When Facebook Inc (NASDAQ:FB) releases its fourth quarter earnings report today, most investors will be focused on mobile ad revenue, as they should, but will the site’s Gifts feature become another main source of revenue? That’s what CNET wants to know.
Gifts was rolled out in phases during the fourth quarter of 2012. The feature is an important one for Facebook because if it works, then it gives the company an additional stream of revenue—one that’s not based on advertising. At this point about 85 percent of the company’s revenue is from advertising, and most of those are just the small display ads. If Gifts does turn out to be a viable idea, then Facebook Inc (NASDAQ:FB) will finally have what Wall Street has been waiting for: a diversified revenue stream.
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Gifts first became available in September with just a few things being offered. In December it became much larger, and all U.S. users could send bottles of wine to their friends. Facebook is in a unique position to enable users send gifts to their friends. It reminds them of important events like their friends’ birthdays or anniversaries. So it gives Facebook a chance to say, “Hey, by the way, it’s Bob’s birthday today. Want to send him a gift?” Why not let someone order a gift when you remind them of a birthday? It has the potential to be a good moneymaker for the company.
At this point, however, we won’t see any details about Gifts. Facebook Inc (NASDAQ:FB) won’t be breaking down the financials of the feature on this earnings report because it is relatively new. And the amount it brought in during the quarter is likely to be quite small, although it could eventually become a major revenue powerhouse for Facebook Inc (NASDAQ:FB), in time.