I hope he's not actually putting his retirement money on the line here.

It's not about the quality of the ads, which he argues will get better with more data. It's about intent.

When I search on Google, my natural next action is to click a link. That link can be organic or an ad. If it's an ad Google stands to make money.

When I browse Facebook, my natural next action is not to click a link to an outside service/store. It's to continue to read status updates and browse around. Clicking an outside link is unnatural and unpleasant in this context.

This is the same reason ads on other Google properties such as gmail do so poorly - they may know exactly what you're likely to buy and could therefore present you with the perfect ad, but the activity you're engaged in does not naturally lead to clicking on ads.

Say I decide to buy a new set of speakers. Do I tweet that I'm looking for speakers? Do I announce on facebook that I'm looking for speakers? Or do I just start googling?

Twitter and Facebook might occasionally be clued in about some of my purchases, but google is in on virtually all of my purchases that are considered while I'm at a computer. They're first past the post and privy to a much higher percentage of what I buy.

Google's pageviews have more value (because they know exactly what people are looking for), Google IPOed at a valuation of 20% of what Facebook wanted in valuation, and Google is already entrenched into the market that the author is suggesting Facebook is going to have such an easy time moving into.

My money is on Google.

Facebook has a lot of data about what you say you like, but Google has a lot more data about what you actually like. Hope you really didn't bet your retirement.

Betting one's retirement on a single security seems like a bad strategy regardless of how successful it's likely to be. I'm hoping the title is just hyperbole.

I've never clicked on the ads in Facebook. I've clicked on more ads while using Google. When I'm looking to buy something, I use Google. As with tworats, I do hope he's not actually planning on retiring with Facebook stock. Privacy laws could easily render the data that we give to Facebook off-limits.

So... Facebook has some code you can put on your page and you have an instant like button. Well... what if Facebook starts providing a neat little bit of code that also embeds an ad? If the Like button knows who you are... so will the ad widget. So now they are serving "Facebook ads" on other sites. Of course that is what Google does with AdSense... but does Google know as much about you on that page as it does about that page? I could see it possible for Facebook to grab eyeballs on other sites... sites that are currently monetizing with AdSense. Not that I'm convinced they would make a dent with this approach... but you can't just compare the ads ON Facebook to the ads on Google search. If Facebook was putting the ads on pages that had a different focus than what you do on Facebook... there is a chance.

AdSense has much lower margin compared with AdWords because Google has to pay publisher for displaying the ads. In the early days, (AdSense revenue around 1B) I remember google was almost paying every penny they got from AdSense back to the publisher. Only later, they started to make money, but still capped by the competition from microsoft/yahoo.

Facebook entering the AdSense market? It won't generate a lot of profit for facebook. The true profit engine for facebook is still the facebook site.

I feel like the author is overstating the benefits of a like button on every page. Google - and many other ad networks - also know the products being viewed if the site owner is using retargetted ads. Might facebook offer compelling retargetting? Sure. But I imagine the conversion rates would be, at best, comparable to other retargetting networks. Probably not a game changer.

I'm not even mentioning the reach of analytics.

All the author of that article managed to convey is an overwhelming sense of fuzziness in his thinking. e.g.

>Do the math on this: instead of growing it organically, we wake up one day and Facebook has taken over Google’s Adsense business. That’s $10B in revenues alone.

Bit awkward given the recent happenings over the weekend http://www.smh.com.au/business/world-business/lawsuits-pile-...

The graphs he cites as evidence are referring to google's display network verses google's total revenue. If that is the case, then the author is presenting no information about facebook. I hope that he did not invest based on these graphs.

This struck me: "Even if you didn’t click on the Like button, Facebook probably has a pretty good idea of what your next purchase will be."

I imagine the people best able to predict my next purchase issued my debit card, no?

You should never substitute a belief for an investment strategy. Seriously, even if your idea of Facebook's long term potential is correct, you can take a haircut on whatever random thing occurs today. Balance the utility of what you gain if you're right compared to the utility of what you lose if you're wrong (think twice if you really want to make a "heads, double your house's square footage, tails live off dumpsters at 65" bet).

If you want to start investing based on your beliefs, go ahead. But have a pool of money for that and be ready to lose it.

But for your retirement, diversify.

Don't do it, unless you plan to work long years and/or die young. FB price might well be around $10 before long.

Sensationalist headline. Bad mistake.