We’re all on the edge of our seats waiting for the Facebook IPO to drop. Thankfully, Kara Swisher over at AllThingsD reports that we can all hang out a bit (maybe), because the FB IPO isn’t dropping until later today (probably). Phew.
The Wall Street Journal proper reports (no offense, AllThingsD) that Facebook probably makes most of its revenue from online advertising combined with cuts from game purchases. Before its public offering, Zynga reported $828.9 million in revenue through the third quarter. Facebook takes a 30% cut from games that live on its ecosystem. In this instance, Facebook collected about $350 million from Zynga. Facebook Credits are another revenue stream. Now there’s even a a user loyalty incentive component.
As Facebook moves forward with its IPO, many are wondering just how much it makes from ads. Boston-based Nanigans, a Facebook ads API developer, reports 1600% growth in Facebook ad spending over the past year. This refers to the ad spend managed by Nanigans’ software – not the entire Facebook ecosystem.
You’ve heard it before: Marketers are trying to figure out how to best reach their target audience. Facebook ads are becoming more appealing, or at least that’s what Facebook’s advertising solutions want us to believe. “Marketers across the globe, and beyond early adopters, have embraced Facebook as a mainstream media platform,” says Nanigans CEO Ric Calvillo.
Facebook revealed more about its ad strategy at the end of last year, shortly before it rolled out Timeline to all users. Facebook tailors its ads to the user, delivering what it believes they want to see. Users also have the option of X-ing an ad if they do not want to see it.
Nanigans’ Ad Engine is focused on the more granular aspects of Facebook ads. It optimizes marketers’ Facebook ad spend to meet goals on Facebook, such as “Likes,” app installs, registration, in-app actions, viral referrals and purchases. In 2011, it served over 175 billion Facebook ad impressions.
Facebook is preparing to file a $5 billion IPO, but that number could end up being closer to $10 billion. As the New York Times reports, this entire offering is fueled by you, the user who continuously provides Facebook with the personal data it needs to serve targeted ads. Barrons reports that 90% of Facebook’s $3.8 billion revenue in 2011 came from ads.
Soon Facebook CEO Mark Zuckerberg will thank you kindly, and Wall Street will officially place a value on your personal data. Will advertisers bite harder in 2012? And more importantly, will users provide the social network with even more personal data?
Photo courtesy of ShutterStock.
