Facebook plans ad innovation

27 January 2011

PALO ALTO: Facebook recommendations are to be recycled as ads and served to friends, with the social network attempting to make its ads more personalised and effective.

The "sponsored stories" will consist of individual users' interactions with brands on the social network which are then bought by advertisers and re-broadcast in page space usually reserved for display ads.

For example, if one Facebook user decided to "like" a brand, this decision would appear as an initial news feed update, and could then be re-broadcast to his or her friends in the form of an ad.

Advertiser payments would depend on the number of "likes" the brand is able to generate.

"This is word-of-mouth marketing at scale," Facebook spokesman Jim Squires said.

"It's about taking the word of mouth recommendations and endorsements that are happening across Facebook every day and increasing the distribution of those."

The system will be rolled out over the next few weeks.

There will be no universal "opt-out" for users who do not want their posts to appear as sponsored stories.

But the system will follow users' own privacy settings, meaning that only users able to see the original post will see a sponsored story.

Figures from eMarketer released earlier this week suggested Facebook generated ad revenue of $1.86bn (€1.36bn, £1.17bn) for 2010, and will generate a further $4bn this year.

Data sourced from Wall Street Journal/AdWeek; additional content by Warc staff