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Facebook's Plan B: New ads in News Feed

The social network, currently under pressure to grow revenue, is now letting advertisers run a more familiar, albeit less holistic, ad type in the News Feed.

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Headshot of Jennifer Van Grove
Jennifer Van Grove Former Senior Writer / News
Jennifer Van Grove covered the social beat for CNET. She loves Boo the dog, CrossFit, and eating vegan. Her jokes are often in poor taste, but her articles are not.
Jennifer Van Grove
2 min read
James Martin/CNET
Move over, Sponsored Stories, you've got company. Facebook today announced that advertisers would be able to pitch members directly from the News Feed with less holistic messages that direct people outside of the social network's walled garden.

The launch, which Facebook is calling a "small alpha test," brings Facebook Exchange-targeted (FBX) ads, which are special ad units served to members based on their online browsing behavior, to the desktop version of News Feed for the first time.

"We wanted to give advertisers and agencies the opportunity to deliver highly relevant ads in News Feed, the most engaging place on the Web," the company wrote in a blog post. "We also believe that ads delivered through FBX will create more relevant ads for people."

The addition of the ad unit will not change the total number of ads people see in their News Feeds, the company said.

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Previously, Facebook allowed advertisers to run FBX-delivered ads on the right-hand side on the desktop. This unit's format, called "Page post link ads" in Facebook speak, is more familiar to traditional display ad buyers than Facebook's own native ad unit, the Sponsored Story, because advertisers can tap their own user intent data for targeting purposes and direct people to outside landing pages, instead of Facebook Pages, for conversion-tracking.

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The introduction of FBX-delivered ads to News Feed, albeit small to start, feels like Facebook's Plan B revenue-growth strategy. Sponsored Stories in News Feed, on both Web and mobile, sure sounded like the company's Plan A, especially the way Chief Executive Mark Zuckerberg and COO Sheryl Sandberg talked about the units, which offer Facebook Page owners increased exposure for their content, in post-earnings calls with investors and analysts.

In October, the company exclaimed that it was making $4 million a day from the in-stream, Sponsored Story placements by the end of the third quarter 2012.

But since the social network reported fourth-quarter earnings in late January, and stayed mum on revenue from News Feed ads, investors have been increasingly skeptical of the company's ability to grow revenue as it spends more. The stock has slid backward, down about $6 per share, or 20 percent, since it closed at $31.24 on Wednesday, January 30.

Investors haven't exactly rallied around today's reveal, but Facebook's shares are trading up by a few cents Tuesday. Perhaps there's something to this Plan B.