Facebook ad scheme utilizes word-of-mouth with Sponsored Stories

Sponsored storyFacebook has launched a new marketing tool dubbed Sponsored Stories that turns your news feed into a series of ads. Before commenting on how formulaic this all looks when it’s in play, it does seem like Facebook’s doing this in the least obnoxious way possible.

The social network launched a touchy-feely video last night explaining Sponsored Stories. It’s basically been developed for businesses to utilize the word-of-mouth recommendations already taking place on Facebook by plugging themselves every time you plug them. For example, if your friend checks in and posts to the News Feed she is buying shoes at Nike, Nike can purchase that comment, slap on a logo and link to its Facebook page, and package it up for the right hand side of your screen, which is generally advertising domain. The same will happen when users “like” a page.

There are undoubtedly going to be critics of this new marketing scheme, but it doesn’t really seem like they have any legs to stand on. It stands to reason that if you’re checking into or liking a place or business on Facebook, you’re already supporting them with free advertising – they just want to organize that information and keep it from getting lost in the constant rotation of the News Feed.

The only thing we will note is that it can look a little prescribed. The idea behind Sponsored Stories is to offer organic, word-of-mouth recommendations from familiar voices. As the video says, you, often times, want your friends’ advice on purchasing decisions – but a Starbucks logo and link plastered on my buddy’s story every time he frequents the place could become overkill.

But that doesn’t mean it isn’t going to work, and Facebook stands to rake in some serious advertising revenue. Businesses and brands will pay on a cost-per-action basis, and presumably will get their money’s worth: Beta testing revealed that Sponsored Stories increased brand’s presence as well as users’ chances of recommending the brand to others. And Facebook is dominating the social media ad game: We reported yesterday that Twitter had experienced huge growth in ad revenue, but Facebook is still dominating this arena, and is estimating to continue to extend its hold.

This could be the reason why Facebook’s pulled the option to suggest pages you like to others in your network, replacing it instead with the friend-promoted ads.

Check out Facebook’s video to get the social network’s take on Sponsored Stories.

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