January 11, 2012

Facebook today announced their most significant advertising move for years – ads in an area that until now has been sacred – the News Feed.

Starting this week, some users in the UK will begin seeing one paid for amplification of their friends’ interactions per day. The new placements, dubbed ‘Featured Stories’ rather than ‘Sponsored Stories’, allow businesses to pay to feature posts from a Page or person is connected to in their feed.

Marketers can only pay for stories to be featured in the News Feed if a user has explicitly liked their Page. Facebook are also labelling stories from friends that have been paid to be featured in the News Feed as ‘featured’ to keep things consistent.

The move is significant because it makes it possible for brands to highlight stories that people may miss because of News Feed ‘noise’. The stories won’t displace any stories that users may otherwise see organically and will be the same size and treated in the same way as other stories in the News Feed.

If successful – and Facebook hopes the new format will be ahead of a planned IPO this year – the leading social network will have tapped into a significant new revenue stream by deeply meshing the ‘social graph’ with paid media and could start significantly eating into spend on paid search and traditional display dominated by Google, who currently suck up over 44% of online ad spend.

Facebook had already begun the gradual rollout of Sponsored Stories – a placement on the right hand side of a profile which turns friends actions into promoted content – and a recent Nielsen study showed encouraging results, with a 68% increase in ad recall and a 2X increase in message awareness when users see a friend’s name associated with an ad.

Shifting this format into the News Feed could yield even more impressive results, with users actively engaged with browsing photos, status updates and posts attentively consuming paid for content as well.

We’re expecting a chorus of protest from users who wish their news feed to remain ‘uincommercialised’ but since Facebook has provided an invaluable social networking service for free for so long, we doubt there will be uproar. One alternative is a micropayment for an ad free service which Facebook may have up their sleeves as a backup plan – but things would have to be bad. And we know they are good at riding storms of user disapproval.

Facebook will have to manage things carefully though and have already begun raising awareness of privacy controls. They’ll be keen to make sure the rate limit at which Featured Stories are served doesn’t detract from the user experience, because if that is degraded, then the value of the new format could plummet.

The position on this kind of social advertising is still blurred. Even Facebook’s Head of Policy stumbled on the subject in an interview with the BBC.

In relation to Sponsored Stories, Facebook have argued that a like or check in, for instance, constitute consent to feature a user’s name and picture in a social ad, ‘affirmatively communicating that I am associating myself with whatever I’m liking’. This is controversial territory and although Facebook’s privacy settings can be customised in a number of ways, it is impossible to opt out of Sponsored Stories (though you can of course delete them).

Facebook has hinted that these new placements will be heading to our mobiles soon and that’s not surprising as almost half of all Android and iOS device owners have installed Facebook’s mobile apps, with approximately 117 million people logging into Facebook’s mobile app every month from an iOS device and 87.8million from an Android device, according to AppData.

Featured Stories could be very significant if rolled out on mobile, both in terms of extra ad inventory also driving users to a point of conversion if integrated with location-based social ads, for example.

It will be really interesting to see how they roll this out and expand the functionality of the mobile apps without undermining their simplicity. Mobile Pages still lack the option for page owners to customise a landing tab, which would be an important feature if Pages did gain the ability to run mobile ad campaigns.



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