Yes, people spend a lot of time on FB but how much of it converts to revenue? Google could be converting visitors to revenue faster than what FB could be. Say, I search for a .is domain registrar, I click on the ad which seems to be selling it the cheapest and I leave Google. My short visit was converted to revenue and converted quick. On the other hand, I go to FB not to look for anything specific but only checkout…
I see a couple of things happening though:
* Not all purchases are customer initiated, and based on the time users are spending on Facebook, they're in a much better position to capitalize on impulse and casual purchases.
* I've seen an increase in the number of friends who post "Hey, what phone should I get" and similar questions. This social behavior was commonplace prior to the advent of relevant, usable search. We may see a return to this leveraging of social knowledge for important purchases. Facebook has a significant advantage there.
Even with virtually zero effort, Facebook is going to begin to eat in to Google's territory, simply as a result of the sheer volume of eyes on ads. Right now, Facebook is continuing to focus on engaging users. They're digging deep roots in to our lives, and appear to be focusing on partnerships that aren't ad-related right now. These partnerships are also in markets that are inherently social. Music, for example, is a very social product. It makes perfect sense for Facebook to form strong partnerships there.
It's difficult to say when (or if) Facebook will focus on general advertising as a revenue stream. They certainly have a product, but I don't know how effective it is. I've seen a fair number of anecdotal write-ups that suggest it doesn't work all that well, but for individuals with a rational, causal mindset, advertising frequently "does not compute", so it's hard to say if there isn't significant bias there.