I got send this link earlier today http://bokardo.com/archives/why-social-ads-dont-work/ with the comment "I can't say I completely agree. It takes a very one dimensional (i.e. transactional) view of online advertising and largely ignores the concepts of campaigns and brand-building."
This started a dialogue it is worth repeating here. I think it is true that we search because we are looking for something and therefore, as the offer may well be for that specific thing that you are looking for, advertising works .
In the same vein, when you are doing something (like socialising, reading news, looking at pictures etc), you are not in acquisition mode (whether for product, service, information or experience) as you are currently having the experience you want. So these ads are less like to perform for us.
The issue for social networks, as well as for many destination sites - both online and mobile, is that while 'branding' is fine as a concept (campaigns, recognition, placement, exposure etc) - with the rise in performance based advertising (CPC or CPA as opposed to straight CPM) - there is a difference in 'performance'.
So, in discussing whether ads work or not, we ned to konw aht we mean by work. If we are to be rewarded on performance and not brand-awareness or presence, then ads provided as part of search search - when you are actively seeking something - will always perform better.
I just wonder if they do as much good for your brand.