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The automaker said its Facebook ads have proved to be ineffective

General Motors Co. (GM) pulled its paid advertising from Facebook only days before the social network's massive initial public offering (IPO).

GM reportedly spends about $4 billion annually on advertising worldwide. Of this $4 billion, approximately $10 million is spent on Facebook advertisements, and another $30 million on Facebook fan pages.

While Facebook ads take up a fairly small amount of GM's total amount spent on advertisements annually, the automaker says the advertising on the social network has proved to be ineffective. GM has decided to axe its $10 million spent on Facebook ads, but will keep its Facebook fan pages.

"We regularly review our overall media spend and make adjustments as needed," said Greg Martin, a GM spokesman. "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 multiple social and digital media outlets.

"In terms of Facebook specifically, while we currently do not plan to continue with advertising, we remain committed to an aggressive content strategy through all of our products and brands, as it continues to be a very effective tool for engaging with our customers."

Experts say that GM could be having troubles gaining business from its Facebook ads because its customers are older and do not have as much of a presence on the social network.

Many wondered if GM's decision, which came only three days before Facebook's $104 billion IPO, would affect investor's view of the social network at a crucial time. Facebook is expected to price its shares on Thursday and begin trading under the ticker "FB" on Friday. 

While other automakers may see benefits to advertising with Facebook, The Wall Street Journal recently reported that Google ads are more effective than Facebook ads. Facebook's clickthrough rate was 0.051 percent in 2010 while Google's was 0.4 percent. Clickthrough rates are the number of times users click on ads.

This sort of information could really put a damper on Facebook's upcoming IPO this week. Other potential impediments on Facebook’s plate include the U.S. Federal Trade Commission's (FTC) probe into the social networks $1 billion Instagram acquisition, which aims to increase Facebook's mobile usage, since the company's amended S-1 filing with the Securities and Exchange Commission on Wednesday mentioned that Facebook revenue will decline as more user's access the site from mobile devices instead of PCs.

Sources: The Detroit News, The Wall Street Journal

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RE: correction
By kleinma on 5/16/2012 2:35:47 PM , Rating: 4
Facebook will go the way of the Dodo, AOL, and MySpace soon enough. Once people start to realize they are cattle whos privacy is being raped in order for zuck to pad his pockets, they will hopefully figure out that they are the batteries that run the facebook machine. They offer a mediocre social platform that doesn't cost money, it just costs privacy.

RE: correction
By FaceMaster on 5/16/2012 2:42:27 PM , Rating: 2
Meh, I don't care, I can keep in touch with friends and relatives better than any previous generation has done, and for the first time ever the majority of people in the world have been on the same site! Never cared much for having to sign up to various services to keep in touch with everybody.

Of course people are going to think it's all some kind of conspiracy.

RE: correction
By JediJeb on 5/16/2012 3:06:57 PM , Rating: 2
I keep up with my family and friends the old fashioned way, it's called Facetime :)

RE: correction
By spamreader1 on 5/16/2012 5:10:42 PM , Rating: 5
I chose the older easy way, I don't keep up with them.

RE: correction
By Bonesdad on 5/16/2012 11:12:24 PM , Rating: 2
better than any previous generation has done...didn't know they measured this type of data historically. And I doubt that it's true...most previous generations lived with their family's, or at least in the same town as their family. With the crap that is continually posted on Facebook, I honestly wonder what the h*** people find so fascinating.

RE: correction
By TSS on 5/16/2012 2:46:59 PM , Rating: 5
Hah. Facebook will die because of the same reasons those platforms you named died.

Not because people "woke up". Because something better came along. Easyer to use, less annoying to encounter.

If you name those, you've got to name the original social network, Geocities. And the only reason that became popular, is because before geocities the only way to make a website was to learn actual HTML code. Then geocities introduced some simple tools that could do the same, only in a basic form. But basic is better then nothing, so even i had a geocities website.

Facebook is just the ultimate continuation, where a standardized template and powerfull but simple tools allows you to make an "individual website", but within certain restrictions (like no annoying background music) to keep it looking "professional".

If i'd had to wager any guess, the next "facebook" will be a social network who will allow much easyer creation of actual media, rather then just collecting and sharing that media. Basically facebook meets youtube & fraps.

"When an individual makes a copy of a song for himself, I suppose we can say he stole a song." -- Sony BMG attorney Jennifer Pariser

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