Likes & Lawsuits: What’s the Deal with Facebook’s Sponsored Stories?

Organic content with a paid media boost – that’s an appealing concept for just about any digital marketer. Of course Sponsored Stories look good on paper, but the concept has grown complicated when it comes to users’ rights.

The ads offer businesses the opportunity to add a little extra juice to organic social interaction. So if Jane gives Amazon.com a thumbs up on Facebook, Amazon can then pay to increase the chances that Jane’s friends will see this action in their News Feed.

Sponsored Stories

There are currently eight types of Sponsored Stories that can be created, including when someone:

  • Likes a Page
  • Likes or comments on a Page’s post
  • RSVPs to a Page’s event
  • Votes on a Page’s question
  • Checks in to a place
  • Uses an app or plays a game
  • Likes or shares a website

Facebook likes the Sponsored Stories concept because it’s a giant, mobile-compatible cash cow. Brands like Sponsored Stories because they function as organic content with a paid media boost. But users are a different story. Just like with regular Facebook ads, users are unable to opt out of seeing Sponsored Stories.

And when it comes to being featured in a Sponsored Story, things get especially tricky. Facebook’s original policy was that users could not opt out of being in these ads. But a group of users in California felt this was a violation of privacy and took Facebook to court. The lawsuit led to a settlement in which Facebook agreed to revise its terms of use so that users can opt out of unwilling product endorsements (but not until after they are created). More details on that here.

The legality of the whole covert user endorsement concept is still somewhat unclear, though. The issue in the lawsuit was that California law protects citizens from “unauthorized use of their likeness for promotional purposes.” But Facebook does note in its terms that it has access to your social actions:

“When you publish content or information using the Public setting, it means that you are allowing everyone, including people off of Facebook, to access and use that information, and to associate it with you (i.e., your name and profile picture).”

The future of this issue, both legally and public opinion-wise, has huge implications for Facebook. Sponsored Stories have significantly higher CTRs than regular Facebook ads. Plus, Sponsored Stories are the only way that Facebook has managed to monetize mobile thus far (although the actual success of Facebook’s mobile ads is debatable).

What do you think? Does Facebook have the right to profit from your social actions? Chime in on our poll, or let us know what you think in the comments.

Facebook Sponsored Stories Poll