• by Laurie Sullivan  @lauriesullivan, March 24, 2009

HOLLYWOOD Calif. -- Social media isn't a good medium for advertising. It is the worst medium for advertising. It will never work. It hasn't worked for chat rooms, message boards, AIM or other socially interactive mediums. Jason Calacanis, founder and CEO at Mahalo, told OMMA Global Hollywood attendees Monday that social media may not work, but search does.

Think of Facebook and social networks as parties, the time when people are least likely to watch advertising. "People don't want marketing messages in social networks or when they are having a dinner party," Calacanis said. "Social media is fantastic at collecting data, behavioral stuff, you can use at some other point, but it's greatly overstated."

Pay-per-click ads in Google are different. That's when people are researching information.

Expect the online ad industry to experience a major economic boost from the turmoil, Calacanis said. The bad years in 2001 and 2002 during the dot-com bust led to innovations by Internet companies; the gap between online ad spending and Internet use closed. "Thinking that the Internet industry has any problem monetizing content over the next couple years is like thinking settlers had problems with real estate in the United States before we crossed the Mississippi," Calacanis said. "We're just getting started. There are massive amounts of gold for us yet to reach."

Calacanis calls Twitter the new Super Bowl commercial. Only it's not a commercial, it's direct marketing: "How much is this worth, being on the auto-suggest list on Twitter?" he asked. "When someone signs up for Twitter, the site provides options for people to follow."

Think of Twitter as a one-on-one direct marketing tool, Calacanis said, except the message is open and available for everyone to read. The search tool on Twitter makes the medium more compelling, but the site needs to clean up the results.