Facebook's Sponsored Stories -- Or, Consumers As Ad Medium

Facebook's Sponsored Stories ad unit, announced earlier this week, is one of those amazingly simple social media ad ideas that also leads to a lot of questions. Why? Because in a manner not seen on Facebook before, we consumers are the ad medium. If that's the case, what's in it for us?

Sponsored Stories units work like this: when a consumer interacts with or mentions a brand on Facebook -- via a check-in, a "Like," a wall post or a brand-sponsored app -- that interaction can become an ad shared with the user's Facebook friends, taking into account each user's privacy settings. One of the chief benefits of Sponsored Stories is that it leverages each Facebook member's social graph in a more controlled way than when a brand interaction gets inserted into a news feed.

As many of us have Facebook friends numbering in the healthy triple digits, it's pretty easy for news feed information to get buried. A "Sponsored Story" -- and each is clearly labeled as such - gets placed in a much more deliberate manner. Also, as Michael Lazerow of Buddy Media points out, the new ad model helps turn Facebook into a reach vehicle, 600 million people or so strong. Try that CBS! Try that Super Bowl on FOX! (Hey media buyers, the ads are being shown on both a CPC and a CPM basis.)

This ad model is kind of obvious, right? Well, yeah. But where it gets complicated is in Facebook's relationships with its members. If you're on Facebook, the first thing to know is that Facebook and its advertisers aren't going to ask you if they can re-purpose your wall post or "Like." Some critics, including my partner-in-crime David Berkowitz, say that's a mistake, but I also think it would be completely unfeasible.

Let's say you're McDonald's and you're running a weekend special on the McRib. Do you really have time to get approvals from consumers to use their content or actions? Of course not. As members, it's the price we pay for not paying Facebook a dime for what is an essential part of many of our everyday lives. There will be complaints. Some users will find Sponsored Stories creepy, just as I felt when Google Ads started targeting Gmail users by having algorithms "read" each email's content. As with that, pretty soon, the practice will all be white noise.

But here's the other big issue that something like Sponsored Stories dredges up. If I'm a really active Facebook user, and I've got lots and lots of Facebook friends, what' s in Sponsored Stories for me? I'm helping your brand, aren't I? In a related matter, when advertisers decide which Stories to sponsor, are they going to select the wall post of the person with five friends or the one with 500 friends?

You could offer up the same answer I did before to "solve" the compensation issue: there shouldn't be anything additional in it for Facebook members since this is the price we pay for getting to use Facebook for free. And maybe it is. But what we've been seeing in social media for some time -- now amplified by Sponsored Stories -- is the emergence of consumer-as-ad-medium. Particularly as some of us become sought-after cogs in the wheel of the great reach/frequency machine, we may start to wonder what our social graph is worth.

I didn't write today's column to provide answers, because I don't have them. However, I keep wondering how this will work out in the end. There's no standard for how consumers should be treated by advertisers who piggyback on them, but there are precedents. To some extent, that's what being declared Foursquare's "mayor" of the local coffee house - and receiving perks because of it -- is all about. But there's a danger in compensation schemes too, since any sort of compensation, games the authentic brand conversations and interactions that might make Sponsored Stories valuable in the first place. Conversely, some people may stop talking or interacting with brands on Facebook because they don't like their actions being exploited. Yes, these issues have been around for awhile, but there's a difference this time around. This is Facebook, and it has about 600 million users.

See you next week at Mediapost's Social Media Insider Summit, in Key Biscayne!

4 comments about "Facebook's Sponsored Stories -- Or, Consumers As Ad Medium ".
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  1. Jeff Skaggs from Booyah Inc., January 27, 2011 at 4:08 p.m.

    Don't like their actions being exploited? In a social graph? Seriously? Consumers expecting something from this goes against pretty much everything that social media represents. Should consumers demand something from a brand when they forward or share a branded video that becomes viral?

  2. Cathy Taylor from MediaPost, January 27, 2011 at 5:52 p.m.

    Actually, people have raised those issues. There's a big difference between you deciding to share a branded video, and you doing a wall posting that then, without your buy-in, gets turned into an ad. It's actually the reverse of sharing a video. In one you do the sharing. In the other the advertiser co-opts your brand interaction and does it for you.

  3. David Berkowitz from MRY, January 27, 2011 at 7:16 p.m.

    Great writeup.
    Two notes on my proposal:
    1) A huge % of Facebook users go on daily, so it wouldn't delay a Sponsored Story campaign any more than Facebook delays campaigns due to their own approval process.
    2) I also proposed a blanket opt-in or opt-out. That would just require a single request to users.

  4. Howie Goldfarb from Blue Star Strategic Marketing, January 27, 2011 at 9:56 p.m.

    The big Facebook fail is its business model. Charge a fee and boot every brand off the site. It would make them more money. People would share more on their own. There is a reason network usage is dropping dramatically based on a per person time spent per day. People are doing less because of fatigue and they don't trust. This won't help.

    Think of how for each member exploitation feature Facebook has created (Places, Deals, Open Graph, etc) they created a new communication feature for the users. And charged them.

    Wireless did this when they imbedded SMS into the phones. Laptop OEMs did this by including a wireless card inside as a standard feature.

    Going to be ugly but I see Facebook on an AOL trajectory. With unique visitors in the US flat since July at 130m (per Compete) that means 3/4 of US consumers are not logging in each day. And 7/8's are not logging in and not doing anything. (For every 2 log ins Facebook records one action ie Like, Comment, update).

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