March 7, 2013, 2:59 PM

Facebook gives its news feed a face lift

The move could open up new advertising opportunities.

Lead Photo

A look at Facebook's new news feed.

Facebook Inc. today rolled out what it is calling a mobile-focused makeover of its news feed that increases the size of its photos and videos. The news feed displays updates from a user’s friends and companies that a user is a fan of, and it  is where users spend 40% of their time on the social network, Facebook says. With the new design, the news feed looks the same whether someone is viewing it on a desktop computer or a mobile device.

The social network is also dividing up users’ feeds by content type. That means a consumer can choose to view an “All Friends” feed that features everything his friends are sharing; a “Photos” feed that only presents photos posted by his friends and pages he Likes; a “Music” feed that shows posts about music he listens to; or a “Following” feed that shows content from the brands he Likes on the social network

The move will present businesses with a richer platform for reaching consumers, says a spokeswoman for the social network. “We’ve seen that users respond better to more visual stories in news feed, from both people and pages,” she says. “Now businesses have an even more visually rich way to showcase content.”

Businesses should also note, the spokeswoman says, that Facebook is now displaying a brand’s cover photo—which is the large image that appears at the top of a brand’s page—with all of its posts that appear in the news feed. “This change is designed to provide more context about the page,” she says. “All the more reason to make sure your cover photo is eye-catching and visually representative of your page.”

The changes make sense because the news feed is where consumers “snack on” content, and images and videos are easier to digest than the written word, says Rebecca Lieb, an analyst at the business research and advisory firm Altimeter Group. “Nobody wants to read a lot of content on Facebook,” she says. “A picture draws people in and creates engagement.”

Moreover, Facebook’s revamped news feed focuses on areas—online video, images and mobile—where marketers are increasingly looking to increase their investments in the next three to five years, according to a 2012 Altimeter Group survey of 56 marketers. The report also found that marketers planned to decrease their investments in the written word—both in print and digital. “People respond to images,” Lieb says. “Think of billboards—that’s what Facebook is trying to create in its news feed.”

Facebook says the news feed revamp will not change the algorithm the social network uses to select what it considers the most relevant content in the “Top Stories” section of each Facebook user’s news feed. A Facebook user typically sees only about 16% of the content his connections post on the social network, according to a report from web measurement firm comScore Inc. However, marketers can use Facebook’s Promoted Posts product to pay to ensure a certain percentage of Facebook users see its message.

The news feed revamp will likely present more opportunities for Facebook to roll out new ad units, Facebook CEO Mark Zuckerberg said during its fourth quarter earnings call in January. “As our news feed design evolves to show richer kinds of stories, that opens up new opportunities to offer different kinds of ads as well,” he said.

Lou Kerner, managing partner of The Social Internet Fund, which invests in social and mobile companies, believes that those ads will likely be more contextual, visual and engaging than the social network’s current ad formats that run in the news feed. That’s because with different news feeds a marketer can more precisely target a consumer with an ad when he is likely to be interested. For instance, if a consumer is browsing his Music feed, he is more likely to be interested in clicking and viewing a record label’s ad for an artist his friend is listening to or Likes.

Facebook last year rolled out a number of ad formats that run in the news feed, which enables both desktop and mobile consumers to see the ads. And those ads have become increasingly important to Facebook’s bottom line. 65% of the advertisers on the social network used ads that ran in the news feed in the fourth quarter, up from 50% at the end of the third quarter, Sheryl Sandberg, the social network’s chief operating officer, said during its earning call.

“Marketers are recognizing that our news feed is the most efficient and effective place to reach their customers due in large part to the fact that ads in news feed see a higher click-through rate and ultimately a lower cost per conversion than ads on the right-hand side of our site,” she said. That’s not exactly an apples-to-apples comparison, however, because only desktop users see those ads on the right side of a Facebook page.

While Kerner believes that Facebook’s news feed revamp is aimed at showing investors that it is continuing to innovate, he says investors are more interested in the bottom line—that is, will the changes lead consumers to spend more time on the social network?

The bottom line is also a concern for Facebook’s advertisers, many of whom are still uncertain how to measure the success of their ads on the social network. That’s evident in a survey in the Social Media 300 that found that only 38.7% of advertisers said they believe their social media ads generated a clear return on investment. The guide gives a comprehensive analysis of 300 e-retailers’ social commerce strategies and ranks retailers’ social skills on the percentage of web site traffic that they receive from social networks.

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