Facebook is on fire.
Global revenue for the world's most trafficked social platform will hit $4.27 billion this year, up from $2 billion last year, according to a forecast issued today by digital market research company eMarketer.
Facebook is also on track to pull in $3.8 billion from advertising worldwide, that's up 104 percent compared to last year's $1.86 billion. While brand advertising remains a primary revenue stream, analysts at eMarketer and elsewhere anticipate advertising revenue to decline as the company continues diversifying its model.
For example, advertising represented 95 percent of Facebook's total revenue in 2009, whereas this year it will drop to 89 percent. "This slight revision downward for 2011 should not be taken as a sign that Facebook's overall business is losing momentum," according to Debra Aho Williamson, a principal analyst at eMarketer.
Facebook Credits, meanwhile, is one revenue stream that's becoming increasingly important to Facebook's future, according to Williamson. Credits, a virtual currency for games, is expected to reach $470 million this year, or 11 percent of total revenue, up from $140 million in 2010. Credits are a key part of the Facebook platform, where major businesses like social-gaming giant Zynga have been built. Facebook takes a 30 percent cut of every in-app transaction conducted on its platform.
Going forward, though, marketers still must be prompted to pay for advertising on Facebook. Williamson says, "Facebook must either work to improve its click-through rate or show advertisers that advertising on the site is effective even without a click or other action."
"Having amassed a large quantity of 'likes,' some brands feel that they can continue to market to these people directly through their pages rather than by buying advertising on Facebook," Williamson noted. "This may especially be the case for companies that market to Facebook's younger users, because they tend to be more willing to 'like' or comment on brand pages."
To come up with its ad spending estimates, eMarketer said it analyzed "estimates of consumer usage, marketer usage, ad pricing, and impressions on Facebook, as well as revenue estimates from research firms and other sources." It also interviewed executives in the industry "who provided perspective" on the social network's ad business and revenue.
Facebook is privately held and does not disclose financials. The company is widely expected to file next year for an IPO, which some reports say could be based on a valuation of $100 billion.