UPDATED 10:59 EDT / AUGUST 31 2012

Facebook’s Other Products Doing Better than Ads as Stock Declines

eMarketer reduced their estimates for Facebook’s ad revenue from $5 billion down to  $4.23 billion.  Though the predicted ad revenue for this year is still 34.1 percent higher than last year’s eMArketer states that the company’s poor performance earlier in the year as well as the effectiveness of some of their ad products contribute to the lower ad revenue expectations.

“Paid advertising accounts for the vast majority of Facebook’s total revenue, though its share has been dropping over the past several years,” eMarketer stated.  “As recently as 2009, advertising accounted for 98% of the company’s intake; this year that percentage is down to 83.9%. Total revenues at Facebook will break the $5 billion mark this year, an increase of 35.9% over 2011.”

They also noted that other Facebook products are gaining revenue faster than ads, such as Facebook Payments.  eMarketer expects Facebook to reel in $811 million from sources other than ads, which is 45.6 percent higher than last year.

However, eMarketer’s estimates could be off, especially with Facebook giving the go signal for advertisers to stalk Facebookers.  According to reports, Facebook is willing to give user information such as names, e-mail addresses and phone numbers to paying companies for targeted ads.  But before you freak out, everything is said to be legal.  Facebook will only be giving away information that users readily give when they sign up for a Facebook account, so as to not invade users’ privacy.  So it looks like we’ll have face even more annoying targeted ads, and we have Facebook to thank.

But not everyone will be in companies’ crosshairs, just those who like to use Facebook for everything they do, like posting your online purchases or music habits.

Facebook’s aggressive push in advertising may be due to their stocks’ decline.  When Facebook went public, their shares were up at $38 a piece but months after that, they’re share’s are already down by half.  The reason behind this is that investors are getting worried that companies are slowing down their spending on advertising which is the biggest contributor in Facebook’s revenue.  Facebook’s shares have hit a new low, it was down by four percent at $18.41 in early trading today.


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