A few things to add, my background is in running direct response marketing campaigns for tech/web Co's. A few years back we did a small monthly ad spend via facebook, basically display ads with very cheap CPM's and even then pretty great demo targeting, but poor results. It was cheap and semi relevant so we continued on.

In the last 3-6 months many of the Co's I've been working with have greatly expanded their FB advertising with CPA's on par or better than Adwords Search. It's very important to separate branded and non branded search terms on Adwords when evaluating a campaign. Non branded is what matters for evaluating effectivess of Search campaigns.

FB has a huge advantage in demographic targeting. There are only so many relevant queries on Adwords and once you have covered your bases with relevant KW's, its hard to profitably scale past that stage. You can endlessly optimize but the gains are incremental.

I agree that buying likes on FB is not great, the exception is if your super targeted by demo and location, and then do friends of friends lead campaigns on top of the newly acquired likes, that can work, but it takes patience and a bit of budget.

FB's rising stock price is a direct result of their expanding share of advertising budgets.