SAN FRANCISCO (AdAge.com) -- The ubiquitous "like" is currency for brands, and Facebook is giving them a new way to collect: an ad unit that shows up on the right-hand side of the screen it calls "sponsored stories."
Facebook Turns the 'Like' Into Its Newest Ad
The unit will give brand-related action such as a "like" or a check-in a lot more visibility on Facebook by adding them to an ad unit in addition to users' news feeds.
For example, if Starbucks buys a "sponsored story" ad, the status of a user's friends who check into or "like" Starbucks will run twice: once in the user's news feed, and again as a paid ad for Starbucks. Though clearly marked with the words "sponsored story," the ad -- which will includes a user's name, just like the news feed -- is not optional for Facebook users.
The product itself is broken into four possible buys for advertisers -- page likes and check-ins, and actions Facebook is calling "application play" and "page posts."
An application play works like this: If a user goes to the Coca-Cola page, and Coke has an app for users to upload photos, the sponsored story that shows up as an ad will read "John Smith used the Coke app to upload a photo."
A "page post" is when an advertiser posts something and it wants to get more distribution, so it can buy a sponsored story to further distribute that post -- in the news feed and on the right-hand side of the home page.
The settings that exist for users to control whose feeds they see and who sees their feed also apply to the sponsored stories. Users, however, will not be able to opt out of having their action turned into an ad and having that broadcast to their connections on Facebook.
The way that the product is today, a check-in post will show up in the ad feed exactly as the user wrote it. So if a user checks into Starbucks with a "I hate this place, but it's the only coffee around" then that's exactly what the "ad" turns out to be.
Facebook is aware of this possibility, because people will be people, and it has left a "flag" button for "inappropriate content." Advertisers that don't want to take the chance of having negative sponsored stories pop up about them can limit their buys to likes. "As a marketer, you can say that I'm only going to do 'like' stories, since there is no way to change that," said Facebook marketing lead Jim Squire. "So you can figure out which is the best option for your organization."
As of today, managed accounts can use the product globally and a number of brands and charitable organizations -- including Coke, Levi's, Anheuser-Busch, Amnesty International, RED and Unicef -- are on board. In a few weeks, the sponsored story product will be available as a self-service option.
"Anything that lets brands amplify social action or word-of-mouth is a great thing," said Michael Lazerow, CEO of Facebook marketer Buddy Media, adding that, historically, it's been very difficult for companies to buy word-of-mouth. "This product lets brands further leverage their investment in Facebook and make it louder, amplified and more noticed -- which, ultimately, is a great option."
According to two recent estimates, Facebook's ad business is scaling nicely. EMarketer estimated the company took in $1.86 billion in worldwide ad revenue last year. The majority of the 2010 revenue, 60% or $1.12 billion, was earned from smaller companies, those more likely to be using self-serve tools rather than work through a media agency.