Facebook readies Sponsored Stories ads

Facebook is expanding its Sponsored Story ad format, which will gradually introduce social ads in users' news feeds from next year, to boost ad revenues ahead of the company's flotation.

Facebook: readies ad initiative
Facebook: readies ad initiative

Sponsored Stories were introduced at the start of the year. They show how users interact with brands, including likes or check-ins, and are placed on friends' profiles as display ads.

Ads do not currently appear in users' news feeds, so the Sponsored Stories will be rolled out "thoughtfully and slowly" and will be clearly marked, according to a Facebook spokeswoman.

She said the ads will respect all privacy settings. Initially no more than one ad per day will be shown to users.

Sponsored Stories has been much-trumpeted as a highly successful ad format on the social network site.

According to data from TBG Digital, Facebook's specialist marketing and technology agency, the increased effectiveness of Sponsored Stories played a key part in driving up click-through rates for Facebook ads by 18.5% between the second and third quarter of 2011.

The agency's data from July reveals the use of Sponsored Stories in Facebook campaigns decreased cost per acquisition by 32%.

Recent reports also suggested that Facebook was likely to use the Sponsored Story ad format to start monetising its mobile app, paving the way for advertising on Facebook mobile.

Figures leaked last week revealed Facebook is expected to generate $1bn by the end of the year, while forecasts predict its long-awaited IPO in 2012 will value the company at $100bn.

The company has faced intense scrutiny over privacy and handling of consumers' personal data. Last month, The Federal Trade Commission in the US, ruled that Facebook must ask permission before rolling out new products and face 20 years of independent audits.

Twitter has taken a cautious approach to serving advertising on its platform in 2011 by gradually inserting promoted tweets into users' feeds throughout the year.

Follow Sarah Shearman on Twitter @Shearmans

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