Peter Kafka

Recent Posts by Peter Kafka

Facebook’s New Ad Plan Is the Web’s Old Plan

Sheryl Sandberg headshot

A year ago, in the run-up to its IPO, Facebook told the ad world that it had a new plan: “Sponsored stories” — ads that looked like “real” content, that would show up on users’ screens based on the way they and their friends behaved on Facebook.

New new plan: Facebook will let advertisers buy ads on the social network the way they buy ads all over the Web — tracking users’ travels outside of Facebook, and showing them ads based on their browsing history.

Facebook took a step toward this last summer, when it rolled out its Facebook Exchange, which allowed marketers to serve “retargeted” ads on the right-hand side of users’ pages. Today they’re making a small but important change, by letting advertisers serve the same kind of ads directly in users’ main “News Feeds” — Facebook’s primo real estate.

Unless they’re really paying attention, the average user won’t notice the difference between a retargeted ad in their News Feed and Facebook’s (not very) old-fashioned “sponsored story” ads. The formats look the same, and just like the old ones, you can see if your friends “Liked” or commented on a retargeted ad.

facebook sponsored ad

The main difference is that if you click on the ad, you’ll be sent outside of Facebook to an advertiser’s site, instead of inside to a Facebook page. (You’ll also, in theory, be able to opt out from seeing that kind of ad if you notice a small “ad choices” logo” and follow a series of steps.)

The real change is all happening behind the scenes: Instead of telling an advertiser that they’re likely to find someone receptive to their message based on their Facebook behavior, Facebook is telling an advertiser they can guarantee delivery of their message to someone who has visited certain websites.

That’s a big shift in the way Facebook has treated advertising. Before last year, the site didn’t allow any retargeting at all; both internally and externally, the concept was treated with disdain.

And that made some sense: If you’re going to sell ads on Facebook the way they’re sold all over the Web, then what makes Facebook different than Yahoo, AOL or any other big site with a ton of impressions?

But advertisers — at least certain kinds of advertisers, particularly those with “direct response” pitches — love retargeting, and they’ve gone gaga for the ones Facebook started selling last year. Presumably they’ll be just as excited about these ads, which will be much more visible. And if Facebook can figure out how to serve them up on phones (much trickier, for technical reasons), they’ll be into that, too.

The question is what this means for Facebook in the long run.

The site says it isn’t backtracking or moving away from its “sponsored stories” ads in any fashion, and that this lets it have the best of both worlds: You can buy ads on Facebook the Facebook way, or the way everyone else does it.

Wall Street might well conclude that this is a good idea, too, since it should add a whole new revenue stream for the site. Or it might conclude that Facebook is less enthusiastic about a worldview it was promoting just a year ago.

Time to find out.


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