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From the beginning, the people who founded Facebook wanted it to be free for everyone. Showing ads is how Facebook continues to support its growth and development.

Facebook enables advertisers to reach more than 900 million people with ads that are relevant, engaging and have social context.

Facebook Ads
People have a better experience when ads are relevant and useful. Advertisers can ask Facebook to show ads to an audience based on demographic factors such as location, age, gender, education, work history and the interests people have chosen to share on Facebook. Facebook does this in an anonymous way so advertisers don’t know the individuals who see their ads.

Advertisers can further engage their audience by incorporating social context into their ads - such as displaying when someone’s friend has liked an advertiser’s Facebook Page.

Sponsored Stories
Sponsored Stories enable marketers to amplify the distribution of stories that people have already shared with their friends. For example, when someone posts on Facebook that they have “checked-in” at a restaurant, their friends may see that in their News Feeds. The restaurant can purchase sponsored stories to increase the distribution of that story to the person’s friends.

Sponsored stories also enable marketers to promote stories to people that have liked their Facebook Page.

More resources:
Facebook Advertising
About Advertising on Facebook