$34.5 million spent on Facebook virtual goods?
At a rapid pace, Facebook is making money from those $1 virtual gifts, which may account for a shockingly high 10 percent of revenue. Maybe one day, goods will outshine advertising.
The short answer: based on different calculations, between $28,500,000 and $43,500,000 in annual Facebook gift sales, with an average of about $34,500,000.
Not surprisingly, the majority of the gifts are more drive-by than they are purposely chosen.
The vast majority of Facebook gifts are bought from the first screen of gifts in the directory--almost 80 percent of the total sales come from the group of the first 20 gifts. This points to the self-reinforcing nature of popularity (the crowdiness of crowds rather than the wisdom of crowds) when popularity data is made public.
I have to hand it to Facebook for making this absurd gifting a lucrative part of the social-networking norm. I wonder if the people who buy $1 virtual gifts would also buy $1 physical gifts.
Estimates put Facebook revenue between $300 million and $350 million in 2008, meaning that virtual-good sales would account for a shockingly high 10 percent of revenue.
Disclosure: Jeremy Liew's venture capital firm is an investor in my company.