With Facebook’s highly anticipated initial public offering (IPO) expected early next year, the company is attempting to further monetize the social media site and its user base in order to make the stock even more appealing to potential investors. In an effort to further increase advertising revenues, Facebook is expected to begin displaying Sponsored Stories in users’ News Feeds in the near future. Beginning in January, Facebook users will begin to see their friends profile pictures along with prominently placed endorsements of brands and products.
Facebook, which admits that the move is primarily motivated by increasing revenues, said a system is in place to deliver the Sponsored Stories in an unobtrusive manner and transparent manner. Annie Ta, a Facebook spokesperson, recently told ClickZ News:
“We want to be really thoughtful about this, so we’ll have a lot of rate limits in place. We hope to show people no more than one Sponsored Story in their News Feeds per day and we’ll clearly label the story. They’ll also be of the same size and treatment as other stories in News Feed.”
While including stories in users’ News Feeds has the potential to greatly increase advertising revenue, the company must be careful to implement the changes in a way that does not aggravate users or impact the usability of the social networking site.
Recently, Facebook users who said “they were economically injured by the misappropriation of their names, photographs and likeness” sued Facebook. The lawsuit, which a California judge refused to dismiss, has the potential to greatly impact Facebook’s advertising strategy and reduce the company’s ability to monetize the site.
Facebook, which is ranked the third-largest web property in the world, has over 800 million users and reaches over half of the world’s global audience. Facebook is expected to gradually roll out the new changes beginning in January and steadily increase monetization leading up to the IPO.
[Sources Include: Forbes & Business Standard]
David Angotti
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“world’s global audience”
What would be the world’s non-global audience?
It was only a matter of time before Facebook made a move like this one. It will be interesting to see what the user reaction will be and how long it takes for once a day to become more.
I’m not sure if Facebook users are going to be happy with the sponsored stories showing up in their feed. Facebook should definitely be careful how they implement this change and monitor the impact it will have on their users. It will be similar to Twitter’s promoted tweet, which seems to work well. As long as Facebook keeps the sponsored stories to a minimum of once per day and clearly labeled, this could greatly increased the value of the company for their IPO. This should be great news for advertisers.