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Facebook’s global revenues will hit $4.27 billion in 2011, up from $2 billion in 2010, according to the latest eMarketer estimates. Most of those dollars are coming from advertising, which will rise 104 percent to $3.8 billion worldwide. The numbers demonstrate the social network’s sudden power in the display space, as former leaders Yahoo (NSDQ: YHOO) and AOL (NYSE: AOL) relinquish some of that share. E-commerce is also becoming a factor, albeit a comparatively small one so far, as eMarketer expects revenues from Facebook Credits to bring in $470 million by the end of 2011, up from $140 million last year.
The lopsided balance between Facebook’s advertising and e-commerce programs are not expected to last long. “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, eMarketer principal analyst, in a statement.
A mere two years ago, ads made up roughly 95 percent of Facebook’s total revenue. With the rise of Facebook Credits, advertising will represent an 89 percent share of the social media site’s total revenue this year, eMarketer estimates. Revenue from Facebook Credits will grow to 11 percent of the company’s total revenues in 2011, compared to 7 percent in 2010.
In January, eMarketer forecast that Facebook would bring in $4.05 billion in global ad revenue this year. While $3.8 billion in worldwide ad spending is nothing to fret about, nor is there any suggestion that Facebook is losing steam as a display powerhouse, either in comparison to the new dominant display player Google (NSDQ: GOOG) or the continuing struggles of Yahoo and AOL.
In an attempt to blunt the force of Google and Facebook’s increasing take of display’s share, AOL, Yahoo and Microsoft (NSDQ: MSFT) have formed an ad alliance, which will allow the trio to sell some ad inventory on each of their sites. But there is not a lot of confidence that the partnership will dent the current spending trends, which favor Google and Facebook.
The overall display marketplace in the U.S. is expected to be $12.33 billion this year and $14.82 billion the next. Facebook will have a 16.3 percent share of the U.S. display market this year, followed by Yahoo at 13.1 percent, Google at 9.3 percent, MSN at 4.9 percent, and AOL at 4.2 percent. Collectively, those top five display leaders have 47.9 percent of the display space in the U.S. That means there’s a lot of territory still to conquer amid an otherwise fractured market.
For the most part, eMarketer’s slight revision downward for Facebook’s ads reflect an attempt to reduce clutter and streamline the amount of ad inventory on the site.
But there is an opening for those other sites in terms of capturing Facebook’s take of global ad dollars. As eMarketer’s Williamson points out, marketers still don’t see too many clickthroughs or sales resulting from all their Facebook fans and likes. “Facebook must either work to improve its clickthrough rate or show advertisers that advertising on the site is effective even without a click or other action,” she says. Release