Facebook’s new ‘sponsored stories’ advertising system is a hit

  • 1
  • May 9, 2011
Felicity Crouch

Felicity Crouch

Marketing Manager

Facebook Sponsored StoriesNew research figures have revealed that Facebook’s new Sponsored Stories advertising system is proving to be a real success, with a 46% higher click-through rate than Facebook’s standard ad units.

This new advertising method could revolutionise the way brands conduct their advertising campaigns, and provide a more objective way of advertising by promoting the brands that are truly popular with Facebook users; rather than the brands with more money.

The Study:

The research; conducted by Facebook ads API service provider, TBG Digital; was studied over a 10-day period during which two-billion ad impressions were run. Since the new ad units were introduced in January, this is the first substantial report which accurately reflects their impact.

The results showed that as well as a 46% higher click-through rate, the Sponsored Stories had a 20% lower cost per click, and an 18% lower cost per fan than the traditional Facebook ads.

What are Sponsored Stories?

The Sponsored Stories ads can turn page updates, place check-ins, Likes, and application activity by users into advertisements, and convert them into a sidebar ad in the right-hand column. The ad displays the users name and photo, and any additional context or friends they’ve tagged, a link to the advertised Facebook page, and the Likes and comments from the original post.

Friends can then respond to this ad by liking it, commenting on it, or visiting the advertised Facebook page. This allows brands to boost the viral effect of their advertising, and expand the distribution and visibility of their organisation or business.

An Example:

So let’s say I visited a Starbucks coffee shop; I could check-in using Facebook places as I normally would, and add a comment saying something like, “Enjoying a caramel latte”, and I could also tag whoever I was with.

All of this information would then appear as an ad for Starbucks on the right-hand side of my friends pages, with the theory being that my friends would be more compelled to visit a Starbucks cafe if they knew I liked going there, rather than if they’d seen a standard advertisement telling them to go.

What effects could this have?

Facebook is renowned for having a difficult and complicated in-house advertising system, and efforts aren’t generally worth it as they tend to have very low click-through rates. However, brands and companies continue to throw money at these ads, supported by the statistic that social media display advertising growing by 200% last year.

The introduction of Sponsored Stories could spell an end to increasing Facebook ad costs, and provide a fairer way of advertising as the extent of reach depends on popularity. However, brands still need to fork out for the percentage of Stories they want to be seen, but this cost (for the moment…) isn’t as much as the traditional display ads.

As the system is automatic, those advertisers who spend hours trying to figure out Facebook’s old ad system will now be able to let the viral effect of Facebook do the work for them; saving time, and money.

So, Facebook wins because advertisers are hot on the heels of this new system and therefore they’ll receive increased advertisement revenue; advertisers benefit from well-targeted ads; but what’s in it for the users?

Some critics have already blasted the system for invading the privacy of Facebook’s users and cashing in on their personal updates. With no option to opt out, Facebook account holders have the choice between putting up with them, or not using Facebook.

Whilst it will be some time before we can see whether these Sponsored Stories have affected Facebook’s number of users; for now, they’re certainly proving a hit and Facebook advertising campaigns are quickly becoming popular.