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BroadVision Marketing Blog

Sneaking in an ad: Facebook 2012

Posted by Jaco Grobbelaar on Wed, Jan 04, 2012 @ 04:25 PM

What do you do if you are a huge business, you did not meet your 2011 revenue targets and you need to produce some revenue in the first quarter? What if your huge business is Facebook and you know a way to bring in that money using a little sleight of hand?

First, you need to know that Igor Beuker of Viral Blog, in his article “Facebook 2012: Placing Ads in User News Feeds” December 27, 2011, is the one who suggested that Facebook had the financial need that is leading to featuring Sponsored Story ads in user’s News Feeds. You can read Igor’s entire article at http://www.viralblog.com/facebook-marketing-2/facebook-2012-placing-ads-in-user-news-feeds. I found no other article offering this explanation for the second big Facebook move in as many months.

Facebook Sponsored Stories are already successful ad products with high click rates because they have the built-in endorsement of a friend. Facebook began experimenting with the concept in 2006 when they allowed advertisers to pay to show sponsored content in the news feed. They stopped the program in 2008, deciding that advertisers shouldn’t be able to pay to show content in the news feed unless it could appear there naturally. So this is not a new idea.

After the shut down in 2008, all ads were confined to a small right side of the page sidebar. Then last January 2011, Facebook launched Sponsored Stories, allowing advertisers to pay to turn the news feed stories generated by interactions between users and businesses into ads. Interactions included a user Liking a Page, receiving a news feed update from a Page a user Liked, checking in to a local business, sharing content from an external website, or using an app.

Then in the fall Sponsored Stories began appearing in the Ticker, the first time Facebook mixed ads with social content since 2008. No one actively protested having updates of their friends mixed with ads, possibly give Facebook permission to show ads again in the main news feed without ruining users’ experiences.

Josh Constine had a fresh take on this renewed effort in his article “Facebook Sponsored Story Ads to Appear in the Web news Feed in 2012” December 20, 2011 at http://techcrunch.com/2011/12/20/sponsored-stories-news-feed/.

Josh said, “The ability to display promoted content alongside organic social content in the popular and highly addictive news feed is essentially the holy grail for advertisers. While users are attentively browsing photos and updates from friends, they’ll end up consuming ads as well. The ads look so similar to organic news feed stories and are only marked in the bottom right corner — the last place a user’s eyes will scan. That means users probably won’t notice the difference until they’ve already internalized an ad’s message.” The marking at the bottom is at the end of a familiar line and ends with the gray word “Sponsored”. If the user points at the word, Facebook adds a message saying, “This was already shared with you. A sponsor paid to feature it here.” (See the picture at the start of this article.)

While some users will probably be outraged by this, others might think that Facebook is providing a valuable service (Facebook itself) to them for free so Facebook is entitled to show ads where ever it wants.  Also while there is no way for users to opt out of seeing Sponsored Stories in the news feed, they can “x” out individual ads.

There is a possibility that Facebook will be able to enlarge its daily ad inventory enough to reduce ad prices; although if enough advertisers want Sponsored Stories, Facebook might not be able to lower prices after all. Studies have shown that sidebar Sponsored Stories have a 46% higher click through rate than traditional ads. What the stories within the News Feed will produce remains to be seen, but the prediction is that they will also have high click through rates as well.

What about mobile users? Igor states that mobile users won’t see any Sponsored Stories in January, but that Facebook is planning its first attempts into mobile advertising by late March 2012, according to Bloomberg News. “Sponsored Stories in news feeds were cited as a possible route for Facebook to generate revenue from its 350 million active mobile users,” Igor said.

Sponsored Stories sounds like a good way to make up for a financial shortfall. How do you feel about having ads in your news feed?

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Topics: Social Media, Marketing Principles

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