Earlier this week, Facebook announced the ability for direct advertisers and agencies to buy sponsored stories* on mobile devices, exclusively. Prior to this, Facebook controlled whether or not an advertiser’s sponsored story would appear in a user’s news feed for mobile devices. Furthermore, marketers had no choice in when their sponsored stories were shown and no means of segmenting out the performance by desktop and mobile. For those familiar with Google AdWords advertising, this new Facebook functionality is equivalent to desktop and/or mobile device targeting for paid search campaigns.
The sponsored stories targeting options now available through the ads API and Power Editor are:
What does this mean for Facebook and their advertisers? This change certainly provides marketers with more control over their ads and visibility into their data for optimizing campaigns. But to anyone familiar with advertising, this also means more ad revenue for Facebook. Consider these figures: Facebook made $3.2 billion in ad revenue last year, primarily from desktop advertising. And as of December, there were 901 million monthly active users, with 500 million of those being mobile. With the flood gates now open for sponsored stories on mobile devices and the continued growth of monthly active mobile users, it’s clear that Facebook is set to generate hundreds of millions, if not billions, of dollars in revenue from this untapped mobile ad market.
Though this announcement appears to be a win-win for Facebook and their advertisers, it remains unclear as to how mobile users will react to seeing these new ads in their news feeds. As a thought, Facebook may want to consider providing more visibility into the algorithm that influences the ads appearing in a user’s news feed, such as click-through-rate. This algorithm might be similar to Facebook’s existing EdgeRank, which factors Affinity, Weight and Decay into the ranking of social content appearing in news feeds. Developing a transparent and effective metric to promote ad relevancy would benefit marketers and Facebook users in a landscape of dynamically changing content and consumer intent.
Share your thoughts with us on this announcement in the comments section below.
*Sponsored stories allow Facebook advertisers to surface word-of-mouth recommendations about their brand that exists organically in the Facebook News Feed. Sponsored stories are different from ads and can amplify the brand engagement of the target audience. For example, if a person’s friends like a Page, in addition to seeing that news story in their News Feed, they can also see the same story on the right-hand column. Sponsored stories are available for ads that promote a Page, Place, Application or Domain.
Marin Software released data this week highlighting the recent gains in social ad adoption by Facebook advertisers. New ad formats, such as Sponsored Stories, leverage word-of-mouth recommendations to bring social context to traditional ad creative. These highly relevant social ads are becoming a more effective way for Facebook advertisers to reach and engage their target audience. Some of the key data include:
These year-over-year increases point towards a strong advertiser adoption rate. The relevant nature of social ads, coupled with strong CTRs, has caused a shift in advertising budgets from traditional ads to social ads. With the increasing adoption rate, competition amongst advertisers has resulted in increasing CPCs. Given current trends, Marin predicts that Facebook advertisers will allocate 50% of their budget towards social ad formats by the end of 2012. This would mark a significant jump from the current 23%.
For advance tips and best practices on implementing and managing Facebook ads, click here.
Facebook sponsored stories typically provide a significant boost to click through rates and conversion rates. The reason behind this is that the ads introduce social context within them. The social context makes the ads more relevant, yielding more favorable metrics. But how can an advertiser take advantage of sponsored stories? There are several different types of sponsored stories and they may not all fit with an advertiser’s business model. Below is a snapshot of a few of the most popular sponsored stories and some guidance on which sponsored stories would be the most helpful for the various business models.
To set up domain sponsored stories, the advertiser needs to place a small piece of HTML on their website which appears as the Facebook “like” button. When a user comes to their page, while logged into Facebook, and clicks “like” a story is created stating John Doe likes MarinSoftware.com. A click on this ad would send the user to MarinSoftware.com.
Domain sponsored stories require the most work to set up, but they are a valuable targeting asset for lead generation advertisers that would like to drive users to their domain instead of a Facebook page. This is the only sponsored story that will allow the user to be driven away from a Facebook URL. In the end, it’s Social Context plus the ability to drive the user offsite. This is a huge win for lead generation and retail advertisers.
Page like stories are created when a user clicks “like” on a business’s Facebook Page. After clicking “like” a sponsored story can be created stating “John Doe” likes Marin Software. A click on this ad would send the user to the Marin Software Facebook Page.
This is great for brand advertisers that want to increase their Facebook page likes. The key advantage here is that the advertiser can target users who have friends that like their Facebook fan page. In this sense, the targeting is more valuable than the “friends of connections” product because the ad is targeting friends of the user that clicked like AND they are showing an advertisement with social context. If my friend, John Doe, likes Marin Software I might like it too.
Page Post stories are created when a user navigates to a Facebook advertiser page and posts a comment on the wall. This creates a story that shows the post on the advertiser’s Facebook wall. For example, if I post “I love the new shirts” on the Macy’s Facebook page that comment could then be used within an ad.
For a little while, this was a dangerous feature to use because a user could potentially post negative feedback on the advertiser’s Facebook page. Using sponsored stories in this case would then broadcast that negative feedback. Recently, Facebook has changed this functionality so that the user can identify which story they want to broadcast for the advertisement. Social context is no longer required to run a page post ad. Essentially, this ad is able to take the business’ most favorable feedback and broadcast it. This could work for both branding or to sell an individual product through the FB platform.
Check-in stories are created when a user checks-in at a store that you have claimed as yours. For example, if I were shopping at Macy’s in Union Square and I decide to check-in, Macy’s would be able to use that check in for a sponsored ad. The sponsored ad would state “Michael Poynter checked in at Macy’s - Union Square”. Clicking on this ad would take the user to the Macy’s Union Square Place Page.
This is the type of ad that goes full circle to the point of offline sale. These are much more difficult to track and the volume will likely be low, but the ads can be an effective sales tool for large businesses.