Facebook Rolls Out Word-of-Mouth Ads

Facebook has crafted a new role for you: product endorser.

The social networking behemoth, which boasts more than 500 million members, is rolling out a new word-of-mouth marketing strategy that uses your brand “likes,” comments, and location check-ins in advertisements. The approach is called “sponsored story.” The ads, which circulate within a member’s circle of friends, have already begun appearing on some profile pages.

If you “liked” Brigid Pasulka’s novel A Long, Long Time Ago and Essentially True, for example, that product interaction, along with your name and photo, might appear in the right-hand rail of your friends’ profile pages, where other ads, events, and announcements currently reside. Facebook representative Jim Squires described the campaign to the Wall Street Journal last week as “word of mouth marketing at scale.” He pointed out that all privacy and sharing settings of the original post will be respected and that the content in question had already appeared in members’ newsfeeds. A sponsored story ad allows a positive brand interaction to live on rather than be pushed down as more content appears in the feed.

The underlying idea makes good marketing sense, says Tom Fauls, a College of Communication associate professor of advertising.

“Any advertising done within a small circle of social friends should have a greater trust factor,” he says. “If it shows up as an ad, then one of your friends liked the brand or interacted with an app, which gives it this overlay of trust. A recommendation that comes with that is worth so much more than a random review from someone you don’t know. So you can charge more for each individual ad.”

While the media have been reporting on the new strategy, users so far haven’t been informed of the development, as they were with the recent layout change to profile pages. And some feel that without offering an opt-out option, Facebook still hasn’t learned its privacy lessons.

“I think it’s intrusive,” says Christina Izzo (COM’11, CAS’11). “Already anything I search on Google gets pulled up on the side of my Facebook page. I think that’s creepy. And just because it says I’m single on my Facebook page, it floods my page with dating sites and all these unnecessary things. It is getting a little scary. I feel that every step Facebook takes, it gets a little bit creepier.”

Other students say online behavioral targeting is the price of using the internet. Advertising major John Fichera (COM’12) doesn’t begrudge Facebook trying to make money, pointing out that other websites already track and share consumer interests.

“I once went to Zappos.com to look for shoes and then when I went to a bunch of different websites I was shown ads for the exact same shoes,” he says. “It’s already happening elsewhere on the internet; it’s just that this is the mega website that everyone goes to.”

Fichera isn’t convinced Facebook’s strategy will bear fruit, however. Unless it tracks whose profile pages you visit the most, he says, there may be a randomness to the endorsements you see.

“I might not be great friends with that person, so it might be completely ineffective,” he says. “I see this person from high school all the time on these ads. I don’t think anything of it. It’s peripheral. So basically, I’m seeing this kid I don’t really know and seeing that he likes this thing I don’t really care about. It’s going to be hit or miss.”

But with half a billion users across the globe constantly updating their content, Facebook is sitting on a seemingly bottomless marketing gold mine. The whole Facebook business model, Fauls says, is predicated on monetizing that traffic.

“They’re gradually doing this by throwing advertising models, like sponsored story, against the wall and seeing what sticks,” he says. “If they’re going to live up to their supposed capitalization, being worth more as a company than most of the corporations in the world, then they’re going to have to monetize, and the only way now is selling ads based on behavioral targeting.”

One advertising approach Facebook tried that decidedly missed the mark was Beacon, launched in 2007. Facebook culled user data from third-party websites such as Amazon and then relayed that information in the user’s news feed. Permissions weren’t asked, and in some cases, surprises, such as the purchase of an engagement ring, were ruined. A huge backlash ensued, and lawsuits were filed. The company scrapped the plan. Fauls says Facebook has matured since then, even though, again, member permission isn’t being sought for the sponsored story ads. “On the other hand,” he notes, “we are the ones mentioning or interacting with brands in the first place.”

While Beacon, and even the initial introduction of the newsfeed feature in 2006, provoked negative responses, the reaction to sponsored story has so far lacked similar ire. Fauls isn’t surprised by this, at least among younger members.

“It’s a phenomenon we’re seeing with the younger generation, which has come up being totally digitally literate and is less likely to be creeped out by behavioral targeting and may be more willing to share personal info than older generations,” Fauls says. “Facebook is a closed platform. They have a lot of control over it. There have been so many changes over the past few years, variations in pages, and most of us are getting used to it. There is user fatigue in that we’re getting a little less exorcised by it.”

As for the new advertising gambit, Fauls thinks it’s too early to tell how effective it will be.

“They are still feeling their way and that’s smart,” he says. “The alternative is, you make too many mistakes or one big mistake and you begin to lose people. Sooner or later a competitor will come along, and it’s not going to take too much to abandon somebody who goes too far. It’s extremely smart of them to go slow. Google did the same thing. Even to this day they don’t run ads on their main page.”

Caleb Daniloff can be reached at cdanilof@bu.edu.