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The answer is, you might want to reconsider advertising at all. Sources say that Facebook may be one of the most under-performing advertising platforms out there, averaging somewhere on the order of .04% click thru for banner ads. The jury is still out as to why these numbers are so low, but lets explore this story through the magic of quotation.

Quotes

The people at Reach Students had some bad luck with Facebook’s offerings, they are the ones that cited the atrocious .04% click thru.

Our most recent campaign saw 1.4 million page impressions delivered at specific universities – and only a 0.04% clickthrough rate. Ouch.

When we first experienced poor results earlier this year we looked carefully at creative and planning. Further experimentation saw a variety of quite different offers and creative approaches. What kept us going was the fact that others had anecdotally mentioned good returns from Facebook ads.

Yet our results did not improve.

Valleywag, in typical fashion attacks Facebook for being one of the worst advertising platform in social networking. It does, however, point out that rival MySpace manages to have over twice the click thrus averaging about .10%.

Isn’t that what one would expect on a highly social site, on which people interact rather than absorb? Well, even News Corporation’s rival social network, Myspace, is a better medium for marketers: for a similar set of advertising campaigns, its click rate, a measure of the audience’s engagement, was 0.10%, more than twice Facebook’s. Complains one media buyer who spent heavily on a range of blog and social properties: ‘Facebook was consistently the worst performing site on just about every campaign we ever ran with them.’

Scott Karp over at Publishing 2.0 sums up what Facebook should be doing quite nicely. Lets remember that if Facebook is the Google of social networking, then it needs to find its version of “Ad Words”.

So what is Facebook’s core value proposition? Connecting and communicating with friends. So can Facebook sell companies the ability to connect and communicate with Facebook users as “friends”? Well, the problem with that is that most people don’t want to be friends with companies. The beauty of AdWords is that the user interaction with the organic link and the paid link is exactly the same — click and find something relevant.

With a valuation (as accurate as those are) of something like 200 over revenue, I don’t think Facebook has too much to worry about. It should, however, be trying its best to provide some real value for its investors. I’m exciting to see what they come up with.

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