Facebook Advertising: Is it Hitting the Mark?

Like Google, Facebook earns the vast majority of its revenue from online advertising. While the flow of capital from this channel has contributed to the social network's estimated $100 billion valuation, business owners are less enthusiastic.

A recent survey by MerchantCircle found as many as 70 percent of businesses claim to use Facebook as a marketing platform. However, of those respondents, only about 23 percent admit to spending capital on Facebook ads, up 5 percent from six months earlier.

While there is a clear discrepancy between the number of brands engaged in Facebook marketing and those using the site's advertising capabilities, the effectiveness of the latter is clear. Nearly two-thirds of those who have bought ads would do so again.

"Facebook has proven to be a great marketing tool for small-business owners, but I'm wondering if entrepreneurs are somewhat spoiled by the fact that it's free," writes Rieva Lesonsky for the Huffington Post. "Perhaps that's making them reluctant to shell out for ads on the social network."

The bottom line: Social media marketing is a fledgling market with a lot of kinks to work out. As the process unfolds, it will be interested to observe how marketing evolves throughout the social web.