A top priority of today's CMO is to maximize consumer social influence, also known as "earned" or "shared" media value, and there's no better way to do so than through the social graph. Facebook's Sponsored Stories ad unit — which is initiated by the consumer, not the brand, and only delivered to the user's friends — provides a solution. If you're a big Q4 spender and your campaign doesn't include these ad units, it's time to rethink your approach.
Ultimately consumers are the best advocates for brands. Facebook's advantage lies in the fact that brands can use the social graph in advertising campaigns to drive word-of -mouth recommendations from these "influencers." Many large brands have been slow to utilize this powerful advertising unit. They may fail to understand its impact and performance.
Posting content to your page and expecting the posts to reach your connections through the News Feed is not enough anymore. Facebook's EdgeRank algorithm makes it harder for brands with low fan engagement to reach their audiences with status updates and posts alone, forcing them to provide complementary advertising support.
For proof, examine the page insights Facebook released at the F8 conference. Brands are getting far less reach across their entire fan base, and Facebook users are often unaware of posts that may interest them. Page management alone can no longer attract, engage and influence enough consumers.
Brand as 'contagion'
Facebook's power hinges on the phenomenon of "contagion." Brands want to target people with demographic and psychographic characteristics similar to those that are known to respond to their messages. In this approach brands are following the accepted theory of homophily: Birds of a feather flock together. This can be an excellent approach for fan acquisition, but when looking to influence purchase decisions, the concept of contagion is critical: Its role is to seed or to spark a viral reaction, which starts with one friend, spreads to other friends, and so on. Brand discovery, in the form of promotions, sales, events and new products, along with sponsored stories ad units, can start this viral reaction and cause a shift in buyer behavior based on your friend's social-graph influence.
Facebook's latest roadmap updates emphasize improving the scale with which brands can drive contagious reactions, largely through new actions revealed at F8, including "read a book," "watch a movie," and "listen to a song." Many more will roll out soon. These actions allow brands to piggyback on real-time consumer actions and are used to drive further engagement, branding and word of mouth across the social network, whether on a Facebook page, .com site or mobile assets.
Over time, consumer-initiated ad types will improve, and will proliferate as brands and Facebook continue to innovate. Effective CPMs are already 70 percent higher so far this year and rising. This is primarily due to new ad units that improve advertising effectiveness, as well as more advertisers migrating to Facebook because of improved results. This is great news for both advertisers and Facebook.
Social supports advertising
The importance of Sponsored Stories for brands, especially during the upcoming holiday season, lies in their ability to raise awareness and remarket to fans on the key shopping days while supporting other advertising — including TV calls to action, local marketing, event marketing, and application promotion. Macy's is one of several retailers making a huge push around in-store QR codes this holiday season, and a smart consumer-initiated Facebook ad strategy will supplement the other ad campaigns. We expect many of the most innovative marketers to leverage this capability, which can be a key point of differentiation.
Google now offers social components within ads, but it doesn't offer consumer-initiated ads. That makes a world of difference. Consumer-initiated ads are the future of advertising — not only on Facebook, but also across other social networks, as their ad products advance. Shrewd brand advertisers are activating sponsored stories in all of their Facebook buys — an easy and cost-effective tactic that can produce outstanding results.