Facebook gauges interest in new way to monetize users: ‘highlighted posts’

Facebook is currently testing a way for users to pay to promote their posts at the top of friends’ News Feeds, a spokesperson confirms to us.

The test, which is limited to a small percentage of users including some in New Zealand, places a “highlight” button next to Like and comment on a user’s Facebook posts. After clicking “highlight,” users will be taken through a payment flow. We’ve seen prices ranging from free to US$2, and users seem to be able to use PayPal, a credit card or Facebook Credits they have saved. The promoted post will appear at the top of friends’ News Feeds with the word “highlighted” below the post.

Although the social network constantly tests new features that do not become implemented more widely across the site, this particular feature is surprising for a number of reasons. Facebook has previously struggled with rumors that it would charge for its service, despite a note on its homepage that says, “It’s free and always will be.” Asking users to pay for friends to see their posts seems likely to fuel further speculation and hostility from some users. The company is also in the middle of its roadshow leading up to an initial public offering next week. As we noted when Facebook announced Wednesday it would begin a testing paid apps on its platform, it seems unusual for a company to implement potential new monetization strategies at this stage.

However, if tests show that users are interested in the feature, Facebook would be likely to expand its availability and highlighted posts could become a source of new revenue. The test is likely inspired by Tumblr, which in February began a highlighted posts feature that lets users pay $1 to make their posts more noticeable in readers’ dashboards. While this is an interesting approach for a startup that has previously never monetized, it seems odd that Facebook would try a similar test at this stage in the company’s development. The experiment reminds us of when in 2009 the company tested a way for users to give give each other Credits for content they shared in the feed — an idea that Facebook quickly scrapped without ever rolling out widely.

If highlighted posts did expand to more users, we can imagine people who have chosen to enable subscribers being interested in the feature. Though in its current state, users do not seem to get any data about the results of highlighting their posts, so it might be hard to determine its value. For example, a $2 cost to show a single post to a user’s 130 friends — the average according to Facebook’s statistics page in February — is a CPM of more than $15. Most users might not frame the cost in this way, and there may in fact be cases when a user would be willing to pay $2 to make sure that friends see a post. Perhaps a birth announcement, a post about looking for a roommate or a link for fundraising might qualify. Small business owners might also start to use the feature to promote their business this way rather than using pages and traditional ads, which are not guaranteed to show in News Feed.

Hypothetically, if Facebook could get every user in the U.S., Canada and Europe — where the company currently generates the bulk of its revenue — to highlight one post a year for the $2 price, it could bring in about $858 million in additional revenue. This is well above the $484 million it made from its payments business in the same region last year, according to a filing with the Securities and Exchange Commission.

Still, giving users the option to pay to ensure that friends see their posts might lead some users to question what happens to their posts they don’t highlight. It does not reflect well on Facebook’ algorithms if users have to pay to get their most important posts seen. It also seems out of character for the company to make this sort of blatant revenue grab after much of the company’s pre-IPO talk involved managing investors’ expectations for how the social network approaches monetization. For example, in Facebook’s IPO filing it says, “Our culture emphasizes rapid innovation and prioritizes user engagement over short-term financial results.” And CEO Mark Zuckerberg wrote in a personal letter to prospective investors, “These days I think more and more people want to use services from companies that believe in something beyond simply maximizing profits.”

Facebook re-introduced Sponsored Stories to News Feed in January, but these are content that brands and other advertisers pay to promote, not individual users. Last month a company spokesperson told us it would begin testing an option for page owners to more easily pay to promote their content to fans, but it did not suggest that users would be able to do the same for their own posts until a New Zealand blog reported the feature.

Below are images from Neowin.net whose writer, Owen Williams, has tested highlighted posts. If you have access to the feature, please share your experience with us in the comments.