What’s Behind Facebook’s ‘Sponsored Stories’

This was in the NYTimes

One Day, Nick Bergus came across a link to an odd product on Amazon.com.

He found it irresistibly funny and, as one does in this age of instant sharing, he posted the link on Facebook.

Within days, friends of Mr. Bergus’s started seeing his post among the ads on Facebook pages, with his name and smiling mug shot. Facebook – or rather, one of its algorithms – had seen his post as an endorsement and transformed it into an advertisement, paid for by Amazon, reports Somini Sengupta of The New York Times.

Companies pay Facebook to generate automated ads, called sponsored stories, when a user clicks to "like" their brands or references them in some other way. Facebook users agree to participate in the ads halfway through the site’s 4,000-word terms of service, which they consent to when they sign up.

With heightened pressure to step up profits and live up to the promise of its gigantic public offering, Facebook is increasingly banking on this approach to generate more ad revenue. The company said it did not break down how much revenue comes from such ads. Its early stock market performance – down 22 percent from its offering price – is likely to increase the urgency.

But this new twist on advertising has already proved to be tricky. Users do not always realize that the links and "likes" they post on Facebook can be deployed for marketing purposes. And Facebook has already agreed in principle to settle a class-action lawsuit over the practice in California.

The Times’s technology reporters and editors asked several of their Facebook friends who showed up in such ads what they thought of the practice. The responses have been compiled in a blog post , where readers can also discuss their own feelings on being featured in sponsored stories.