September 14, 2011, 1:24 PM

Facebook tests the impact of mixing ads with user content

In a test, the social network starts including ads in home page feeds.

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Facebook Inc. says it is experimenting with adding an unfiltered live feed ticker to the home pages of some of its users and to include ads in this prominent part of the page. The ticker features updates on what all of a Facebook user’s friends are doing at that moment, such as if someone clicked that they Like a particular brand or product. That’s a different approach than the current news feed, which highlights only a portion of actions taken by a consumer’s friends.

Incorporated into the new ticker are Sponsored Stories, an ad format on the social network that enables companies to pay to highlight posts or actions that a consumer’s Facebook friend has made that relate to the advertiser. Including those ads makes them far more prominent than they’ve been. Facebook displays “Sponsored” under Sponsored Stories in the live feed.

The new live feed ticker represents the first time the social network has melded user and paid content in a single feed. Facebook previously separated its ads into two positions on the right-hand side of the web site. The site’s self-service Marketplace ads appeared on one of four slots on the right side of a Facebook page under “People You May Know.” Sponsored Stories appeared in a box under the Marketplace ads.

Facebook says the test includes only a fraction of a percent of Facebook users. However, with more than 750 million active users, that can still account for a large number of consumers.

Before the format rolls out to more members of the social network, Facebook might make changes to the format, a Facebook spokeswoman says. “In the coming weeks, as we learn more from this test, we'll keep making improvements and may expand it to more people,” she says. 

If the format retains the blending of organic and paid content it could result in Sponsored Stories becoming far more important to marketers, say experts.

“If the ad is relevant, and it should be as it involves the activity of a connection, then the user is likely to engage with it at rates that far exceed traditional display advertising engagement,” says Lou Kerner, vice president of equity research at Wedbush Securities. “That's the power of Facebook.” 

However, the ads could also be distracting to consumers and result in a poorer user experience, says Patricia Seybold, CEO of Patricia Seybold Group. “It's much more annoying than an ad in the margin,” she says.

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