While Facebook tries to prove advertisers about the value of ads on their network, I feel facebook will not truly become the power it should until Facebook creates a recommendation engine based on people's preferences (anything that points to the fact that some purchase is about to happen). Let me give an example:
John is a plumber is New York city area. John uses Facebook to keep in touch with his friends and he finds out that he can promote his plumbing business at the same time. How? By starting conversations about his service. His near friends on facebook and not so close friends now know who to call next time the shower is clogged (even after using Draino). So John successfully used Facebook to grow business. Say if Facebook starts recommending John to somebody who is in the friendlist of John's friend, Facebook becomes a recommendation engine.
http://www.bloomberg.com/news/2012-06-05/facebook-extends-share-declines-since-ipo-san-francisco-mover.html article shows some evidence to support what we are talking about here, but again, the kind of recommendation engine we are talking about gives John the advantage because John would be recommended by his customers, instead of his friends (who know nothing about plumbing or haven't bought from John). Essentially, instead of being confronted with an Ad, which a consumer would have to again research online, the consumer can be directly connected to business if the business is recommended by customers of the business.
Cut to chase: Facebook needs word of mouth recommendation rather than forced ads. People like things that they trust. People chose things when they are recommended by friends (word of mouth that we talk about all time), Facebook has to create that trust among its users. There are other platforms that are available where companies are using Facebook to create referrals, but will Facebook do it? That remains to be seen.
