General Motors decided to stop paying for advertisements on social media website Facebook Inc., according to a breaking report from the Wall Street Journal on Tuesday. The report stated that the decision was made due to several executives having gone through the revenues made from Facebook ads and coming to the conclusion that they had very little impact on Facebook, which, according to the social media website's official statistics page, had over 900 million monthly active users by the end of March 2012.
GM, according to the report, was said to have spent $10 million alone in 2011 to place advertisements on Facebook, which is separate from the additional $30 million the conglomerate put into creating marketing content on Facebook to promote their products.
Joel Ewanick, marketing head of GM, said the company "is definitely reassessing our advertising on Facebook, although the content is effective and important," according to the Wall Street Journal's report.
It was reported that Ewanick and other General Motors marketing executives met with Facebook managers in early 2012 to discuss their issues regarding ad sales and revenues from the social media site. "[The] auto executives left unconvinced that advertising on the website made sense," noted the Wall Street Journal from sources familiar with GM.
"Companies in industries from consumer electronics to financial services tell us they're no longer sure Facebook is the best place to dedicate their social marketing budget-a shocking fact given the site's dominance among users," Nate Elliott, a market research analyst from Forrester, said on Monday via a company blog post.
General Motors overall spent $1.8 billion in 2011 towards overall advertisement for its company, of which $40 million went towards Facebook site-wide advertisements and content for its official Facebook page, which can be set up at no cost. The $40 million spent was a tiny fraction of the total revenue Facebook brought in front advertisements in 2011, noted the Wall Street Journal, where the social media company, created by Mark Zuckerberg in 2004. The company made $3.7 billion, most of which were from advertisement sales.
