Facebook has introduced “Sponsored Stories” as a new advertising product.

This means that where you typically see promotional ads on the right column of the page, a news feed story may appear that references one of your Facebook friends’ interactions with a brand – including “likes,” application uses, check-ins, and comments on a brand’s page. The image below shows (1) what a story typically looks like in your regular Facebook news feed and (2) what it will look like as a “Sponsored Story.”

Facebook Sponsored StoryJim Squires, a product marketing lead at Facebook, said, “It’s about taking the word of mouth recommendations and endorsements that are happening across Facebook every day and increasing the distribution of those.” We know how vital and powerful word of mouth marketing can be for a brand, and this new advertising product ensures that such “testimonials” don’t get lost in your news feed. Having just launched to managed accounts with plans to expand usage to self-service accounts, Sponsored Stories are already being used by Coca Cola, Starbucks, Levi’s, and Anheuser Busch, as well as non-profits like Amnesty International, (RED), and UNICEF.

While it obviously can provide value to brands, what does this mean for the users/consumers? Well, Facebook will respect your privacy – only those who can see your news feed regularly can see your potential Sponsored Stories – but there is no option for opting out of being featured in a Sponsored Story.

Despite the potential value, it could raise issues for brands, as Sarah Perez of ReadWriteWeb points out: “The funny thing about these ‘personalized recommendations,’ as Facebook calls them, is that an ad could come from a restaurant check in that led to the worst meal of your life or showed up after you ‘liked’ a retailer only because they were running an ad that said ‘like us on Facebook for 10% off.‘”

Still, chances are high that advertisers will embrace this new ad format considering that “a Facebook-Nielsen study found ads with such [social] context – showing that a friend recently liked a brand, for example – improves ad effectiveness” (via AdWeek). Only time will tell, but what do you predict for Sponsored Stories?