I think a lot of the analyses of Facebook's advertising model miss one important point. Sure, their CTRs are not even closely comparable to Google's numbers. Ho

I think a lot of the analyses of Facebook's advertising model miss one important point. Sure, their CTRs are not even closely comparable to Google's numbers. However, when people search on Google, they're often actively looking for certain products that lead to high CTRs on these targeted ads. In Facebook's case, people want to socialize and generally don't want to be disturbed by ads. Basically, Facebook currently uses an advertisement model that is not very natural to its product (and not very well targeted for a number of reasons). But Facebook just doesn't care at this point, because they still generate sufficient revenue through the sheer number of users. So the real question is whether Facebook can come up with an advertising model that is truly natural to its product (e.g. actual product recommendations by friends in conversations etc.). To conclude that Facebook is doomed to fail because their advertising model is suboptimal seems to be a little premature.