General Motors is set to stop advertising on Facebook after seeing little impact on sales figures despite recent spending trends toward social media.
GM, one of America’s largest advertisers, has been unconvinced by the effectiveness of its Facebook advertising campaign on consumer vehicle purchases, according to the Wall Street Journal.
GM marketing chief Joel Ewanick told the Wall Street Journal the company “is definitely reassessing our advertising on Facebook, although the content is effective and important”. The GM content referred to includes the brand’s free Facebook page, used to promote its products without the additional costs of paying the social-media company for specific advertising.
The Wall Street Journal reports GM first started to reassess its Facebook advertising earlier in the year following the automaker’s own marketing team questioning the ads’ effectiveness. GM marketing executives then met with Facebook managers in an attempt to alleviate concerns but reportedly left unconvinced that advertising on the website made sense for the brand.
In contrast, Subaru America has committed more than US$5 million ($4.9 million) for ad spending to Facebook for this year alone, with Subaru America chief marketing officer Dean Evans saying, “half the US population is on Facebook, you have to work it to learn it”.
GM is thought to have spent about US$10 million ($9.9 million) of its US$1.8 billion ($1.79 billion) advertising budget to advertise on Facebook in 2011, with GM ranking third behind Procter & Gamble and AT&T for advertising dollars spent across all media in the US, according to Kantar Media.
Market analysts expect Facebook to start selling shares in an initial public offering on Friday that could see the company’s market value reach as much as US$104 billion ($103.9 billion) with Facebook executives spending the past two weeks convincing investors that its advertising business and pulling power is worthy of the significant valuation.
GM’s decision raises doubts about Facebook’s ability to maintain the 88 per cent revenue growth it achieved in 2011, particularly when Facebook has already admitted its first-quarter advertising revenue was down 7.5 per cent from the previous three months.