Sponsored Stories. That's the name of a brand-new Facebook ad unit that leverages the "likes" of Facebook users into paid promotions across the social-networking site. Facebook's announcement on its fan page describes it as a new way for marketers to promote word-of-mouth recommendations.
Here's the premise: When consumers are making decisions about the products they want to buy or the places they want to go, they are looking for recommendations from their friends, whether or not they come out and ask.
Although most consumers aren't working to market themselves as influentials, influencing a friend's decision happens as a natural course. If you see your trusted friend had a great trip to Miami on American Airlines, that gives you more incentive to go to that city or use that airline.
Blurring the Lines
Sponsored Stories lets advertisers take word-of-mouth recommendations from your friends and promote them. In a marketing video, Facebook offered an example of a friend who checks in at Starbucks. That check-in will appear on your news feed, but you may or may not see it.
Facebook sees that many impressions get lost because there is so much content flowing through users' news feeds. With Sponsored Stories, Starbucks can decide it wants to promote check-ins to its location. So when you go to your Facebook home page, you can see in the advertising area that your friend checked in at Starbucks. You can click through and "like" the Starbucks page from Sponsored Stories. When you like that page, it creates more organic content, producing a viral effect.
"This is an interesting approach to blurring the lines between advertising and editorial. Maybe it's OK to cross the line if it's done appropriately," said Brad Shimmin, principal analyst at Current Analysis. "If knowing that their two friends checked in at Starbucks, I would imagine that if I was their friend, I may decide to start going to Starbucks. This could also take off in combination with coupon sites that offer group discounts."
A Rich Advertising Tapestry
Addressing privacy champions, Facebook was quick to point out that these word-of-mouth recommendations only appear on friends' pages. In other words, anything your friends see as Sponsored Stories that feature your content is something they would have already seen in the news feed. Sponsored Stories never go to somebody who isn't one of your friends.
Sponsored Stories is only available to Facebook's premium advertisers. It remains to be seen how hot those advertisers will be on the notion. But Shimmin is optimistic. As he sees it, the way social media intertwines with the daily lives of consumers, crossing over from work to home to mobile, it creates unique opportunities that don't exist in other forums. "There's only so much you can do to really reach out to those consumers," he said. "But social networking creates this rich tapestry."