On the eve of Facebook’s wildly anticipated initial public stock offering, General Motors said Tuesday that it is “reassessing” its spending on Facebook paid ads — about $10 million — but “remains committed” to the social network as part of “an aggressive content strategy with all our products and brands.”
In other words, GM will not pay Facebook for ads but will continue to maintain content, for which Facebook doesn’t collect revenue. News of the decision was first reported in the Wall Street Journal.
GM’s position is far from universal. Ford Motor said it would “accelerate” Facebook paid ad spending in conjunction with the content it’s producing for the network.
But GM’s pullout points to Facebook’s biggest challenge: Though most consumer brands see the social network as a way to connect with consumers, opinions are mixed on the value of paid ads there. Posting messages is free, but Facebook astonished the market in February when it revealed that only 16% of “fans” see any given piece of content. To reach more “fans” as well as their friends, marketers were urged to buy advertising.
Automotive is a tough category for Facebook, as the purchase cycle is long and many factors influence a decision. A spokesman for the company said it would have no comment on GM’s decision.
Sources told Ad Age that world’s second-largest automaker has been reviewing the effectiveness of Facebook paid ads vs. placing content on the site for a while. (GM named Carat as its new media spending agency in January.). GM spokesman Tom Henderson said that the carmaker would continue to budget for content spending on Facebook “because Facebook continues to be a really effective tool for engaging with our customers.”