Facebook's future ad revenue to come from small businesses: Experts

Facebook, in its most recent earnings call, saw a rise in profit and revenue, and the social networking giant is expected to see even higher revenue growth from small businesses.

Facebook's director of small businesses, Dan Levy said that the social network has 1 million advertisers on its platform, a number first announced in June, and double the number of advertisers from a year before.

According to Mashable, with one million advertisers associated with Facebook and 25 million small businesses with active company pages, means only 4 percent of companies that use Facebook to connect with customers are also using the site to advertise, which ultimately is a lot of potential ad revenue.

Wedbush Securities analyst Michael Pachter said that the 25 million businesses with active pages clearly understand that having a presence on Facebook has value to them.

Patcher believed that as many as half of the small businesses on Facebook will eventually advertise, which would generate more than 1.25 billion dollars in ad revenue.

Levy pointed that small and medium businesses aren't advertising on Facebook because many small businesses don't have a product ready for an advertising campaign and other may have only one or two employees, and finding time or resources to advertise isn't always easy.

Pachter said that Facebook will need to experiment with other kinds of ads, including coupons and location-based advertisements.

He further added that a success-based advertising model, where businesses are only charged if their ad brings in customers or sales, could eliminate risk and encourage small businesses to take the plunge on Facebook, the report added.