Facebook's Sales Are Said to Reach About $2 Billion This Year

Sales will more than double from 2009, said the people, who declined to be identified because the privately held company doesn’t disclose revenue. Facebook had $700 million to $800 million in sales last year, and the 2010 figure was previously expected to be closer to $1.5 billion, according to two other people familiar with the matter earlier this year.

Facebook’s more than half a billion users have made it an attractive target for advertisers, including Coca-Cola Co., JPMorgan Chase & Co. and Adidas AG. In October, Facebook surpassed Yahoo! Inc. when ranked by the number of global users, making it No. 3 behind Google Inc. and Microsoft Corp., according to ComScore Inc., a research firm in Reston, Virginia.

“The love affair of consumers with social networks is an abiding one,” said Karsten Weide, an analyst at IDC in San Mateo, California. “All the big brands are there.”

Jonathan Thaw, a spokesman for Palo Alto, California-based Facebook, declined to comment.

Facebook, founded in 2004, would reach $2 billion faster than Yahoo and at almost the same pace as Google. Yahoo, founded in 1994, posted revenue of $1.6 billion in 2003 and $3.6 billion in 2004. Google, founded in 1998, reached $1.5 billion in 2003 and then $3.2 billion in 2004.

‘Person of Year’

Mark Zuckerberg, Facebook’s founder and chief executive officer, was named Time magazine’s “Person of the Year” yesterday. The publication noted his role in “creating a new system of exchanging information” and “changing how we all live our lives.”

Zuckerberg, 26, created Facebook for college students when he was a sophomore at Harvard University. After opening the site to people outside of higher education, the company surpassed News Corp.’s MySpace as the No. 1 social network two years ago. Facebook users now post a billion pieces of content, such as photos and messages, every day, Time said.

Facebook has maintained ad prices, even as its user growth creates a surge of space for commercial messages, the company said in August. Facebook also makes money from a credits program, which lets people buy virtual items in online games.

Figuring It Out

“People are learning and they’re figuring out how they can work with Facebook,” said Christian Juhl, a president at digital ad agency Razorfish, part of Paris-based Publicis Groupe SA. “You can prove success without a massive expenditure.”

Facebook is making gains in so-called display ads -- the banners, videos and other graphical promotions that appear on websites. It may grab about 9.4 percent of that market in the U.S. this year, up from 6.6 percent in 2009, according to EMarketer Inc. in New York.

Yahoo, which leads the market, will have about 16.2 percent, down from 16.5 percent, the firm estimates. Google, which is stronger in Internet-search ads, may take 6.7 percent, up from 4.7 percent.

Facebook’s growth is also attracting investor interest. The company has a valuation of $43.1 billion, according to SharesPost Inc., an exchange for privately held stocks. That’s up more than 60 percent from three months ago and almost quadruple the level in March.

At the same time, Facebook’s expansion has increased concerns about privacy. After lawmakers and advocacy groups complained that it shares too much personal data, the company introduced simpler privacy controls in May and said it was reducing the amount of user information that’s publicly available.

“They’ve done a better job recently around privacy, which alleviates a lot of the concern,” Juhl said. “That’s something we’ll always have to keep watching. But that’s nothing new -- whether it’s Google, Microsoft, Yahoo or Facebook.”

To contact the reporter on this story: Brian Womack in San Francisco at bwomack1@bloomberg.net

To contact the editors responsible for this story: Tom Giles at tgiles5@bloomberg.net