Facebook's brand new Premium Ads are really just Souped Up Sponsored Stories

by Dennis Yu on Feb 23, 2012

There are two main types of ads on Facebook, premium and marketplace. Marketplace ads are the self service ads that most businesses create on the site.

Premium ads are a product that Facebook has to run for you and requires a large budget, some say $10,000 a month minimum. These ads have a lot of benefits, including that they run on the Facebook homepage only where you start out on Facebook to read the newsfeed. This is where Facebook users spend a lot of their time.

Facebook is rolling out big changes to Premium ads this month. You may have seen these huge ads on the Facebook homepage recently with 3 components:

  1. Social context (you and X friends like this)
  2. The content being promoted
  3. A feedback section (comments and likes)

They get great click-through rates because they contain friend information, boosted by the fact tat Facebook will show only one ad at a time and because they live on the homepage. In fact, homepage ads typically get 2-3x the rates of self-serve ads (also called marketplace ads).

But are they worth the 20x premium you have to pay to get them (a $10 CPM in the United States vs about 50 cents for self-serve)?

If you’re a big brand that cares about reach, the support you get from the Facebook Ad Ops team, and the “good neighborhood” of the home page vs next to someone’s drinking photos or Farmville app– then it could make sense.

These new ads amplify engagement and EdgeRank like crazy– more on that in a second.

If you’re a direct marketer, small business, or B2B player– it didn’t make sense before and still doesn’t. You need at least $20k to drop per campaign, you have to run through the Facebook Ad Ops team (so you can’t optimize it yourself), and Facebook will run to a higher frequency (as high as 30 impressions per user) than you’d typically allow– leading
to ad burnout.

Bottom line– if you’re using self-serve ads, nothing has changed and there’s nothing new for you. Keep milking Sponsored Stories. If you’re already using Premium ads, you already know about the new features, since your rep has told you.

If you want to see the 6 types of new Premium Ads, go here, Otherwise, suffice it to say that these are just regular Sponsored Stories you can do yourself, except they’ve made the image larger and added the social context portion at the top.

Via marketplace Sponsored Stories, you can still amplify a post, link, fan action, photo, or video. And via a Page Post Story, you can still reach non-fans, too. See 7 examples here. Note that in marketplace Page Post Ads, you can now have your video play in the ad unit itself. That used to be a Premium-only feature.

If you want to micro-target interest and workplace combos in hundreds of ads, or try precise and broad category combos in the same ad (available just yesterday), do this in self-serve yourself via Power Editor. Personally, if I had to choose between running a bigger ad unit versus getting more precise targeting, I’d choose the targeting any day.

The Big Picture

Let’s face it– advertisers are getting terrible CTRs on Facebook ads.

Sure, you can claim that reach or raw impressions alone matter most–with clicks being a bonus–that massive Facebook impressions create offline awareness and conversion in other channels.

Or you can claim that the price of Facebook traffic is still insanely cheap relative to everything else– it is. I’d agree with all that.

But that misses the point.

People go to Facebook to find out what their friends are doing– not to get assaulted by ads.

So better ad performance comes not from yelling louder, but by amplifying actions that your friends are taking which have commercial value. They checked into your restaurant, commented on a curious photo, liked a neat quote, noticed something one of their friends did (read, watch, listen, cook, and all the other new Facebook verbs).

So Facebook’s new Premium ads are about amplifying organic activity tied to your brand. You want to know what
your friends are doing.

Premium Ads

For the last 4 years, Facebook advertisers have been running ads that will work in Google (when people are actually looking to buy your stuff), and wondering why it doesn’t work on Facebook. And no amount of optimizing fixed that problem– even if you used fancy software that tried thousands of combinations of images, headlines, and body copy.

You can’t make chicken salad out of chicken poop.

Chicken SaladAnd finally these new ads solve that problem. I suppose there is one caveat– if the brand is posting uninteresting content, then no amount of amplification will make it interesting.

But at least the brand or agency doesn’t have to go through the painful exercise of crafting new ads. They can just choose existing posts to amplify with Premium ads. And the little guys or performance-conscious folks can run the regular Sponsored Stories.

A Hidden Bonus

Brands have complained that increasingly, their posts just aren’t showing up in the news feed. There’s more and more stuff competing for a user’s attention.

EdgeRank, Facebook’s magic algorithm, is drowning them out, perhaps conveniently in anticipation of their IPO, as some speculate. Facebook has stated that your EdgeRank is boosted when people interact with your content, whether that action was organically driven or driven by an ad.

So running Premium Ads or marketplace Sponsored Stories improves your visibility in the news feed. That’s like Google saying that if you run AdWords, you’ll rank better in natural search results.

In research last month, we looked at the 11,365 pages we have admin on, covering 120 billion impressions over the last 7 months, and noticed that pages that ran ads had 373% more organic impressions than those who didn’t.

Yes, 68.3% of statistics are made up, but it’s strikingly obvious that content your friends are consuming is twice as interesting as that same content with no social context.

So if you didn’t get the mechanics on EdgeRank, just know that running Sponsored Stories of any type boosts not just the message you’re running ads to, but anything you’re doing on Facebook. It’s like cheating.

Where Is This Going?

Expect more forms of Sponsored Stories– premium and self-serve. Watch what happens when these ads make it into the news feed in full-force, and also in mobile. You’ll have not just ads on the right side, but in the sacred center area.

Advertisers will debate whether these are really ads, since it’s organic content and action being amplified. Users will cry foul over their images being used in ads and there being just too many ads (like MySpace in their decline). Ultimately, Facebook is a paid word of mouth channel– “word of mouth at scale”, as Sheryl Sandberg, the Facebook COO, likes to say.

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Post Author

Dennis Yu is the Chief Architect / CTO of Portage.co. He is an internationally recognized lecturer in Facebook marketing, having been featured in The Wall Street Journal, New York Times, LA Times, National Public Radio, TechCrunch, Fox News, and CBS...

  • http://www.vmrcommunications.com Hugh Macken

    I agree that Non-Premium Sponsored Stories will never get the same CTRs as google ads but I do think what would help boost those CTRs is if Facebook allowed for better I/A/O targetting by, for example, allowing marketers to use conjunctive boolean operators (
    x∧y ) for interests. The only option currently is disjunctive which broadens rather than refines the targetting. Just curious: Do Premium Ads allow for more advanced interest targetting?

  • http://twitter.com/kyledardashti Kyle Dardashti

    @hughmacken:disqus  They both have the same targeting options!

  • http://www.vmrcommunications.com/ Hugh Macken

    Kyle – Belated thanks for your reply. It completely escapes me as to why Facebook does not allow for conjunctive interest targeting. CTRs would be sooooo much better. (hmmmm, maybe that’s the reason ;)