News, Social Media

Facebook Shows How It Makes Money and Runs Sponsored Stories in News Feeds

Facebook reveals its own ‘business secrets’ and adds one more business instrument to its portfolio: in January sponsored stories advertisements will start to appear in users’ news feeds.

On a page spread among its users though a link that appeared at the top of their pages on December, 21 Facebook gives an explanation as to how the social network gets ads and why they show up on users’ pages. According to Facebook, ads are what let it keep the network free.


Photo: Facebook page explaining advertising processes in the network

Mashable says that the note might be a precursor to sponsored stories showing up in news feed in the beginning of 2012. This way Facebook may be trying to calm down its users: the explanation of advertising on Facebook contains information about sponsored stories aimed to give users only the news they may be interested in. The explanatory page also stresses that users who find ads that don’t interest them will be able to remove them.

Sponsored stories created to foster users’ engagement with a brand initially used to appear only in specific advertisement modules. This fall, Facebook started moving them through a ticker but they still were clearly differentiated from user generated content. In January 2012, the stories will be shown in the same news feed with friends’ updates.


Photo: This is how sponsored stories will be incorporated in news feeds, from www.allfacebook.com

The initiative is not the first time when Facebook tries to incorporate advertisements in this space. In 2007, it tried to run Beacon advertisement program but had to dismiss it for reasons of privacy. Inside Facebook says that this time the initiative has to be more successful due to more targeted ad placement.

According to Allfacebook, running the social network now costs more than $1 billion per year, and delivering ads is how Facebook pays for this.

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