What's New Facebook?

With the new upgrade of Timeline unrolling on Facebook, that is not the only change the new year holds.

From the beginning of Facebook, the goal was for the site to be free for all users. With a upkeep cost of $1 billion per year, the only way to keep the site running is to take advantage of advertising.

With the IPO (initial public offering) of Facebook in a couple of months, it is no surprise that they are looking for a new way to add revenue. How are they doing this? Sponsored stories.

What are sponsored stories? To understand sponsored stories, one must first understand Facebook ads. With regular ads on Facebook, a business creates an ad. If you have liked the business’s page, then the story about you liking the page may be paired with ad for your friends to see. With sponsored stories, a business pays Facebook to feature existing posts and activity that mention the business. Like Facebook ads, they’re only visible to friends you’ve already shared this information with.  These stories will also look like other unsponsored stories appearing in your news feed, however they will be identified with a “sponsored” link.

What does the rollout entail?  According to Ms. Ta, a Facebook spokesperson, only a select number of advertisers will be participating in the rollout and users will only see, at most, one sponsored story in their daily news feed during the launch. Goals of this launch are to increase presence of marketers of Facebook and to increase visibility of ads to Facebook users. These goals go hand-in-hand, with an increase of visibility to users comes an increase of marketers wanting their ads seen.

How does this affect mobile? While sponsored stories won’t appear on Facebook mobile until late March, they will no doubt be featured.

Sponsored stories in users’ news feeds have been anticipated and is an obvious step for the company in terms of generating revenue and competing with other mediums as a legitimate placement for advertising.

Will users question the “cool” factor of Facebook now that they are adding even more ads? Will users opt-out of using the site and force Facebook into the “has been” category with MySpace? Will users even care? We will see what happens as the rollout occurs and as Facebook goes from a private to public company.

Some may ask, is this even legal? What about our privacy? Well, you can read Eric Goldman’s discussion of the California privacy lawsuit against Facebook here: http://blog.ericgoldman.org/archives/2011/12/facebook_sponso.htm

Sources: 

http://adage.com/article/digital/facebook-start-placing-ads-user-news-feeds-january/231691/

http://www.allfacebook.com/facebook-sponsored-stories-ads-2011-12

http://www.facebook.com