Recent numbers suggest that Facebook has surpassed Yahoo and Microsoft in number of display ads delivered. That’s the good news. Less inspiring, Facebook’s ad revenue is still lagging well behind competitors. While big players like Verizon, Toyota and Ford are taking the top ad spots on Facebook, it’s looking like Facebook’s success comes down to companies you’ve probably never heard of.

Case in point: we browsed the Washington, D.C. Facebook network earlier this week to see who was posting advertisements. No doubt there was some big names using the service, as seen from these banner ads:

But the majority of advertisers seemed to be local companies and start-ups. In fact, the location-based ads were so precise that businesses from the neighborhood we were accessing Facebook from (in this case Foggy Bottom) were the most predominant. As seen below, many of the ads specifically targeted George Washington University, which contains the biggest population of Facebook-goers in the area:

This isn’t to say Facebook is making the most of its ad system though. It is raking in $1 billion in ad revenue, comScore tallies, which is up from $500 million last year, but still a long way away from its more established rivals; i.e. Yahoo generated $6.1 billion in ad revenue. This could very well be due to Facebook’s advertising system, which allows advertisers to bid for ad space and can sometimes run as low as a few cents per post.

The pricing and the geo-targeting is no doubt a big appeal for so many local companies. In the end, Facebook’s advertising model is a mix of two very successful online ad models: Google’s hyper-local search ads and Yahoo’s display ads for big brands. Whether it can now catch them is another story.