GM to pull Facebook ads

(MoneyWatch) General Motors (GM) will cease running paid advertisements on Facebook, according to a source close to the situation who spoke to CBS MoneyWatch.com on condition of anonymity.

The Wall Street Journal, which first reported the automaker's decision to stop advertising on the social networking firm, said on Tuesday that GM executives had determined that marketing the company's vehicles on Facebook is ineffective. GM will continue using the part of Facebook that allows companies to distribute content for free, the newspaper reported.

A spokesman for the company said the company routinely reviews and adjusts its media spending.

"This happens as a regular course of business, and it's not unusual for us to move our spending around various media outlets -- especially with the growth of multiple social and digital media outlets," GM said in a statement. "In terms of Facebook specifically, we are reassessing our advertising, but we remain committed to an aggressive content strategy through all of our products and brands, as it continues to be a very effective tool for engaging with our customers."

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The move by GM, the third-largest advertiser in the U.S., to back away from Facebook comes at an awkward time for the social network. Facebook is expected to go public on Friday in stock offering that could value the company at more than $100 billion. 

Facebook on Tuesday officially boosted the price range for its offered shares to between $34 and $38 per share, a nearly 15 percent hike from the previous range of $28 to $35.

Most of the Facebook's revenue comes from ads. Although GM spends only some $10 million in ads on the social network, a fraction of Facebook's $3.7 billion in revenue, losing a high-profile customer like GM could raise fears about other advertisers abandoning the service. In its February 1 filing to go public with the SEC, Facebook said that the "loss of advertisers, or reduction in spending by advertisers with Facebook, could seriously harm" the company's business.

Questions about the efficacy of advertising over social media also could stoke broader concerns about Facebook's growth prospects. CNET News notes that consumers tend to click on online ads on Facebook at a lower rate than they do in using Google (GOOG) or other websites. 

GM spends roughly $40 million to promote its vehicles over Facebook, but only about $10 million of that goes to Facebook directly as ad payments, the Journal reported. The remainder goes toward the carmaker's other marketing initiatives on the site.

[ladyang]

Good for you GM. FB is bad for the 99%! Good for the 1%!

[PJ1252]

I didn't fall for Facebook either. It allows another method of staying in touch in an anti social manner, what is wrong with the damn phone.
So nice of that CEO to relinquish his citizenship to avoid US taxes. I'm sure all the users can feel proud they are supporting someone who doesn't pay taxes to the country they live in. Although Askagain states you can use Facebook free of charge which is true do you have any idea how things I would like to respond to or enter or view that I can't because I am not a member. Most companies seem to be on the Facebook bandwagon and if you want information or would like to leave a comment you can't if your not a member. If the company doesn't allow for another method to be in touch I have decided they are a narrow minded entity and I'm better off without them.

[endrepubs]

FB might want to reconsider the price of its stock. A lot of people are going to get burned buying this stock.

[skitbit]

I am proud to be someone who has not fallen for FB. Recently seeing a restaurant begging me to like them on FB on the inside of one of their bathroom stalls made me hope that the long, long slide down for this monstrosity will start SOON.

[tmittelstaed]

GM's Facebook ads don't work because they aren't properly targeted. Today for advertising to be effective you must target it. GM is only advertising to a small group of people in the country, known as "new car buyers" Today, new cars are so expensive that only people who make a lot of money can afford them. And people who make a lot of money aren't wasting a lot of time on Facebook. Also likely they aren't wasting a lot of time posting on CBSnews blogs.

I am quite sure that ads for new video game cartridges, fast food coupons, soft drink advertising, and so on, probably work quite well on Facebook.

I'm also quite sure that nobody posting to this blog has ever bought a new car, myself included. And frankly I don't understand what motivates new car buyers to make a selection because to me most new car purchases are enormously impractical and stupid. People buy 4WD trucks to commute to work on the highway, or sportscars that can do 150Mph and drive them around on side streets all day long not going over 40Mph, etc.

[askagain]

tmittelstaed - Although I agree with many of your points, I do buy new luxury cars, earn a very good income, and find time to post on the CBS news blog. Because so many Facebook users are young, advertising expensive cars on Facebook may not be the best use of GM advertising dollars. On the other hand, many of those young Facebook users will someday have good jobs with good incomes and will be able to purchase more expensive new cars. That is where the payoff might be for companies such as GM.

[rsamps1]

Facebook is passe. Its founder & CEO lacks integrity, & its ads are worthless. GM is right.

[JustAGreatAmerican]

Quit using Facebook! We can beat this monolith to excess off the backs of the people, by shear power of Will.

[coonana]

Facebook is about to pull the biggest swindle in history. It is a fad and the minute the word gets around that 14 year olds are fed up it will become passe and irrelevant. You heard it here first.

[P0ST1NG_AWAY]

Wonder who else is going to figure out that FaceBook is a waste of time ???

[Jeri_Evans]

I can guarantee that advertising on facebook means nothing, to me at least. I spend a lot of time there chatting with my friends, and do everything I can to avoid the ads. I no longer watch commercial television or listen to commercial radio, because of the time wasting advertisements. When I need a new car, I'll do some research and find what I want. Toothpaste ads? New fast food ads for the same old crap? Don't waste my time.

[askagain]

Jeri_Evans - You are able to use Facebook at no charge because someone else pays the freight for you, namely advertisers. Avoiding the advertising is fine but is it fair to criticize Facebook for selling advertising to pay for its operating expenses? When cable television was first introduced, we were told that there would be no advertising in exchange for subscribing to cable TV. Today, we pay for cable TV and still suffer through the commercials. Now that is something to complain about.

[m0u5y]

I block ads on Facebook and I couldn't care less. I don't care if Facebook stopped existing tomorrow because of this, honestly. I go out of my way not o buy things I see in ads. If I need something, I get the cheapest out there and only if I really need it. I definitely do not need a new car, nor do I need to go out to eat, nor do I need to buy a Segway.