Facebook is fast becoming one of the most popular forms of social media marketing out there.  I think it helps tremendously that they allow you to establish a business page for free, and you can employ viral marketing via your page for free – it's free word of mouth.  The free version even provides analyitical tools to measure your page's performance.

You can also run promotions either directly through FB or with other applications that interface with FB.  One company I consulted for used ran a contest that allowed voting via a designated FB page.  Again, amazing opportunity for viral marketing through the news feed.  The contest was a huge success and although it wasn't hosted on Facebook, it was much more visible and easier to maintain because of the FB interface.

I haven't had experience with their paid advertising services, however, so I can't comment on their effectiveness, but my experience with the basic (free) service has been a positive one.

Any sales person will tell you that the easiest sales are the ones that are driven to him or her from recommendation. The buyers are invariably hot, focused, are already confident in your product or service and almost always ready to buy. 

What Facebook does is give the marketer a platform on which to display the product or service professionally. The skill is then to build a network of fans, friends or application users. Once you have a large enough network in place, you can use the tools available within Facebook to distribute your product through the network of your networkers. The biggest bonus to this type of promotion is that the recipient invariable sees your product has bening recommended – why? Because a friend, someone within their network sent it to them.

Lets illustrate this with an example.

Most Facebook users will have a database of 50 to 300 friends. If you are marketing sunglasses, and have developed a Facebook fan site of 1000 Facebook members. Your real network reach is nearer 150,000 (150 friends x 1000 fans) If you post an offer of 15% discount for the latest frame son your Facebook pages, and you manage to get all 1000 fans to endorse the offer it's like a 150,000 mailout to customers who come recommended.

The best part of all this is the fact that, apart from your time, its FREE. You don't need Facebook paid advertising, the Social Tools available with Facebook do a better job of converting sales anyway.