Initial estimates of a $550 million year for Facebook in 2009 may be lower than expected. In fact, the company may have brought in as much as $700 million, though it is notoriously tight-lipped about the size of its coffers. In what was clearly a banner year for the social media site, it also moved into positive free cash flow territory – and the number of users continues to rise across the board.Facebook's revenue trajectory – at least to the extent that it can be gauged – has been impressive. From $150 million in 2007, it grew to an estimated $280 million to $300 million in 2008 and a 2009 result that could range from $600 million to $700 million. Revenue has at least doubled every year, a trend that Inside Facebook expects to continue. Of course, these are all third-party estimates, and Facebook isn't saying a thing.
Brand advertising was where Facebook made a major push in 2009, chasing major players with multimillion advertising budgets and committing to improved campaign data through a relationship with Nielsen. At the same time, Facebook experimented with new ad types and saw its user base grow from 150 million at the beginning of the year to 350 million toward the end – driving a lot more impressions, especially in valuable regions like Europe and the U.S. Inside Facebook estimates a year-end total of $225 million for brand advertising, based on a rumor of $125 million through July.
Revenue from Facebook's deal with Microsoft (MSFT) is a bit harder to pin down and isn't believed to have had a serious impact on its 2009 results. The international portion of the deal was killed a year early. The rumor of $150 million for roughly the first half of 2009 is thought to be the top line before Microsoft's cut.
The contribution of virtual goods to Facebook's top line is much smaller. It could be as low as $10 million, since the Credits feature spent most of 2009 in testing. Yet, some estimates put revenue from this source as high as $75 million.
The top revenue source in 2009 was performance advertising, which grew by approximately $150 million through the end of the year relative to its July rumor of $200 million (resulting in a year-end estimate of $350 million).
Inside Facebook projects brand and self-service advertising to increase next year, along with virtual goods. This year, Facebook could cross the $1 billion threshold. Brand advertising could soar as high as $350 million in 2010, with performance advertising showing the potential to push past $500 million.
