Monday, March 4, 2013

Facebook Gifts Sales And Revenue Off To A Slow Start

The link to the full story is here

A billion-dollar business? Maybe not. Despite lofty projections for Facebook Gifts from analysts, reporters and myself, a new report picks apart public statements from the company to suggest it sold a maximum of 667,000 gifts in Q4 2012, and maybe a lot less. Sure, it’s early days, but it may take Facebook a while to build Gifts into a game changer.

Correction: The original version of this article was predicated on an incorrect third-party report by Aggregift. It suggested Facebook earned a maximum of $1 million in revenue and sold 267,000 Gifts in Q4 2012 by working back from the fact that Facebook collected $5 million in revenue in Q4 2012 between Page Promoted Posts and Gifts. In reality, the $5 million announced on the earnings call was from Gifts and the more nascent User Promoted Posts product, about which less sales data is available, which prevents the type of analysis shown in the report. Facebook was given a chance to dispute the original report but declined to comment, despite the flawed methodology. This article has been heavily edited to improve accuracy.

Facebook launched the ability for friends to buy each other real-world Gifts in September, though it wasn’t rolled out to all U.S. users until December. That means it certainly didn’t get all of Q4 to rake in e-commerce cash. Still, it was the Christmas season, and Facebook hawked Gifts in the Birthdays sidebar and at the top of the mobile feed, plus a big call-out to buy last-minute holiday presents.

The social network has kept the performance of Gifts close to the chest, and tried to calm hype about it. On the Q4 earnings call, CEO Mark Zuckerberg said:

“I do want to temper near-term expectations a little bit on revenue coming from other areas like Gifts or Graph Search…Payments and other revenue also included around $5 million from sources outside of games primarily user promoted posts and to a lesser extent from our new Gifts product. While we remain excited about the long-term potential of commerce on Facebook, current revenue from user promoted posts and Gifts is very small, and we expect 2013 contributions from these initiatives to remain very small given current run rates.”

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