“But I think reality is slowly setting in. Because what we’re finding is that when people want something specific, they go to Google. When they want to kill time or just communicate with friends, they go to Facebook. And that isn’t changing.”

When someone needs help in math, they search Google. Even though that same person may have seen my ad on Facebook, they don't react to it. They are simply in a different mindset. That may change over time, but right Matt is right.

There isn't a more specific demographic than people who type your product into a search engine. The alternative is basic brand advertising and a proprietary social network is just never going to compete with broadcast.

Sure – from their friends. From a snooping third party? Not so much. Think about what Facebook is for and why people use it. It won't be long until people start asking of advertisers, “Dude, who let THAT guy into the party?”

On the other hand, all of those factors mark you out as someone who is already going to buy Wilco stuff anyway – and most likely someone who is already clued in to what's coming out and where to find it. It's back to the equivalent of a search ad, and changes are (just based on sheer numbers) that Wilco dollar is more effectively spent on Wilco search results than a social network display.