Photo: World Economic Forum
For years, Facebook watchers have wondered when the company would begin trying to profit from that the fact that it sends millions of people to third-party, ad-supported Web sites every day.Perhaps, we all wondered, Facebook would launch something like an ad network.
Well finally, Facebook is testing a new ad unit for third-party Internet publishers – and it’s something like an ad network.
Capstone analyst Rory Maher wrote about it this morning in a report. We called him for details.
Facebook’s first test partner is Buzzfeed.
How it works: When a user clicks share on a story published by Buzzfeed, that story will appear – like it already does – in the News Feeds of that users’ Facebook friends. The big difference is that in this test, there is a new line in the stub Facebook shows users in the News Feed. The line credits the sponsor of that post.
Here’s a screengrab from Maher, showing what the unit looks like:
This test has huge implications.
If publishers are able to attach the name and logo of their sponsors – maybe even a tag line? – to every piece of content they send through the Facebook sharing machine, that will exponentially increase the “reach” of those publishers.
Maher tells us that there 30 billion pieces of Facebook content shared every month. Facebook says it has 900 million monthly users, 500 million of whom come back every day.
No one but Facebook knows what percentage of those billion-shares-a-day come from premium, ad-supported Web sites, but presumably the numbers is very large. Even if its a small percentage and Facebook is only able to charge publishers pennies for a CPM, we’re still talking about a big business boost.
The test unit also solves another huge problem for Facebook.
Finally, brands will have a way to put ads on Facebook in a proper context. Instead of buying a small unit along the side of the News Feed, showing up next to who knows what kind of weird viral video or party picture, a brand like Marc Jacobs – which is today sponsoring the New York Times front page – will be able to sponsor all stories published by the New York Times that appear in any Facebook users news feed.
The number of people that will see sponsors logos next to content that creates an appropriate context for their brands.
Right now, Facebook is not charging Buzzfeed. But that will probably change. For now, Buzzfeed is only putting sponsor logos in the Facebook stubs of its shared advertorials. To us that seems like a first, safe step for both parties. Maher thinks that if the business never evolved beyond advertorials, it could mean an extra $300 million dollars in revenue for Facebook.
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