Facebook has become one of the Web’s top brands and destinations. Hundreds of millions of people use it daily. It is truly a modern phenomenon.

Its recent IPO caught the frenzy by generating a valuation of 40x very quickly. But its value sunk back nearly as quickly and, if you were to believe all the shaming going on, will never recover. One issue amplified by the skeptics is that Facebook generates 82% of its revenues from online advertising, an over-reliance they find troubling. By extension, any pessimism about Facebook’s future, therefore, is pessimism about online advertising’s future.

A recent skeptical analysis of the “Facebook Fallacy” by Michael Wolff in Technology Review lays out the challenges Facebook must overcome, and why Google has a much better position in this same market. However, one of Wolff’s basic tenets is puzzling — namely, that Facebook’s heavy reliance on Web advertising makes their course more difficult. What’s puzzling is that Google is even more reliant on Web advertising, which generates an astounding 97% of Google’s revenues.

Wolff is right to point out that Facebook’s high dependence on an advertising model has created a revenue stream that generates a measly $5 per user per year, while the New York Times is still generating about $1,000 per subscriber per year. But the New York Times’ subscriber base is much smaller than Facebook’s user base, which is about to crack the 1 billion (with a “b”) user ceiling, and could easily reach 2 billion users over the next decade. That’s more than 25% of the world’s population. Scale is a factor Wolff overlooks in order to generate his narrative.

At the same time, Facebook might have a comparatively weak application for the Web — social media sharing — which is facing competition from Twitter, LinkedIn, and many local or language-based social hubs. While Facebook has pushed this into many crevices, the fact remains that from a “killer app” position, Google still has Facebook beat with its search engine. Coupled with the more robust and diversified AdSense online advertising system, Google has created an extension ecosystem for online advertising — with AdSense widgets nearly everywhere, and core Ad Words working well — that Facebook will have trouble matching in any meaningful way. As Wolff writes:

[Facebook] lacks only the big idea. Right now, it doesn’t actually know how to embed its usefulness into world commerce (or even, really, what its usefulness is).

Facebook’s targeting capabilities aren’t a game-changer, Wolff feels, as the wider Web is now rich in data and linkages so that many media companies can legitimately offer insights into user targeting and tracking that Facebook’s closed system can sometimes edge out, but not reliably — certainly not enough to reliably command a higher price point in the market.

But more objective measures of online advertising’s value show there’s still room to grow (as much as a $20 billion advertising opportunity remains to be tapped), with attention being underspent by a significant amount still. The audience and its eyeballs are online. Facebook’s positioning and potential may have been exaggerated by the hype that an IPO creates when there is a paucity of IPOs, but neither is negligible.

The real threat to advertising in my mind remains with print advertising, which may yet reach a tipping point from which it will not recover — assuming it hasn’t already begun its slow decline into niche oblivion. If there is a big shock coming in print advertising, online advertising will probably then bounce as high as print sinks, the money shifting hard to digital. Facebook may be well-positioned with targeting and capacity for those months and years. In this world, both Facebook and Google would have thriving ad businesses.

Facebook was clearly overvalued at its IPO. That’s not unusual for a high-profile and media-hyped IPO, nor are the subsequent drubbing in the market and feelings of hurt and disillusionment. But time marches on, as does Facebook. This story isn’t over by a long shot.

One factor here is that the technology press is notorious for its mood swings — heaping praise on a company one minute, piling on derision the next. It’s a fickle body, with opinions that need to be taken with a grain of salt. At one point, Amazon was doomed, Bing was going to defeat Google, Pointcast was the next big thing, AOL was dead, and so forth. The future is hard to predict, but especially difficult when you yourself are unpredictable and tendentious.

Web advertising is still growing, has a lot of headroom, but is probably going to incrementally grow year after year. Quick hits in the stock market shouldn’t be expected, and Facebook may become a value stock.

As other ways of reaching customers shrink (print, especially) and lose their targeting edge (television, radio), there’s plenty of reason to think online advertising won’t collapse, as Wolff proposes. In fact, it may be expanding even as we speak. As that leaves us with a technology press notorious for crying Wolff.