eMarketer wipes $1bn from Facebook revenue forecast

Digital marketing researcher eMarketer has taken a razor to its 2012 Facebook revenue forecasts as questions continue to mount over whether or not the company can deliver growth that meets the lofty expectations set by some investors.

eMarketer previously predicted that Facebook would rake in total revenue of $US6 billion this year, but now expects revenue to come in just over $5 billion.

“In February, eMarketer predicted that Facebook’s total revenues would surpass $6 billion this year, but after the company underperformed market expectations in both Q1 and Q2, eMarketer’s forecast — an analysis of hundreds of data sets on Facebook ad revenues, impressions, usage and other factors collected from dozens of third-party sources — has been revised downward,” the market researcher said in a statement.

“The new forecast lowers expectations for Facebook revenues by more than $1 billion for the year, following a trend evident from most other firms that have looked closely at Facebook’s revenues over the past year.”

eMarketer goes on to say that it expects advertising revenue to total $US4.23 billion in 2012, up 34.1 per cent over last year, but less than the $US5 billion in ad revenue the company tipped Facebook to achieve in its February forecasts.

“Underperformance throughout the first half of 2012, along with questions about the effectiveness of some of the site’s ad products, have led to the downward revision,” it says.

While eMarketer has ratcheted back 2012 revenue expectations heavily, it still expects Facebook to deliver a 35.9 per cent increase in annual revenue this year and a 31 per cent increase to in 2012. It also tips the company to generate more international revenue as it expands its mobile ad business.

But eMarketer analyst Debra Aho Williamson says the company needs to move quickly to address mounting advertiser concerns.

““Major marketers are still questioning the effectiveness of advertising on Facebook, and they are concerned that their ability to measure results is underdeveloped,” Williamson says. “Facebook is working on addressing these concerns, but it must move even more quickly.”

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