GM Stops Facebook Advertising

Details

Published on Wednesday, 16 May 2012 16:41

Just days before the oversubscribed Facebook IPO, General Motors, the third largest advertiser in the US, has pulled all adverts from the Facebook platform (read here).

General Motors (GM) spends about $1 billion on advertising a year, $40 million on Facebook, of which $10 million was spent on Facebook adverts, the rest on generating content, etc. 

While GM have not said why they are withdrawing their adverts, it is suspected its because users ignore adverts on Facebook. Recent research found nearly 60% of users never click on Facebook adverts. With the  rise of mobile browsing, even fewer chances to click on adverts exist (which is something Facebook have said they are worried about).

This loss of an iconic advertiser sits alongside another 'desertion' trend, that of mainstream retailers abandoning their Facebook stores. Gap, J.C. Penney, Nordstrom and GameStop all opened and then closed shops on Facebook in the past year.

These 'desertion' trends owe their origin to the fact that Facebook is attempting to become something its users never intended it to be. People tend not to go on Facebook to shop or search for products - they use Google for that. People appear to use Facebook to keep in touch, to be 'social', rather than to consume.

Does this spell the end for Facebook? No, but it does pose an interesting dilema for the company, and for those lemming like investors jumping onto Zuckerberg's ship as it attempts to float.