Facebook Revenue Will Reach $4.27 Billion, EMarketer Says

Facebook Inc., the world’s largest social-networking service by number of users, will generate $4.27 billion in revenue this year, more than double the $2 billion made in 2010, according to research firm EMarketer Inc.

The company will get $3.8 billion from advertising this year, up 104 percent from $1.86 billion in 2010, New York-based EMarketer said today in an e-mailed statement. The company should make $470 million from Facebook Credits, a virtual- currency program that lets users buy items in games, more than triple the $140 million it made last year.

“Facebook’s revenue streams will continue to diversify, with ads representing a decreasing proportion of total revenue while other sources such as Facebook Credits will grow,” said Debra Aho Williamson, an analyst at EMarketer, in the statement.

The company, looking to benefit from its more than 750 million users, is trying to draw more ad dollars and spending on its service as it competes with rivals Google Inc. (GOOG) and Yahoo! Inc. for online attention. Facebook, based in Palo Alto, California, is expected to become the top seller of display advertising in the U.S. this year, surpassing Yahoo, which was No. 1 in 2010, EMarketer said in the statement. Google is expected to be No. 3 this year.

The new estimates are a revision from what EMarketer said earlier this year. In January, EMarketer said the company would reach $4.05 billion in ad sales this year, or $205 million more than the new estimate.

Revised Estimate

Williamson said the lower sales shouldn’t be taken as a sign that the company’s “overall business is losing momentum.” Facebook has taken steps in recent months to streamline advertising inventory, which contributed to the revision.

“Even though Facebook has spent several years wooing marketers, many of them still believe the ads aren’t effective at driving clicks and other actions,” said Williamson. “Facebook must either work to improve its click-through rate or show advertisers that advertising on the site is effective even without a click or other action.”

For 2012, Facebook should reach $5.78 billion in ad revenue globally, up from the earlier estimate of $5.74 billion.

Separately, Facebook announced it was trying to make it easier see content on the site that’s important to users. Under the changes, the service will put the most interesting posts from friends, such as photos and status updates, at the top of the News Feed on home pages. In addition, the company is starting a new “ticker” feature that makes it easy to see friends’ updates, and also allows them to interact quickly with those friends.

To contact the reporter on this story: Brian Womack in San Francisco at bwomack1@bloomberg.net

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net

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