Facebook ads might make more money than Google ads precisely because their effectiveness cannot be measured (just like TV and billboard ads). Sure, engineers will cite poor CTRs but "brand managers" will be eager to dismiss that as oh-so-2001. They are not buying clicks, they are creating "brand awareness on the largest website on the internet".

You could invent the wheel and there will be no demand to harvest because everyone has always dragged their dinner back to the cave. A caveman will never do a Google search for a wheel.

Trying to educate a market that they need your product is a losing proposition. Trust me.

Let's say you release "Brand New Purple Foobars!" and hire my ad firm to advertise them. Sales are up, so what's your conclusion? Well, maybe my ads really helped push your product. OR maybe your product was just so awesome on its own that it didn't need any advertising. The question is, if you don't know for certain which it was, do you take the risk of not hiring my ad firm next time? What if you don't, but your competitor that just came out with "Brand New Yellow Doohickeys!" does?

The problem with Google's ads is that it removes the mystery. If I know how many people saw the ad, and how many people followed through and clicked the link, then I can evaluate how effective my ad campaign is directly. It's like giving the prisoners cell phones so they can text each other… "Hey, they said you confessed…that true?" "Nah man, you?" "Nope!" "Cool…so drinks later?"

Do you really think marketers want to blow all their money without returns? Why do you think Google Adwords is so popular in the first place?

And a final note, from someone who worked at a large agency that focused on media buying: display ads often reinforce a keyword/CPM/CPC campaign and lead to better overall results, despite how ridiculous that sounds.

(Parenthetically, this also means people will visit Facebook for product search, buoying the overall commercial intent of the site. And an endorsement by a friend of something carries even more weight than a good Amazon reviews.)

Right now Facebook is where I go to see what my friends are up to. I think adding movie reviews, product recommendations, etc. might dilute its brand and its addictiveness factor -- in fact, I think they already have. Some commercial-type messages have already started diluting my news feed a little bit.

Google, despite having relevant ads in its sidebar, is still just a search engine.

To me it seems like Facebook is the best long term business model. Slowly, as you and your friends update every bit of your life, where you are, what you are doing, who you are with, etc. they can have a massive amount of data to target you with. Google basically made Gmail just so they could mine more data from your email to better target adverts. Facebook may have found the golden needle in the haystack if they evolve the business correctly which it looks like they will. Look where they are taking things with places, etc. Google can target you and the people who email you but there isn't a permanent link between you and the recipient(s) whereas with FB it is a chunky sold gold chain linking you together in every way they can think of from things you "like", wall posts, comments replying to you, comments you make, invites you get, invites you accept, places you go, who you go with, when you go, how much you spend, monitor you behaviour via status updates. They will know you go out every friday night with the same three friends to one of two bars or clubs, you then go and add photos to FB when you are there and label everyone in the pictures, the location either specifically or via geotag, etc.

Google may have a lot of your data but FB is the holy grail and every business needs to think about how they can get in on the action. Google tried with the piece of crap Buzz was and the crappy Orkut that they bought but let it die when FB exploded. Soon FB will be as well known as Coca Cola and used by everyone. FB is the first service my mum, dad, grandma, aunt, uncle, etc. use. It isn't just a "under 30s" thing, literally everyone can and seem to be using it. Facebook is going to only get bigger and they have such a high userbase now it is hard to see how anyone else will replace them. They saw what happened to MySpace, they are smart and have learnt from others mistakes.

Just my 2c though :)

FB may have a ton of data about you, but no amount of demo data can beat a person who searches for "i want to buy x" when you're selling x.

Interestingly, Google has had the same difficult time monetizing gmail (compared to search), even though they are targeting based on the content of your inbox.

And whether they "beat" google or not is rather beside the point. Facebook doesn't compete with them on search, except for people search.

Google Instant only gains Google dominance. You may not like it, but some people do. That adds to Google's stickiness; those people are now much less likely to switch search engines. If the $.12/query rate is to be believed, that stickiness is extremely valuable in the long run. As for those that do no prefer Instant, I suspect they didn't have any trouble disabling it.

As a nice little bonus, Google gained notoriety for their Instant search. This means anyone else who implements it in the future will be riding in Google's coattails, and will be much less likely to realize the positive effects that Google did.

If it were up to me, I'd have Google churning out more of these features. I believe it's already the case that "search" is a commodity, and it's now the bells and whistles that are the point of competition. Google already has a huge head start, and they now need to maintain it.

Facebook will harvest much more intent than they do today. There will be many cases where "Ask your friends/experts" is much better than "Ask PageRank". We are seeing this with knowledge exchange sites like Quora and we will eventually see this with Facebook Questions. And this will seep into all of Facebook's Apps.

Google is having a hell of a time trying to monetize YouTube. They just aren't as good with display advertising. YouTube would be a massive revenue generation engine if Facebook owned it. Look for a Facebook Video that becomes huge.

Facebook will also turn into a massive lead generation engine based on Connect and Pages. Run the numbers for social distribution. You can do customer cluster acquisition through social distribution. With SEM you can only acquire a user at a time.

When you acquire a customer through a social network, they are more likely to lead to referrals than a user acquired through search engine marketing.

Comparing MySpace to Facebook does not follow. MySpace has massive leadership and execution issues. Facebook is probably the best executing pre-IPO company out there.

look this whole Facebook is the future of search is just plain nuts. People want instant results, they don't feel like asking "what colors does the Honda Civic come in?". The answer to that will be "use the search"

I resent the ad hominem attack. I happen to have a computing science degree from when they used to actually teach Lisp in university.

look this whole Facebook is the future of search is just plain nuts.

I said no such thing. It's more like we will see the rise of sort because Facebook and other services (Hunch, Quora, etc) have access to much more structured information.

many universities still do teach Lisp (in AI courses, for example). this seems like an attempt to appeal to authority, which is another logical fallacy...

What bearing does this have on the factual accuracy of the claims being made?

and the relevancy is that social media experts have a vested interest in making people believe that Facebook is not a complete waste of time

I have an observation to share with you: If we ignore everyone who has some sort of "vested interest" in a subject, the only people we can consult for advice or suggestions will be people who are completely ignorant of the necessary facts and who have no experience in the subject matter.

Expertise in a subject is gained through working in the field. Working in the field means acquiring some sort of personal interest in the outcome.

I find that bias is useful to consider when given unfounded claims. For example, if someone says "I think Facebook is a complete waste of time," you might ask whether they have a vested interest in making us believe this is the case. However, if someone says, "Before Facebook there was MySpace and ICQ and Compuserve and Orkut and all of these foundered and died, Facebook is just the latest fad, it will die as well," we can analyze the claim directly and ask whether Facebook is a fad and if not, how it differs from the examples cited.

i.e. don't try to sell my mom a playboy cause I 'fan'd' their page.

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Facebook's bigger problem is that their "platform" strategy makes it pretty easy to monitor these metrics and target fans without paying Facebook a penny. Essentially they traded potential revenue streams for ubiquity. Getting a "x and y like this" published in friends of fans' streams is a free action, as is collecting demographic information on the "likers" and sending them all coupons they have to "like" to activate. Established brands can generate better ROI from well-run fan page promotions they don't pay Facebook for than paid display ads with low CTR.