January 11, 2012, 11:06 AM

Facebook puts paid ads into its news feed

Featured Stories places paid content into the most-viewed area on the social network.

Lead Photo

Facebook Inc. today launched a new ad format, Featured Story, which places paid content into the news feed of some consumers. The news feed displays the actions of a consumer’s friends; the feed dominates the page consumer Facebook user sees when logging on to Facebook.com.

Featured Stories are essentially the same as Sponsored Stories but appear in the news feed, rather than the Ticker or right-hand column, which is where Sponsored Stories appear. Both Sponsored and Featured Stories enable companies to pay to highlight posts or actions—such as a page a consumer is connected to when posting something new, a friend Liking something, checking in somewhere, playing a game or using a Facebook application. Facebook displays “Featured” under Featured Stories in the news feed.

The social network plans to slowly roll out the ads onto all of its users’ news feeds, says a Facebook spokeswoman. Consumers will see an average of about one Featured Story per day. “By no means are we planning to fill the news feed with these Featured Stories,” she says. And, for now, the ads will not appear in the news feed when consumers access Facebook from their mobile devices.

Today’s launch is the latest evolution of Facebook’s advertising program. The social network in November began adding Sponsored Stories ads to its Ticker, which features updates on what a Facebook user’s friends are doing at that moment, such as if someone clicked that they Liked a particular brand or product or what music someone is listening to via online music service Spotify. Before Sponsored Stories began appearing in the Ticker, ads on Facebook exclusively appeared in two positions on the right side of the web site. The site’s self-service Marketplace ads appeared on the right side of a Facebook page under “People You May Know.” Sponsored Stories appeared in a box under the Marketplace ads.

The launch of Featured Stories is Facebook’s most substantial integration of paid and organic content in several years because the news feed is the most-viewed area on Facebook. The social network is integrating paid and organic content because tests have shown that increases consumers’ engagement with advertising, as compared with stand-alone ads, says the spokeswoman.

Integrating ads into the news feed is the natural progression of the platform, says Lou Kerner, social media analyst at the institutional brokerage firm Liquidnet. "Facebook is trying to provide formats that will be as engaging as possible for users," he says. "Given that the news feed is where users spent a lot of their time on Facebook, it is likely to be an effective format."

However, both Facebook and advertisers have to walk a delicate balance with the ads, says Sean Corcoran, senior vice president, director of digital media and social influence at Mullen advertising agency. "On the one hand, it’s the right approach for Facebook to not just plug a regular ad into the news feed but to offer stories that are actually the content you'd see in news feed anyway," he says. "But it's still dangerous because people aren't used to seeing advertising in the news feed. Facebook has to make sure that the Featured Stories fit the model of something someone would want to see shared, while also making it clear to the end user it is still an ad."

With more than 800 million active users there are bound to be some consumers who push back against the new format, say experts. However, given that other social networks have similar ad formats, such as Twitter's Promoted Tweets, social media users should be accustomed to promoted posts in their feeds, says Kerner. "As long as it's relevant, which Facebook should be able to ensure, most people will probably accept Featured Stories as the price of admission on Facebook," he says.

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