Facebook decides word of mouth should come at a price

Should brands be able to pay to influence what information we see from our Facebook friends?

I’m just getting my head around the latest money-making scheme from Facebook. As described by Mashable, Facebook is now asking brands to pay for the privilege of users’ updates (relating to that brand) being shown in friends’ news feeds (well, actually alongside the main news feed, in a new kind of ‘sponsored news feed’).

So if you, as my friend, visit a Starbucks and check in using Facebook Places, Starbucks can pay (or, more accurately, bid) to make sure that I see your check-in on my Facebook homepage.

Currently no one knows on what exact basis Facebook decides which of your friends’ updates are displayed on your page, which, to me, feels a bit weird (“How do you, Mr Facebook, know that I’m interested in Jenny’s haircut, but not in Mike’s dinner plans?”). Now we are entering a world where Facebook begins to make these decisions about which updates you can and cannot see on the basis of how much dough an advertiser gives them.

This system will initially apply to four types of action on Facebook: checking in, liking, posting on a brand’s page, and taking an action within Facebook apps.

Facebook is calling these update/ad hybrids ‘sponsored stories’. Inside Facebook describes their value to advertisers as ‘augmenting viral buzz’.

It’s certainly an ingenious way for Facebook to make money. And it means brands will be moving back to a you-get-what-you-pay-for advertising model, rather than the current ‘free’ yet mysterious situation where they don’t know whether an update by one of their fans will appear on 100%, 90%, 50% or 5% of the fan’s friends’ pages. This puts a monetary value on word of mouth marketing.

So, as a brand, are you cool with this? And as a Facebook user, are you cool with this?

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  1. Kathryn 25/01/2011 at 7:11 pm #

    Pretty interesting. If it moves beyond the check in stage I wonder how they’ll monitor whether statuses are positive. Wouldn’t be so great for Starbucks if they paid for an update like ‘my croissant was stale’.

    • Adam 26/01/2011 at 9:38 am #

      That’s a good point Kathryn, and I think Facebook has some measures in mind to reduce this risk for advertisers. But that’s why I’m sceptical about this whole idea: Facebook is starting to stack the social recommendation game in favour of paying advertisers. If I like something, I want to let my friends know, regardless of whether that brand has paid Facebook. I know at the moment these ‘sponsored stories’ are on the side as ads, but I worry the line could soon become more blurred.

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