Sponsored Stories: Bad News Or The Next Big Thing?

Last week, Facebook announced its new ad unit, Sponsored Stories. With Sponsored Stories, advertisers will now have the ability to utilize user actions – such as Places check-ins, “Likes”, Page posts and even actions in custom Apps within their Facebook ads.

This means that if I decide to “Like” Levi’s 514 Jeans (“Like” really doesn’t sum up my feelings about these jeans, but I digress…), Levi’s can now use that “Like” as an ad in the right-side column, slap their logo on it and show it to all of, and only, my friends.

The concept behind this new format is that an ad unit that uses your friend’s content will build more trust and generate greater buzz than a traditional ad would. While I’m sure Facebook will allow advertisers to filter out some negative content, ultimately the message will be controlled by the users.

For now, only a handful of large national advertisers and non-profits have been selected to partner with Facebook for the launch of Sponsored Stories. I’m curious to see how well this new unit fares especially with the already growing number of people saying that Facebook should allow users to opt-out of this ad experience.

To add even more fuel to the fire, Sponsored Stories is being compared to Beacon, Facebook’s failed attempt at posting third-party activity, like renting a movie from Blockbuster, on your Facebook page. Beacon ended in a settlement from a class-action lawsuit and Mark Zuckerberg became everyone’s favorite privacy punching bag.

If Sponsored Stories proves to be successful with the initial batch of partners, it will be exciting to see how well the new unit does in the realm of local. With rumors already circulating that Sponsored Stories will be offered as a self-serve product, it seems that Facebook might be betting on the new product to be a perfect companion piece to Facebook Pages and Places. A combination that I am sure many small businesses will “Like”.

Another group that I believe will be quick to use this new unit is political candidates. If Sponsored Stories makes it through this initial testing period, I can almost guarantee you that at least one 2012 presidential candidate will have this as a part of their marketing plan. Word-of-mouth marketing is tops in political advertising and this is exactly that packaged into a cost-effective little Facebook ad.

While the future of Sponsored Stories is yet to be determined, it certainly has created quite a bit of buzz in its infancy. It is clear that Facebook has big plans for Sponsored Stories and that they have developed a product that is on par with Google Retargeting and Twitter’s Promoted Tweets. It will be interesting to see how Sponsored Stories plays out when advertisers of all sizes are able to take advantage of this new product.