There has been continued speculation about Facebook’s projected revenue for 2009 and many have posted estimates in the range of $400 to $500 million. If those are truly accurate estimates, Facebook’s revenue per employee falls somewhere between Adobe and eBay based on revenue estimates provided by Royal Pingdom. For a company which has yet to find a “breakthrough” revenue model, it’s most definitely producing competitive results.
Does that mean Facebook’s revenue will scale proportionally to the number of employees they hire? Probably not but considering the large number of employees allocated to non-revenue generating activities (fighting spam, building out the platform, and running communications, etc), Facebook has a lot of room to grow. Unfortunately the comparison to large companies breaks down when you start analyzing profit margins.
Facebook is known for being unprofitable although they are reportedly moving toward a positive EBITDA (earning before interest, taxes, depreciation, and amortization) in the first quarter of next year according to Sheryl Sandberg, Facebook’s Chief Operating Officer. With a few adjustments to their ad platform Facebook could still increase their revenue considerably.
As I previously mentioned, more robust metrics of the conversion of visitors from Facebook ads into fans of public profiles would help increase Facebook’s revenue. Right now there are no metrics for ad conversions within Facebook and as a result many advertisers choose to link to external properties. A system in which advertisers pay to direct traffic within a single site is almost unthinkable (aside from the current pay-per-install ecosystem within applications).
Facebook still has a lot of room to grown but for the time being, users continue to come back and advertiser continue to pay for advertisements. The only question now is: when will Facebook begin generating profit margins similar to that of eBay or Adobe?