Facebook Touts Sponsored Story Results

In its ongoing effort to woo advertisers, Facebook Thursday highlighted results of recent campaigns by Electronic Arts, 1-800-Flowers, P&G and others using its Sponsored Story ads. The format, which allows marketers to turn existing user posts about a brand into ads, is a key part of Facebook’s push to boost paid advertising on the site in connection with earned and owned media on the social network. 

In that vein, Facebook pointed to an EA effort in which the game maker used Sponsored Stories to promote the October launch of “Battlefield 3.” The company turned posts about the popular video game on its Facebook page into Sponsored Stories, many of which led directly to only ordering sites. That led to a total of $12.1 million in sales via Facebook, translating into $4.38 in incremental revenue for every $1 of media spent.



A Mother’s Day campaign by 1-800-Flowers, meanwhile, created Sponsored Stories out of posts by celebrities who had endorsed particular bouquets from the retailer on their Facebook pages. The personalities included Justin Bieber, Jason Mraz, Trey Songz and Yankee outfielder Nick Swisher.

By targeting the ads to fans of these celebs, 1-800-Flowers saw an increase from 4,000 to 12,000 transactions on Facebook compared to the prior Mother’s Day campaign. It also had 10 times higher engagement rates for some of its top-performing Facebook Ads compared with click-through rates in standard display advertising.

Among other examples, P&G used Sponsored Stories to promote the short film “Best Job,” focusing on the mothers of Olympic athletes, which has gotten 13 million views so far. That makes it the third most viral TV spot of the year, according to Facebook.

Beyond the case studies, the company also pointed to a recent Marin Software study indicating that Sponsored Stories have improved ad performance on the site overall since launching. Looking at ad data from April 2011 to March 2012, it showed click-through rates increasing by 20%, CPMs rising 51% and CPC (cost-per-click) increasing 26%.

What the social network is not highlighting is the recent settlement over a class action lawsuit challenging the use of people’s names and likenesses in Sponsored Stories. Facebook agreed to pay $10 million to various public interest organizations and to give users more control over how their personal information is used in sponsored stories. Facebook has declined to elaborate on how it would increase controls in this regard, however.

Reuters reported the potential loss of revenue from the changes amounts to more than $103 million over the next two years, citing the opinion of an economist hired by the plaintiffs. (The revenue figures were redacted in court documents.) Whatever impact the settlement has on ad revenue, Facebook isn’t hiding the importance of Sponsored Stories to its ad business.

The Marin Software study predicted that Facebook advertisers would allocate half of their budgets to social ad formats like Sponsored Stories this year. An eMarketer article about the study earlier this month pointed out, “as more advertisers adopt these kinds of social ads, it’s likely that the cost for the ad unit will continue to rise.” That’s not something Facebook would necessarily mind as it tries to meet Wall Street’s demand for high revenue growth. 

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