All of the LBS (Location Based Services) haven't figured this out yet, but Location does NOT imply intent. Walking past a pizza store does not mean I'm hungry for pizza.
The question for Facebook is whether any data that they possess does a reasonable job of implying intent. It doesn't have to do as well as search, but it has to do well enough.
The question boils down to "what do you do on facebook that implies intent". The status may be one of the only things.
Knowing someone's intent is a sufficient, but not necessary condition for effective advertising. I may have no intention to attend a concert this weekend, but if I saw an ad for a nearby concert by an artist I like I would be likely to click on it. For this kind of advertising, Facebook can be much more effective than Google.
How? Everyone says this, but it just isn't happening because it isn't true. I mean, how does Facebook know that concert ads are better for you than t-shirt ads? They just magically parse your wall comments and this occurs?
My argument wasn't that knowing someone's intent is necessary. It's just that it focuses the advertising much better and as such demands far higher CPMs. Facebook can guess all they want, and if they do a perfect job (far better than technology allows currently) they'll guess as accurately as Google does now.
Facebook doesn't "know" that concert ads are better for me (although it can tell from my profile what music I like, where I live, and maybe even what concerts my friends attend, etc), but it can try different ads and see what works because of the large number of page views in a typical user session. In Google, you search, get the results, then leave the google.com. In Facebook, you can easily navigate to dozens of pages before logging off. This gives Facebook the opportunity to try different ads and see what works and what doesn't.
I agree with your main point, but the bottom line is that even if Facebook's CPMs are lower than Google, it doesn't mean that Facebook can't make a ton of money from advertising or that advertisers can't get good ROI on Facebook. You don't need to be Google to be a successful advertising platform. Also, don't forget that Facebook is still young and I'm sure many advertisers haven't yet adopted it. I have a friend who does internet marketing and he says that, at least in his niche, Facebook CPMs have been increasing by 10% a week.
It's true that a lot of LBS advertising models don't center around intent, but advertisers will still pay a premium for the additional context and relevance of reaching people near the potential point-of-sale. And what about LBS that employ Mobile Search?...
Search implies intent. Better than anything else.
All of the LBS (Location Based Services) haven't figured this out yet, but Location does NOT imply intent. Walking past a pizza store does not mean I'm hungry for pizza.
The question for Facebook is whether any data that they possess does a reasonable job of implying intent. It doesn't have to do as well as search, but it has to do well enough.
The question boils down to "what do you do on facebook that implies intent". The status may be one of the only things.