Duration = Engagement ? Revenue

Led by Facebook, social network sites enjoyed a huge increase in traffic over the last year, according to recent figures from Nielsen covering global Internet usage -- but the new data also underlines just how far social media has to go before it can turn its huge popularity into profits.

The latest Nielsen measurements have the total number of people who visited social networks jumping 20% from 261.7 million in March 2009 to 313.7 million in March 2010. Around the world, Internet users spent a total 113 billion minutes on networks in March 2010, more than double the 55.7 billion minutes spent in March 2009. Turning to more recent data, on a per capita basis average usage increased 66% increase from three hours and 31 minutes in April 2009 to five hours and 51 minutes in April 2010.

Google is still more popular than Facebook in terms of overall number of users, attracting 82% of the global Internet population in April, compared to 54% for Facebook. But on the other hand there's no question that Facebook is more engaging than Google, if we're measuring engagement by time spent on the site: the average Facebook user was logged on for about six hours in April, versus just one hour and 21 minutes for Google.

Zooming in on the U.S., in May 2010 Google attracted 161 million unique users, who spent an average one hour and 57 minutes on the site, while Facebook attracted 125.2 million users, who spent an average of six hours and 18 minutes. That means that over the last two years, Google's total user base has grown about 33% from 120.5 million in June 2008, while Facebook soared 250% from a starting base of roughly 36 million over the same period. At this rate it seems plausible that Facebook could equal or even surpass Google in terms of unique users in the not-too-distant future, while racking up much more engagement in terms of time spent.

But these trends just make the question of social media monetization even more urgent -- because for all its humdrum utility and lower growth rate, Google's search marketing machine has left Facebook and social media generally (still experimenting with display ads, sponsorships, and the like) in the dust in terms of revenue growth. In the first quarter of 2008, Google reported total revenues of $5.2 billion, growing 6% to $5.5 billion in the first quarter of 2009, then another 23% to $6.8 billion in the first quarter of 2010.

By contrast, analysts cited in The Wall Street Journal and elsewhere recently forecast Facebook's total revenues for 2010 at somewhere between $710 million and $1.1 billion, up from $500 million in 2009. While the potential double-digit percentage growth rates of 42%-110% look impressive, this basically means that in 2010 Facebook may earn about $1 billion versus perhaps $30 billion for Google ... from an audience that is roughly comparable in size and far more engaged in terms of time spent. What's wrong with this picture?

4 comments about "Duration = Engagement ? Revenue ".
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  1. Autom Tagsa from Canadian Consulting Firm, June 16, 2010 at 1:48 p.m.

    advertising strategy makes a huge difference doesn't it? also, i was expecting some thoughts (and data) on "duration" -- perhaps trends observed that indicate how duration of usage impacts likelihood of sale/new business/engagement/revenue growth etc. did i miss this?

  2. Rich Wilson from Self, June 16, 2010 at 2:28 p.m.

    I think you can't compare the two for two reasons:

  3. Barbara Rocchi from Sugar, June 16, 2010 at 4:02 p.m.

    I'm surprised that you haven't mentioned how social games on Facebook are adding to their time spent and number of visits "bottom line". This is a huge factor that should not be overlooked.

  4. Syed Ali raza from Jang Group, June 18, 2010 at 3:56 a.m.

    I think its true that average time spent on face book is more than google but as far as advertising is concern there is very low interaction rate of Ads on facebook than google.

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