GM Pulls Ads From Facebook Ahead Of Friday’s IPO….. Not Good

GM is a massive car company and they likely spend a pile of cash to get you to buy a car. So when they decided to stop spending money on ads on Facebook, that got my attention:

GM’s decision raises questions about the ability of Facebook to sustain the 88% revenue growth achieved in 2011. Facebook said last month its first-quarter ad revenue was down 7.5% from the previous three months. Facebook blamed “seasonal trends” for the decline, as well as a greater number of users from outside the U.S., where ad rates are lower.

GM spent only about $10 million last year to advertise on Facebook, according to people familiar with the matter. That is a fraction of GM’s total 2011 U.S. ad spending of $1.8 billion, according to Kantar Media. It is also a tiny share of Facebook’s total 2011 revenue of $3.7 billion, most of which was advertising sales.

For me, it shows just how overhyped Facebook is. If GM doesn’t see the value of spending $10 million on Facebook, I’m going to guess that other companies will start to see that too. Sucks to be Mark Zuckerberg right about now with an IPO on Friday. How do you explain that to Wall Street? Oh well. At least it isn’t a passing fad.

Oh wait. A recent poll says it is. Hmmmm…..


Leave a Reply

%d bloggers like this: