Anecdotally, I know a few companies spending between $15k and $50k+ per day on facebook's version of adwords to shovel the masses into games.

You know how people attribute worth to meaningless points in games? Kid CEOs these days attribute worth to the live-updating user stats (DAUs and MAUs, oh my) of their facebook casual-social-viral games. They'll do anything to make those numbers go up, including spending $200k to $1MM+ per month on ads.

How do those companies make back their ad investment?

More ads.

That sounds an awful lot like yahoo and aol's homepage ad deals.

simple. every user is worth 100 dollars. Like in the old days of 1999.

However accounted for inflation, it's only $76 of 1999 dollars per user. I'd say at this valuation it's a steal!

I'll invest in the next round then! ;-)

I don't think Goldman's position is really revenue based. It looks more like they are pretty much trading on the value of the company shares. I think this is really a way for them to get in on what they believe will be a pretty large IPO, and a way to make money trading on Facebook shares by getting in sooner rather then later. At some time Facebook's revenues will become relevant but you can likely make some serious money having a position in Facebook before it reaches that point.

Valuation is always a dicey territory to be in, especially when done by an investment bank. Their interests are not exactly in line with putting the actual picture out there.

One of the companies I had worked for once had its valuation done by a pretty big i-bank at $1 billion. We were flabbergasted, but they were also going to be underwriters for the issue.