Facebook revenue grows to $800 million on Affiliate Marketing, but can they continue to grow?
It was revealed that Facebook, the mega social networking site, had topped over $800 million in revenue for 2009. Since it is not a public company, they have not publicly revealed this, but according to my source over there, this number is accurate and that the revenue number for 2010 is already trending at what could be a $1.4 billion dollar year. However, he did point out (since he is a reader of my blog) that there is some sign that the revenue for the last half of the year might actually be less than the first half of the year based on the enormous policy changes that Facebook has had in its relationship to Affilaite Marketing. As I’ve pointed out before, Facebook has taken a very aggressive stance on Affiliate marketers, and I might know why.
If you are a regular reader of my rants, you’ll know that while I am a huge fan of Facebook, I am very much curious and concerned about their growing aggressive stance towards Affiliate and direct marketers under the guise of “user experience” and other issues. For a while there during the last quarter of 2009 and first quarter of 2010, there were some affiliate and direct response companies that were doing millions a month on Facebook ads. I estimate, along with my Facebook friend, that March/April of 2010 saw at least an additional $10 million in revenue from generated from affiliate type campaigns (free ipod, education and stimulus campaigns.) One company told me that they alone generated over $3 Million in revenue in stimuls offers, and they know other companies that did the same, leading me to think that even $10 million in additional revenues could be a low number.
Yet, as I pointed out, Facebook doesn’t reveal these numbers publically. They additionally are very, very quiet about their relationship to affiliate and direct response marketers, despite sending sales representatives to all of the major conventions in order to get more money from this part of the business. Publically, as I’ve mentioned, they are pointing out the benefits of brand marketing to their users, while knowing that they will always depending on direct marketers as their key revenue source, at least for the next year or so.
Still, this raises a significant question that no one is willing to ask in the media about Facebook? Can it really grow into the brand centric advertising platform? Facebook has depended completely on the fact that everyone has joined Facebook, because they perceive that everyone is on Facebook. As Michael Flanagan points out, in ADOTAS, the publication I founded, Facebook *is* the internet. Still Michael points out that Facebook “just” took over Myspace as the leader, and the decline of myspace is a very, very relatively new thing. This means that the people on facebook aren’t really “loyal”, “long-term” users who have a reason to stay on there, because there is nothing essentially that interesting about facebook. They are very much similar to google users, they go there to connect find more information, but not to learn or really to connect.
So I ask my audience of 30,000 or so readers, what really is the future of Facebook and advertising. Can facebook, without a real purpose except to connect people virtually, really ever become a brand advertising centric company? I personally believe they are shooting themselves in the foot by pushing away affiliate marketers, because facebook, essentially is nothing new, nothing that interesting — it just has a lot of users, and in those users, it has mass.
What do you think?
9 Responses to “Facebook revenue grows to $800 million on Affiliate Marketing, but can they continue to grow?”
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This is an interesting question. I do some affiliate marketing (nothing huge) so I know the basic in and outs of it and there is often a "spammy" feel to much of the affiliate marketing world. That said, it seems now that FB is top dog they are turning their nose up and distancing themselves from the affiliate scene in an effort to bring in the big brand marketers.
Is this a smart move? I don’t know. What I do know is that every company has a business cycle and there is always something new coming down the pike. Myspace’s decline was in part due to their seemingly sleezy (myspace is for sex) feel as well as their horrible profile layouts. Facebook wants to avoid this happening to them at all costs and maybe they have prematurely lumped affiliate marketers in the sleazy category?
But one thing is true that once FB has hit their critical mass, users will get a little bored and look for that shiny new lure. It’s the history of the pretty much everything.
-Devin Day
http://www.jellybarn.com
Facebook is AOL of the late 90s on steroids. Proprietary and rigid publishing platform. Rudimentary advertising environment. Proprietary chat and email features. "Forums" you can join. Publishers desperately trying to figure out how to leverage the space. An eco-system of third party vendors charging to manage companies "presence" in the environment. AND, a company with a very cocky and arrogant management team believing it has a sustainable competitive advantage when it doesn’t.
LOL @ Old Skool. That was very well put.
It has become apparent that there is still money to be made through direct marketing but it is becoming near impossible for affiliates to make offers work without very high payouts. Direct advertisers that are using facebook if they are willing to pay a little more can still generate leads(disclaimer: if it falls in Facebook’s very strict advertising guidelines which means no giveaway offers, diet offers and many more). If Facebook is willing to make key partnerships with advertisers a huge return can be made for them and also the advertiser through direct marketing. Education should be where they start and as time goes on trickle into other verticals that make sense!
Facebook is developing all the same problems that hinder myspace, and has developed a few of their own. I see social media fragmenting as more social media sites appear that actually meet users needs. e.g. sound cloud.com meets music lovers needs far better than the flash playlists in myspace or facebook, and it allows music creators to connect with their audience in a meaningful way.
FACEBOOK SUCKS
Just wait until you see Apple’s new and improved competitor. You need an iPad to participate though.
I wouldn’t be surprised to see facebook become larger and more important than Google. What’s to keep private corporate-type apps from making their way onto facebook? Think of it as a VPN.
on the branding question… there is a big disconnect still.. between people who really understand emotional brandbuilding and those who really understand technology… the gap is narrowing.. the opportunities are growing… but the gap is there.
a couple examples:
the gap on facebook’s side: http://blogs.rassak.com/everythingcommunicates/2008/11/25/wheres-the-media-in-social-media-facebooks-innovations-begin-to-show-the-way-plus-how-to-speed-up-the-process/
the gap on brands’ side:
http://blogs.rassak.com/everythingcommunicates/2009/03/27/now-you-have-a-friend-in-the-diamond-business-on-facebook-not/
"Facebook is AOL of the late 90s on steroids." Well said and if history serves us right, it will be their demise. Like every big oasis we have seen online become a walled garden. Eventually they loose their vision which beings the exploition their own products and members without recourse. AOL, Yahoo!, CNET, MySpace and many others have fallen into their own trap. In fact it was such manipulation of search that opened the door for Google. Facebook is clearly moving in that direction now. Its only matter of time before people either get pissed off or bored with them and move on to the new new thing.