Facebook launched “Sponsored Stories”—a way for advertisers to endorse users’ status updates if they mention a brand—in its mobile apps about two months ago, but the new ad units haven’t yet been widely seen on people’s phones.That’s because Facebook is only allowing about one in 10 Sponsored Stories to run on mobile platforms, according to Krishna Subramanian, chief marketing officer at Velti, a mobile marketing and ad agency.(Velti has about 1,000 employees in 35 offices globally, and books about $50 million per quarter in revenue.)
Facebook only allows the best-performing Sponsored Stories ads into mobile, Subramanian tells us, based on a performance metric that he’s not privy to. (Or at least, “I assume there’s a performance metric behind it,” he says.)
However, Subramanian says, the Sponsored Stories that have made that leap tend to be ones with offline ties, offering users discounts and coupons at stores if they click through. In other words, ads that act a lot like Groupon offers.
However, BI understands that Facebook operates a cap on Sponsored Stories across all of Facebook, not just mobile, in order to ensure that News Feeds don’t become cluttered with promotions. The cap is based on bid prices for ads and targeting, with a maximum number preventing too many hitting an individual’s feed. A spokesperson for Facebook said, “Velti’s claims are entirely incorrect. There’s nothing in that story that’s right.”
In theory, Facebook’s Sponsored Stories could shape up as a huge threat to Groupon: They combine discounted deals and coupons with the implied recommendation of a friend. And if any marketer figures out how to persuade mobile Facebook users to give up their location data as well, then Sponsored Stories could eventually include a hyper-local aspect.
This isn’t the first time Facebook has launched an ad product that apparently competes with Groupon.
- In November 2010, Facebook launched Deals, a coupon product tied to users’ check-ins. Deals appears to have been largely discontinued.
- In April 2012, Facebook launched Offers, which the company described as “coupons and specials to fans through posts that appear in people’s news feeds on both desktop and mobile, as well as through posts that are promoted as sponsored stories.”
That last sentence (emphasis added) now looks a lot more ominous for Groupon.
Business Insider Emails & Alerts
Site highlights each day to your inbox.