Facebook Launches ‘Sponsored Stories’

Facebook is rolling out a new ad product that lets advertisers give prominent visibility to interactions a user’s friends have with a brand.

“Sponsored Stories” can be built around user interactions with a brand’s applications, likes, location check-ins and page posts. Sponsored Stories are the same type of content that already appears in the main News Feed, only now brands have a way of making sure they’re visible, with promotion to a placement on the right side of the page.

Facebook said Sponsored Stories would not increase the ad load on the site. Instead, they will displace ad messages that are purely promotional copy in favor of ads that report on user actions.

“It’s about taking the word of mouth recommendations and endorsements that are happening across Facebook every day and increasing the distribution of those,” said Jim Squires, a product marketing lead at Facebook.

Facebook hasn’t rolled out many new ad products recently, mostly because its ad system, which was originally panned, is working quite well. eMarketer estimates Facebook is on pace to double revenue this year, generating $4 billion. It is diversifying from ad revenue with its Facebook Credits virtual currency, which it is requiring social gaming companies use—and give Facebook a 30 percent cut on transactions.

The move is part of Facebook’s efforts to provide more “social context” to its ads. A Facebook-Nielsen study found ads with such context—showing that a friend recently liked a brand, for example—improves ad effectiveness. Facebook already does this for many of its ad products, showing users which of their friends have liked a brand.

Squires said the move would benefit both users and advertisers, since users will end up seeing reports from their friends as opposed to straight ad copy. Advertisers, meanwhile, will be able to increase the viral effect of their Facebook ad campaigns. Sponsored Stories will be priced on both a cost per click and cost per impression basis.

It rolls out today to managed accounts and will be available to self-service accounts in the next few weeks, according to Squires.

Among new advertisers, Coke is using Sponsored Stories in order to highlight interactions with its “Coke Cheers” Facebook application. Other possibilities cited by Squires include a Starbucks campaign to highlight when a friend uses Facebook Places to check in at a Starbucks store.

Facebook is not alone in blending paid and earned media. Twitter’s ad system does this to an extent by letting advertisers attach themselves to trending terms that already exist in Twitter.