Sponsored Stories is a great Facebook ad product – it allows businesses to publicize the fact that someone likes their page to that person’s friends and other Facebook users. And since peer influence is perhaps the most powerful marketing agent, this ad product has been a big hit for advertisers – but not so much for some Facebook users.
A class-action lawsuit was filed against the social network to protect the privacy of users who did not opt to have their “likes” used as marketing. According to the NY Times, Facebook “…agreed to pay $10 million to a dozen research and advocacy groups that work on digital privacy rights, and $10 million to cover legal fees for the plaintiffs.” But a judge essentially threw out the settlement because it did not put an end to the Sponsored Stories ad product or state clearly how the parties arrived at the settlement amount – furthermore, there was no path to compensation for all Facebook users that have (unknowingly) been used in a Sponsored Story.
So where does all this leave advertisers? Still sitting pretty! The product has been such a huge success and a major contributor to Facebook ad revenues that we are sure Facebook will do all it can to settle the matter and keep the product intact. Since the product is already in existence, users will likely be asked to opt-out if they don’t want to be featured. Opt out rates are typically low and since users enjoy publicizing their likes and preferences on Facebook, there will be plenty of constituents to serve as brand ambassadors through the Sponsored Stories product.