I have to agree with the point Matt makes, that advertising will continue to work better on Google than on Facebook. We mustn't forget, however, that advertising is a construct of the last two centuries and especially the period 1950-1990, and may already have passed its prime as a way of generating customers.
Moving forward, the value of communities may overtake the value of marketing and of brand - and think here of baby boomer 'retirement' villages as much as MySpace or Facebook. Advertising will continue to work better on Google; but advertising as a means to generate business may be superceded.
I'll admit it's certainly based on a little conjecture. The post-WWII 'Product Era' supported by marketing evolved into the Brand or 'Positioning Era'; one of business frameworks I use for work (I'm a Shirlaws Business Coach) tracks revenue through a business, starting with Product, then Positioning, then Distribution (ie, of product to market).
But this does fit into emerging trends, both online (Facebook) and off ('baby boomer community' returns 5.3 million pages in Google, but no ads...)
"So if social networks are such a great experience, why aren’t people paying for them? Well, the networks let people sign up for free, because they want to have everyone on their network. But then they’ve immediately set the market value of the network at $0! Also, social networks are only a good experience because interacting with people is a good experience! If social networks vanished, people would still have friends, but if your friends vanished, you’d have no use for the social network. Whereas if computers and TV went away, people would still play games (board games? sports?), act, sing and dance."
I agree with this somewhat. Traditionally businesses have been dependent on advertising or PR in order to promote their product, but increasingly there is value in inflitrating certain networks (e.g. early adopter crowd) so as to spread "virally". You could call this a new type of business promotion e.g. community adoption or maybe its just a new subset of PR, in which case, nothing much has changed.
Moving forward, the value of communities may overtake the value of marketing and of brand - and think here of baby boomer 'retirement' villages as much as MySpace or Facebook. Advertising will continue to work better on Google; but advertising as a means to generate business may be superceded.
For more information, albeit from a functional business perspective rather than directly on topic, see perhaps http://en.wikipedia.org/wiki/Distribution_(business) http://www.shirlawsonline.com/downloads/sme-report-summary.z... (Download a research document) or http://360degreeview.blogspot.com/2007/09/signs-of-new-distr...
Don't rule out social networks just yet.