Facebook Tests the Waters: Advertising Expansion

Facebook is piloting a program that would let advertisers become more visible through Open Graph apps. Open Graphs are apps that let Facebook users post their activities through a variety of vendors. The most common Open Graph is Spotify. You may have seen status updates such as “Jane Doe is listening to Madonna on Spotify.” Other companies getting on the Open Graph bandwagon include Nike (NYSE:NKE), Hulu (NYSE:DIS)(NASDAQ:NWSA)(NASDAQ:CMCSA) and more. Facebook is now experimenting with letting companies sponsor these Open Graph updates with “Sponsor Story” ads.

Previously, companies could only sponsor activities that were posted on their own Facebook page or conducted through their own apps. This new pilot program gives advertisers the ability to sponsor activities going on elsewhere on Facebook. For example, now a record company will be able to sponsor a news feeds pertinent to them even if its posted through Spotify. A band might sponsor someone listening to one of their songs, a TV station might sponsor the viewing of one of their stories on Hulu, and so on.

Faceboook continues to pull rabbits out of its hat as investors wait anxiously for the company’s impending IPO. The Street reports that advertising accounts for 80% of Facebook’s value. The Sponsor Story pilot proves that Facebook has even more advertising revenue potential up its sleeve. And it’s not just any advertising, this is advertising distributed directly to an audience who has already shown interest in a related matter.

TechCrunch’s Josh Constine says that this type of focused advertising is beneficial to everone. “This creates a win trifecta — more relevant ads for users, better – and conversion rates for advertisers, and more money for Facebook and its future investors.”