Poof! $1 Billion Slashed From 2012 Facebook Revenue Forecast

EMarketer today said the No. 1 social network will just break $5 billion in revenues this year, with $4.2 billion coming from advertising and the rest from payments and other revenues. That’s down $1 billion from the research firm’s estimate from last February, several months before Facebook’s initial public offering in early May. Even so, Facebook’s ad revenues are still forecast to jump 34% this year from a year ago, and rise 29% next year.

The key reason for the change actually does not reflect a key concern of investors: mobile advertising. [Corrected; I initially misread the release to say mobile was a key factor.] Although Facebook has been slow to roll out advertising on mobile devices, eMarketer had not factored that into previous forecasts either. Instead, the estimate cut reflects growing concerns about the effectiveness and measurability of Facebook ads.

The revenue estimate cut isn’t entirely a surprise. Facebook reported less-than-expected revenue growth in its first and second quarters this year. And eMarketer’s original forecast was higher than that of many other analysts, whose recent estimates came in at around $5 billion.

Still, the new forecast could add to investor worries that Facebook’s growth is stalling as its advertising sales, especially on mobile devices, come up short. In a market that was down about 1% today, Facebook’s shares fell a penny, to $19.09. That’s about half their IPO level.

“Major marketers are still questioning the effectiveness of advertising on Facebook, and they are concerned that their ability to measure results is underdeveloped,” eMarketer analyst Debra Aho Williamson said in the release. “Facebook is working on addressing these concerns, but it must move even more quickly.”

Lately Facebook has been launching a flurry of new ad formats. It also recently introduced an ad exchange that holds promise to juice revenues by making ad buys more automated. And in an attempt to counter bad publicity such as General Motors‘ pullback of Facebook ads just before its IPO, Facebook has released a series of reports and case studies showing how marketers have gotten returns from Facebook advertising.

EMarketer says Facebook’s Marketplace ads that appear on the right side of the page are effective, and that Facebook is likely to provide similarly automated ad buying for so-called premium ad formats such as Sponsored Stories, which appear to perform better because they contain the implied endorsement of people’s friends.