Facebook Sales Could Top $1.7 Billion in 2011

FacebookIn a trailer for The Social Network, the upcoming movie about the origins of Facebook, former company President Sean Parker -- played by Justin Timberlake -- offers his perspective on wealth: "A million dollars isn't cool," the character says. "You know what's cool? A billion dollars."

Well, the real Facebook is set to pull in $1.285 billion in revenue this year, according to eMarketer, a leading digital research firm, roughly double the $650 million in sales the company booked last year.

What's more, Facebook's revenue could reach $1.76 billion in 2011, the farthest into the future eMarketer projects, according to Debra Aho Williamson, a senior analyst at the research firm.

Total spending by ad companies will reach $1.68 billion on social networking sites this year, according to eMarketer's report, which the company released Monday, more than 20% increase over 2009, and rise above $2 billion by 2011.

$1 Billion: Real Money

After years of pundits pooh-poohing Facebook's revenue prospects, well, now you're starting to talk about real money. Facebook recently surpassed 500 million users.

"Facebook is one of the biggest websites around and becoming one of the biggest in terms of ad spending," says Williamson. "People thought Facebook wasn't going to be able to monetize its users, and it turns out that it has."

According to Williamson, Facebook's fastest revenue growth is coming from its self-serve ad platform. "Previously when we looked at Facebook, we didn't realize just how successful their self-serve system had become. It's a great tool for marketers to come in and create targeted advertising, and now we think it accounts for half or more of total ad spending on Facebook."

Another big driver of Facebook's revenue growth is the fact that major national companies are beginning to ratchet up their spending on the site.

Procter & Gamble Leading the Pack

"When a big advertiser is looking at how they're going to spend their money, they're really looking for reach," Williamson says. "500 million people is a mass audience."

For example, Proctor & Gamble (PG), the world's largest advertiser, plans to increase its spending on the site, she said. That's gotten the attention of other big advertisers.

"Advertising on Facebook makes sense to Proctor & Gamble now," Williamson says. "It's like the light bulb has gone off, and when they move, other companies pay attention and think, 'If P&G is there then we need to be there also.'"
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