If users can't tell the different between Google Ads and search terms (or between CBS and a random site), they're unlikely to distinguish between newsfeed updates from friends and paid ads
That's a big assumption to make. The bar is low for search results because they have no personality.
For friends -- we know our friends. They have a distinct personality. Ads disguised as messages from friends could have a negative effect because of this dissonance.
Typically when someone "likes" a product or service, that shows up as the ad. For example, my father "liked" Carnival cruises, this makes sense as he's been searching for a cruise lately. The ad showed his picture next to a Carnival ad. It looks very authentic if you're not paying close attention.
That's a big assumption to make. The bar is low for search results because they have no personality.
For friends -- we know our friends. They have a distinct personality. Ads disguised as messages from friends could have a negative effect because of this dissonance.