At the Graphing Social Patterns conference on “the business and technology of Facebook” (yes, that conference does sound ridiculous) Jason Calacanis went into a short, but fairly accurate rant about why Facebook is not close to delivering the ad value of Google.  My favorite line:

“Social networking is second only to chat rooms as the worst place to advertise.”

He’s right.  He goes on to give 2 explanations as to why that is:

1. On Google, when you type in a phrase “we know what you’re looking for.”
2. When you are on Facebook, the ads can never compete with the other content, which is far more compelling.

Both explanations are correct.  But, he still misses the single biggest factor:  intent.

Millions of people go to Google each year intent on buying something.  Could be a new computer, a new car, or even insurance.  Buying is the intent.  That is why they are there.  That is what they are doing.  They are trying to buy. 

And, for fear of stating the obvious, showing ads to people who are trying to buy things, especially when the ads are for exactly what they are trying to buy, creates enormous economic value.

On the other hand… 

If you are on Facebook, there are a lot of reasons you could be there.  But one thing is clear.  Your intent is not to buy something.  If it was, you would be somewhere else.  So, you as a user you are less valuable to advertisers.  It’s not about “targeting” or the relative attractiveness of the ads and the content.  It’s the user’s intent.  You are on Facebook to do something other than buy.  Thus, you not as valuable to advertisers.   

By the way, I’m not saying that Facebook’s inventory is valueless.  Neither, as Jason noted, is chat room inventory - or Digg, e-mail reader inventory, or news inventory for that matter.  They just have, on an eCPM level, far less value than search.  And it’s hard to imagine how that can change.