Leading global automobile manufacturer General Motors plans
to stop advertising with social networking website Facebook.
The company feels that paid ads on the site have little impact
on consumers' car purchases.
is the third-biggest advertiser across all media in the U.S,
after Procter & Gamble and AT&T.
GM spends about $30 million on content created for the site
which includes agencies that manage the content and daily
maintenance of GM's pages. The automobile giant began re-evaluating
its Facebook strategy earlier this year after its marketing
team began to question the effectiveness of the ad. Grapevine
also has it that GM has been revamping its marketing, hiring
a new ad firm to buy its media.
The move brings to light a much debated issue that many marketers
have been raising: whether ads on Facebook help them sell
more products. While GM plans to withdraw the paid ads, it
intends to continue maintaining the free Facebook pages and
promote its products on Facebook.
This move by GM also raises questions about Facebooks
ability to sustain the 88 per cent revenue growth achieved
in 2011. Facebook said last month its first-quarter ad revenue
was down 7.5 per cent from the previous three months and blamed
seasonal trends for the decline, as well as a
greater number of users from outside the U.S., where ad rates
GM spent around $10 million (5.55 per cent) of its total ad
spends in the US viz. $1.8 billion in 2011 , according to
Kantar Media. This constitutes Facebook's 2.70 per cent of
Facebooks total 2011 revenue of $3.7 billion, most of
which was advertising sales.