Is Facebook Gifts Off To A Slow Start? It Appears So.
When Facebook Gifts was announced back in September, there was buzz about how this offering will change Facebook’s entire revenue model. Well, the initial Q4 reports failed to impress with just 0.4% (at most) of users buying a gift according to TechCrunch.
Initial reports were that just $1 million dollars of revenue was driven via Facebook Gifts, but was later debunked due to incorrect data. What we do know is that the number was below the $5 million dollar mark according to a statement made by Zuckerberg on the Q4 earnings call:
“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.”
So we know that in the roughly one month (December ’12) that gifts were available, they weren’t being purchased at an overwhelming rate, given the < $5 million dollar number. The official dollar amount generated from gifts hasn’t been released.
Even if the gifts product did generate $5 million dollars, it still wouldn’t make a blip on the social network’s $1.59 billion Q4 revenue. The average Facebook Gift purchase is for $25 dollars, up from the $15 initial projections.
The one-billion-dollar-gift-based revenue projections were based off of every US user purchasing a gift; this, however, couldn’t be farther from the real-life estimate of 0.4% of users actually purchasing.
For more information see the article at TechCrunch.
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