MediaWeek is reporting (but see updates below) that Facebook will soon add “sponsored stories” or banner ads to the news feed on users’ front pages. The addition of those feeds in the first place caused a big uproar around privacy concerns. The mere addition of advertisements doesn’t seem like a big deal to me – everyone knows it’s a moneymaking operation – but one reported feature could kick off another storm of anger if it’s not implemented carefully.

When one user clicks on an advertisement in their feeds, all of that user’s friends will be notified that the ad was clicked on and will be given an opportunity to join a group led by the advertiser, apparently. Mike Murphy, Facebook’s chief revenue officer, told MediaWeek the following: “Up until now, most advertising on social network sites hasn’t leveraged social networking behavior…This offers a viral opportunity that is unique for advertisers that is not disruptive.”

The write up says “The new Sponsor Stories ad unit will initially be placed in the third position within each user’s News Feed – as either a small banner-like placements or video clip.” If this is the Microsoft/Facebook advertising deal coming to life, this looks like a big gamble for both companies.

Best case scenario: your preexisting ad space will simply contain an additional note that says “your friend clicked on THIS ad, would you like to as well?” Any extra notification for every friend’s click would be terrible – it’s easy to assume that a friend’s ad click would be considered an “event” that you’d be notified of just like so many other actions, but it doesn’t have to be that way. If done well this could be a great move by Facebook – it’s just hard to see the words viral and advertisement in the same sentence and not cringe. It’s largely a knee-jerk reaction, but it’s real.

We reported on the launch of the news feeds as an issue largely of poor communication around a potentially beneficial feature addition. Though advertising in feeds is a logical and fair thing to do, making each ad a spammy social cluster bomb is sure to backfire.

LinkedIn has told me they are likely to do something much more tasteful around ad placement in social networking; focusing on friend recommendations, context and making receipt of ad pitches completely optional. There are certainly good ways to monetize social networking behavior but there are also many ways that could be bad.

Update: Melanie Deitch, Facebook’s Director of Marketing, emailed to tell us that the MediaWeek story we linked to below was incorrect and that in fact, no unsolicited notices will be sent. Only users who have elected to join a sponsored group will be notified when friends in that group click one of the group’s ads.

Update 2 Deitch wrote back to clarify that no one will ever be notified of your ad clicks and the ads will either be for sponsored groups or link directly to an advertiser’s page. Sounds like the MediaWeek story was almost entirely wrong.