“Sponsored Stories.. are on a $1 million a day annual run-rate (so $365 million a year), around half of which is mobile. Sponsored stories and newsfeed are the cornerstone of our mobile monetization strategy”
Sheryl Sandberg, COO, Facebook.
Most talk about Facebook’s revenues focus on its ads on the right hand side inside Facebook. Social advertising I suppose you could call it but this is really just standard targeted advertising which has been around for over a decade, albeit thanks to the nature of the social network the targeting is not bad. Like all fixed position advertising though, users train themselves to mostly screen out these ads. Not bad for branding, poor for direct response.
Sponsored Stories is the real innovation though. In stream, it is in the stream of information that users are actively scanning. Much better for brand impact and also better direct response. Even better for Facebook, this can work in mobile as well – and shows up in its most recent results – 50% of revenue from Sponsored stories came from mobile.
Like all interruptive advertising though, getting the balance right is key – with complete control of the platform though, Facebook can easily identify the right balance and quickly. Facebook could also potentially alter the frequency by geography and device as well – I am sure both these factors have an impact on how many ads you are willing to endure.