GM Ditching Facebook Ads
Effort wasn't drawing in customers, says company
By Matt Cantor,  Newser User
Posted May 15, 2012 3:52 PM CDT
In this Feb. 8 photo, two workers chat at Facebook headquarters in Menlo Park, Calif.   (AP Photo/Paul Sakuma, File)

(Newser) – Bad news for Facebook ahead of its IPO: General Motors, the third-biggest advertiser in the US, has decided to stop running paid ads on the site. GM execs have found the ads aren't very effective—a conclusion other advertisers have apparently reached as well, the Wall Street Journal reports. "Companies in industries from consumer electronics to financial services tell us they're no longer sure Facebook is the best place to dedicate their social marketing budget—a shocking fact given the site's dominance among users," says an analyst.

Facebook has lately been trying to justify its $105 billion valuation by pointing to its advertising business. But a meeting with the social network's bosses didn't sway GM execs, insiders tell the Journal. GM currently devotes about $10 million to its paid Facebook ads. It spends another $30 million on content and maintenance for its Facebook pages, which it will keep—but the site itself doesn't see any of that cash. "The headwinds for Facebook right now is proving that they can convert that fan engagement into a business outcome for marketers," notes a media buyer. Still, "as long as Facebook is the bedrock of consumer engagement, advertisers can't ignore it."