Facebook has just released a new form of advertising on its site dubbed Sponsored Stories. The feature was created to not only help advertisers increase their presence, but to also get away from showing the social network's users completely irrelevant ads.
The main draw of Sponsored Stories to advertisers is that it lets their products and services spread to users via word of mouth advertising, which is often quite effective. Rather than trying to force feed ads to users, Facebook hopes that Sponsored Stories will transition into the site's interface in more of a subtle manner. Brands themselves will not initiate contact with user pages. Instead, its the users' activities that will determine whether or not a Sponsored Stories ad appears.
While many companies get exposure on Facebook when a user posts that they like or have checked in to a place, such exposure can get lost in a hurry. This is especially true if a user has a plethora of friends, since the multitude of posts will essentially bury whatever post discussed the company. Sponsored Stories remedies this problem by detecting such a post, converting it into more of an official ad, and giving it extra visibility. Instead of sitting solely in the person's news feed, they will see the Sponsored Story on the right-hand side of the page in a separate box.
Some may see Sponsored Stories as added clutter to an already busy Facebook layout. That may be true, but it at least is somewhat relevant to the person's circle of friends. If a friend checks in or likes Starbucks, for instance, this could encourage the person to follow in their footsteps and purchase a cup of coffee.
Since most people usually befriend those with similar interests, the likelihood of a Sponsored Story ad generating business for a company is high. Even if the person had not planned on visiting Starbucks that day, seeing that their friend did so could encourage them to do so. Likewise, the fact that a friend's activity spurred the ad's existence makes a user less likely to get irritated by its appearance on their screen. To avoid the spread of irrelevant advertisements, Sponsored Stories will only be seen by friends of the person who mentioned the brand or company.
One characteristic of Sponsored Stories that could backfire is the fact that users cannot opt out of the service. This could lead many users to question why the social network is using them to promote products. It could also make many begin to wonder where their likes, check ins, and other actions will appear. Such exposure may be undesirable for some, but, as promised by Facebook, the ads will only be seen by friends. For added peace of mind, Facebook promises that Sponsored Stories will respect a user's privacy settings.
How Sponsored Stories will be received by Facebook's users remains to be seen. If successful, it would bolster the social network's already healthy ad revenue. Research firm eMarketer recently released data that reported Facebook's $1.8 billion in advertising revenue during 2010, and it's projected to bring in $4.05 billion this year.
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