GM Un-friends Facebook for Paid Advertising

By Steve Anderson May 15, 2012

General Motors today announced plans to stop using paid ads on Facebook, following the determination that the paid advertising had very little impact on consumer behavior choices. But that doesn't mean that GM will stop using Facebook in terms of advertising and promotions, rather, that they'll be going about it in a whole new way.

GM has decided to focus its Facebook advertising ventures on Facebook pages instead, where it can display the content they like at no additional cost, as opposed to paying Facebook for advertising space. It's the kind of effort that makes perfect sense for GM—getting people to add GM to their friends list in a bid to find out more about GM's upcoming offerings, or in exchange for prizes, costs a lot less than paid advertising—but couldn't come at a worse possible time for Facebook.

Facebook's IPO is slated to launch this Friday, and with plans to price shares in the $34-$38 range in a bid to raise $6.4 billion or more. Facebook needs high-profile advertisers to show the service's value and potential for longevity. If big names like GM are looking at the service and saying that they can get better effect from using the standard Facebook page at no cost to promote its products than it can from actually paying for advertising, how long until Facebook's other advertisers pull their own ads and leave Facebook without a substantial source of income?

Sure, Facebook has other revenue streams in the making, like the Facebook Credits program that allows access to extra content like in-game items and movies, but these aren't enough to draw attention the way advertising would, and likely would have a deep impact on Facebook's bottom line. Those seeing such effects in advance may well even stay away from Facebook's upcoming IPO, or potentially even short the stock expecting it to crater once the hype dies down. And given earlier reports that Facebook runs the risk of losing social gaming innovators due to its current policies and stance on the companies, even that revenue stream is looking a bit threatened.

It's a bad situation for Facebook that comes at just the wrong time. But one critical question remains: can Zuckerberg et al manage to convince potential investors that just because GM jumped ship doesn’t mean that large numbers will follow GM over the rails, or is the Facebook story of rags to riches about to come to a bitter end? That will remain to be seen, and possibly sooner than anyone expected.




Edited by Brooke Neuman

Contributing TechZone360 Writer

SHARE THIS ARTICLE
Related Articles

Ford's Autonomous Car Plan Implies We're Idiots

By: Rob Enderle    8/29/2016

According to CrashStats, about 18 percent of injury crashes, and 16 percent of all police reported crashes were caused largely because we weren't actu…

Read More

Apple Goes Social with Video Editing App

By: Alicia Young    8/26/2016

The goal is to offer simple video editing with tools that appeal to millennials and upcoming generations-the people who grew up surrounded by social m…

Read More

How Do the Year's Threat Predictions Match Reality?

By: Special Guest    8/24/2016

Last year, Fortinet's FortiGuard Labs global threat research team made a series of predictions about cyber threats in 2016. We are now halfway through…

Read More

Automakers Invest in Wearable Tech Pilot Programs

By: Lindsey Patterson    8/24/2016

The advent of wearable technology has recently generated a number of creative products. Consumers check for email messages using "smart" watches and i…

Read More

AI's Major Role in EU's New Data Privacy Regulations

By: Special Guest    8/23/2016

Earlier this year, the European Union passed the General Data Protection Regulation - landmark legislation addressing data protection and privacy conc…

Read More