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How Does Facebook Make Money?

Facebook revenues reached $500 million in 2009, up from $300 million in 2008, according to Fortune editor David Kirkpatrick, who cites "well-informed sources" in his upcoming book, The Facebook Effect.

Facebook expects revenues to reach $800 million in 2010.

Where did 2009's $500 million come from?

Self-service ads, which appear on the right side of the screen on Facebook, accounted for about $250 million to $300 million. They look like this:

image

Engagement ads, which seek user-interaction (and sometimes feature user-endorsements), brought in $100 million. Here's one:

image

As a part of a 2007 ad deal, Microsoft sells some ads on Facebook. It's payment for the privilege reached $50 million in 2009.

Finally, Facebook Gifts and other virtual goods account for between $30 million and $50 million in 2009.

These figures are fairly consistent with Inside Facebook's March 2010 report.

[via] Business Insider
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