Facebook is rolling out a controversial new ad format that lets companies bid on your actions to turn them in to adverts.

It’s called Sponsored Stories and according to Facebook Product Marketing Lead Jim Squires, it is “a way for marketers to sponsor activities that happen throughout the News Feed.”

Advertisers can choose to take advantage of certain user actions, including page likes and check-ins, and actions Facebook is calling “application play” and “page posts.”

An “application play” works like this; If a user goes to the Coca-Cola page, (for example) and Coca-Cola has an app for users to upload photos, the sponsored story that shows up as an ad will read, for example “John Johnson used the Coca-Cola app to upload a photo.”

A “page post” is when an advertiser posts something and wants to get more distribution, so they can buy a sponsored story to further distribute that post – in the news feed and on the right-hand side of the home page.

For example, let’s say Starbucks wants to increase its exposure on Facebook. Starbucks can pay to have a percentage of all Starbucks ‘checkins’ featured in a Sponsored Stories slot in the column on the right-side of the page . Your content wouldn’t be shown directly, but the actions of your friends would appear. Users seeing their friends “liking” or checking in to Starbucks will *in theory* increase trust and drive traffic.

Squires says; “The advertiser is not controlling the message; it’s about actions.”

So what will this new ad system look like?

Here’s what you may be used to seeing in your newsfeed now – a standard action of a friend checking in somewhere;

   FB ad1   

And here’s what that action might look like as a Sponsored Story:

    fbad2    

*images courtesy of Mashable*

Facebook’s list of Sponsored Stories launch partners includes Coke and Levis as well as a number of non-profits including Amnesty International, Alzheimer’s Association and UNICEF. However, from January 25 anybody will be able to bid on Sponsored Story slots on a by a per-impression and/or a per-click basis – just like the current Facebook ad format.

Sponsored Stories has a similarity to Twitter Promoted Tweets –  both use content from within their networks to create advertising opportunities. However there is a difference between the two in that the user defines the content in Facebook’s format, not the advertiser. That one small difference could prove to be invaluable to the success of Sponsored Stories.

As we reported in a previous article, Facebook ad spend is predicated to hit $2.19 billion in the United States this year, and just over $4 billion worldwide.

So what do you think? A smart advertising system or yet another opportunity for Facebook to cash-in at the expense of your privacy?