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Facebook Eliminates Sponsored Stories - Will it Matter to Advertisers?

Facebook announced in January that it is eliminating sponsored stories starting this April. Following the initial announcement, all the industry heard was crickets. While this would have caused a major uproar a few years ago, since facing a class action lawsuit by privacy advocates, Facebook now takes the time to ensure that when it takes such actions, it isn’t a big deal.

Why won’t this have a big impact on advertisers?

1)    Ad units have basically all merged together anyway.

When was the last time you noticed an ad that was a sponsored story?  I haven’t in forever! However, I have noticed lots of other types of ads that may have some information about my friends tied to them.  This is like Yahoo! or Microsoft saying we’re not going to sell pop-ups anymore. Wait you still were? Facebook will receive all the credit of not doing something anymore, without needing to take the hit.

2)    Facebook has tightened up their user agreements to ensure that they can still expand social context.

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Just because sponsored stories are going away, it doesn’t take away the most valuable aspect of advertising on Facebook – being able to associate your brand with a user’s friends and their interests and likes. In fact, this will become even more ingrained in the platform. Facebook learned from the lawsuit and made sure to tighten up their user agreements. They know that telling your friends that you like something will make them more likely to like and interact with it, too. The social net wants to make sure it has the ability, without restriction, to share that and sell that to their advertising partners.

3)    The Facebook Exchange has changed the face of advertising on Facebook.

The success of the Facebook Exchange has changed the look of the right rail a bit on Facebook. While there were always ads driving outside of the Facebook platform, now that’s the foundation of what you see running on Facebook. Because of this, you are less likely to see advertising with social context driving within Facebook (and less pressure on Facebook to sell this). So, Facebook is learning how to better monetize their platform; it’s not just about driving within their own ecosystem (and making sponsored stories less important).

Kudos to Facebook for making a gesture to users where they can say that they learned from the lawsuit, while managing to keep advertisers happy and including as much social context as possible in their ads. I would say it’s a win/win for everyone, but really it’s just a win for Facebook. For the rest of us, life is still the same.

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