January 27, 2011, 4:21 PM

Facebook lets marketers turn consumer comments into ads

Retailers can take advantage of consumers’ brand interactions to create an ad.

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Facebook this week launched Sponsored Stories, an ad service that companies can use to have their logos appear alongside content from consumers’ communications that involve the company. Consumers can click the ads, which appear on the right-hand column of news feed pages in a box labeled Sponsored Story, to visit advertisers’ Facebook pages. Facebook says the ad vehicle is a new way for marketers to take advantage of word-of-mouth recommendations.

A consumer must have had direct interaction with the brand through a Facebook channel in order for his information to be picked up as a Sponsored Story, a Facebook spokeswoman says. A Facebook user that simply mentions a company or product in a status update message does not qualify the post for a Sponsored Story.

Clicking Like on a brand page, checking in at a location using Facebook Places or interacting with an application on a brand’s Facebook page—such as playing a game or entering a contest—are actions that qualify the interaction for use in a Sponsored Story ad. A user that has performed those interactions cannot opt out of having his communications used as an ad vehicle visible to his Facebook friends, a company spokeswoman says, unless he sets his privacy settings to block his friends from seeing his activity.

A video posted on Facebook’s Marketing Services’ Facebook page uses Starbucks as an example of how the service works. If a consumer checks in using Facebook’s location-based Places tool to inform others that he’s visited Starbucks today, that information appears on his friends’ news feeds. Starbucks can then feature that post and profile photo on the news feeds pages of his Facebook friends as a sponsored story and link to Starbucks’ Facebook page, where his friends can choose to Like Starbucks.

The ad-generating tool is automatic once an advertiser sets his parameters for the ad, the spokeswoman says. This means that the advertiser has no ability to block the ad if the consumer’s comments about his experience at Starbucks are negative.  “It’s not this thing that’s saying you should buy this thing or come to this web site. It’s your friend saying, ‘I did this and I want to tell you about it,’” the video narrator says.

Facebook says test cases have shown an increase in both ad recall rates and the likelihood to recommend products and brands friends, although the social networking company did not say by how much. Word-of-mouth recommendations from friends and family carry weight, studies suggest. 90% of consumers say they trust recommendations from people they know, according to a Nielsen Co. survey of more than 25,000 online consumers.

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