Facebook Sponsored Stories a New Way to Monetize the NewsFeed

Today, Facebook launched Sponsored Stories, a new ad format that turns your friends News Feeds, Likes, Places, Check-ins, and Facebook application activity into promoted ad content. Sponsored Stories is “a way for marketers to sponsor activities that happen throughout the News Feed,” Facebook Product Marketing Lead Jim Squires told Mashable.

Companies can choose to take certain user actions – such as check-ins or actions within Facebook apps – and feature them in the column on the right side of the News Feed. – USA TODAY

For example, if you’re Whole Foods and you’re looking to increase your exposure on Facebook, you can pay to have a percentage of all check-ins to Whole Foods featured in a Sponsored Stories slot in the right-side column. Your content wouldn’t be shown directly, but the actions of a user’s friends would appear. Users seeing their friends “liking” or checking in to Whole Foods will drive increased trust and increased traffic.

When a user checks in to a Place, Likes a page, or shares content to the news feed with a paid Sponsored Stories, an advertisement will be displayed to their friends. The ad is shown in a special right sidebar module, and displays the user’s name and photo, any additional context or friends they’ve tagged, a picture of and link to the advertised Facebook Page or app, and the Likes and comments from the original post. All privacy settings are honored so the ads will only be visible to those who can see the original post they draw from.

Similar to Twitter Promoted Tweets, both Twitter and Facebook are trying to create revenue using content within their networks. Facebook’s Sponsored Stories hopes to be unique by allowing users to define the advertised content, not the advertiser. Facebook is reaching for an estimated ad revenue goal of $4 billion this year.

Facebook’s ability to provide relevant advertisements to users gives it an edge over other social media formats. Similar to social context ads and ads for applications that Facebook launched this year. A Sponsored Stories advertisement can create a more direct, personalized brand connection for users and a more compelling reason to visit venues or take advantage of deal than a standard advertisement simply because it is displayed as a recommendation to users from one of their friends.

As for now, Facebook’s launch partners include Coke, Levi’s, Anheuser Busch and Playfish. Also, the social network is partnering with several nonprofits including Donors Choose, Girl Up!, Malaria No More, Amnesty International, Women for Women, Autism Speaks, (RED), Alzheimer’s Association and UNICEF. However, anybody will be able to bid on Sponsored Story slots (by a per-impression and/or a per-click basis) starting January 25 2011.