In a glancing blow to Facebook Inc.’s coming IPO, one the of the three largest US advertisers in all media, General Motors Co. (NYSE: GM), will stop advertising on the social networking site. This sounds a lot worse than it is, at least in terms of dollars. According to a report in The Wall Street Journal, GM spends just $10 million on Facebook advertising, although the car maker also spends another $30 million on its own Facebook content.
There have been rumblings that Facebook’s advertising value resided more in an advertiser’s own content than in the display and other ad placements. Clearly GM thinks so.
While this is not particularly good news for Facebook right as its IPO is about to get kicked out the door, it’s not terribly devastating either. After all, $10 million out of $3.7 billion in revenue is not a big slice. But the social network needs to figure out how to do ads and how to prove that the ads are working if it doesn’t want more defectors. Once again, $10 million here and $10 million there and pretty soon it adds up to real money.
Paul Ausick
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