Why Facebook's Revenue Is Poised To Explode

While Facebook’s revenue is reportedly going to surpass $500 million this year, it’s still a fraction of the revenue from large, publicly traded tech giants. For example Google generated over $21.7 billion last year, a large portion of which came from their self-serve advertising platform. Facebook has a long way to go before they hit $21.7 billion but if a new report published by eMarketer is correct, Facebook should have a good shot at getting there.

Facebook’s self-serve advertising platform has worked especially well for one group of advertisers: local businesses. According to a new report from eMarketer, local online advertising will surpass national online spending this year. By 2013 local online advertising is expected to reach $19.18 billion, far beyond the $14.47 billion national online spending expected the same year.

If Facebook can continue to experience rapid growth in local advertising, the company could become the most dominant player in the local space. Additionally, Facebook is looking to continue driving growth in the brand advertising space which means that these two channels combined are worth billions. Add to that a robust virtual goods platform and you can begin to see how Facebook’s revenue could eventually match if not surpass Google’s.

It also means that Facebook shouldn’t be in a rush to go public as the company should have an exceptional amount of revenue growth even as they surpass the $1 billion revenue mark (which we’d expect to happen next year). Despite some developer frustration with constant changes to the platform, Facebook continues to make one right step after the other when it comes to protecting their most valuable asset: an active user base.

If Facebook can continue making smart decisions as they have in the past, there’s no doubt that the company will have explosive revenue growth. The latest eMarketer data is just one more sign to add to the numerous others which suggest Facebook has a massively profitable future ahead.