In a stunning blow preceding Facebook’s IPO, General Motors announced it is canceling its paid advertising campaign with Facebook, calling the ads “ineffective,” according to a Wall Street Journal report.
The auto giant has concluded that paid ads on Facebook “had little impact on consumers,” according to the report, which cites “people familiar with the matter.”
GM will however continue to spend about $30 million per year on brand page content marketing strategies. Brand pages are of course, free. So why not spread some GM cheer into the social networking space where one-seventh of the global population spends its time?
The automaker spends about $40 million marketing on Facebook, but only about a quarter goes to advertising. The rest funds content creation for the site, according to the report. GM spends about $1.8 billion globally on advertising per year.
GM released the following statement on the matter:
We regularly review our overall media spend and make adjustments as needed. 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 social and digital media outlets.
In terms of Facebook specifically, we are reassessing our advertising, but remain committed to an aggressive content strategy with all of our products and brands, as it continues to be a very effective tool for engaging with our customers.
Another critic of Facebook’s effectiveness in the paid advertising space is Forrester Research Analyst Nate Elliott who wrote a blog post on Monday questioning the efficacy of the social network’s advertising. “Somehow Facebook still hasn’t stumbled upon a model that’s proven consistently successful for marketers, or that brings in the massive revenues to match the site’s massive user base,” wrote Elliott. “One global consumer goods company told us recently that Facebook was getting worse, rather than better, at helping marketers succeed. And 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.”