Facebook – Growth and Revenue

In an October 2008 interview with German newspaper FAZ (Frankfurter Allgemeine Zeitung), Facebook CEO Mark Zuckerberg, in reference to Facebook’s business model, was allegedly quoted as saying, “Growth is primary. Revenue is secondary”. Based on this interview, several reports fuelled speculation that Facebook at that time did not appear to have a clear business model and that it could be three years before one was fully formed. The transcript of this interview can be found on the FAZ web site.

A few days after the FAZ interview took place Mark Zuckerberg was interviewed in Madrid. In this interview Zuckerberg explained that his message was lost in translation. He said Facebook did indeed have a business model and that revenue was a key player. He explained that Facebook’s mission is to help people share information and in order to do that growth was the immediate focus.  At that time Facebook had just reached an important milestone in growth by having over 100 million users, but Zuckerberg had plans to further increase the Facebook empire. He then went on to explain that it is however important that Facebook build a sustainable business. Zuckerberg gave examples of the current revenue model such as the Facebook ad service and direct sales brand advertising. Zuckerberg wanted it be clear that development was also going into advertising.  This interview can be viewed below.

So if there ever was a “three year plan” then we would be half way through that period around now. Let’s take a look at how Facebook has performed in the last 18 months in terms of growth and revenue.

Growth is an understatement when referring to Facebook. In the 18 months since Facebook reached its golden milestone of 100 million people, the number of active users on the popular social network has quadrupled. Here are the stats:

• 400 million active users globally.
• 2^nd most frequented site in the world. Google is number 1.
• 50% of active users log on to Facebook each day.
• 60 million status updates per day.
• 3 billion photos uploaded each month.
• 5 billion content items (web links, news stories etc) are shared each week.
• 3.5 million events created each month.
• 3 million active Pages (half of which are for businesses).
• 5.3 billion fans of Facebook pages.

More stats can be found at alexa.com or the Facebook press room.

So growth has been phenomenal, but what about revenue? Considering the controversy 18 months ago about revenue taking a back seat to growth, from all reports Facebook are doing well in this area as well. As a private company, Facebook are not obliged to publish its revenue figures. But, according to an Inside Facebook prediction, Facebook are set to record up to $1.1 billion in revenue in 2010 with brand advertising ($350 million) and performance advertising ($600 million) being the most significant potential revenue streams.

To capitalise on this incredible growth, Facebook has established offices in regional markets to ensure revenue is maintained as a focus. The Australian Facebook office established last year is headed up by Regional Vice President of Facebook for Australia, Paul Borrud, whose current mission it appears is to educate Australian businesses in Facebook brand engagement. Today, I was fortunate enough to attend an Interactive Minds seminar where Paul Borrud spoke about the opportunities brands now have to engage with Facebook members. I came away from this seminar quietly convinced that Facebook appear to have found the right mix of advertising and consumer engagement (more on this in my next post).

So with a member base of 400 million active users, what appears to be an advertising model finally suitable for social networking and reports that they are set to make $1.1 billion in revenue this year, Facebook appear to me to be in a very good position.

About these ads