What if it's not a binary (advertising works/ doesn't work)? In my view, part of Google's success is they allowed advertisers (as well as self serve businesses) to better measure the ROI from the advertising. In other words, for direct response campaigns, the best option pre-AdWords was through TV. But Adwords really let's you measure your ROI with a granularity not possible with mailers/tv ads.

So direct response campaigns existed before google b/c there was some value holding it up; Google just came along and revolutionized it. That's part of their power from the advertisers POV -- metrics.

Large, nationwide branding campaigns have been effective b/c the entry cost to run one means they are only feasible to large corporations. And those corps have the resources to run the market surveys that are really necessary to evaluate the effectiveness of a campaign. Smaller ad budgets just can't do the followup efficacy measurements.

I definitely think both direct and branding based advertising works. I wonder if Facebook's play will be to revolutionize large branding campaigns, while google focused on the direct response (CPC v CPM, at its core).