Facebook must restrict marketing of "Sponsored Stories"
Facebook is facing new challenges in its advertising strategy. In the future, users will be able to prevent themselves from appearing as unpaid brand ambassadors in «Sponsored Stories» when, for example, they mention a product or company.
The online network has agreed to this in a settlement with which it is settling a class action lawsuit before a court in California. In addition, Facebook must clearly inform users in future that it is marketing certain statements. As "Sponsored Stories" are considered an effective advertising tool, the agreement could lead to significant losses in revenue.
The instrument, which was introduced at the beginning of 2011, allows companies to
advertising campaigns can highlight certain Facebook posts by users - mainly when they click on the "Like" button for a brand or product. The respective Facebook friends are prominently displayed with the member's name and photo. The company must now draw attention to the function in its terms of use and provide unspecified mechanisms for controlling "Sponsored Stories".
Facebook will pay the plaintiffs' legal fees up to USD 10 million and donate a further USD 10 million to non-commercial organizations. The company has six months to implement the settlement. Facebook founder Mark Zuckerberg once described personal recommendations from friends - as given with the sponsored ads - as the "holy grail of advertising". The settlement thus makes it more difficult to market the social network's extensive reach. (sda)
