Facebook’s future was looking less secure after one of its key advertisers walked away from the site.
General Motors has decided Facebook’s ads had little impact on consumers and it would be better off doing something else with the $40 million it spends. Desperate Housewife in the 4.30 at Derby would seem to be a safer bet.
Facebook, which is about to have a huge IPO, needs the announcement by GM like a hole in the head.
GM is the third-largest advertiser in the United States, and is starting to show some doubts about whether advertising on Facebook works better than traditional media.
Analysts are saying that while Facebook looks likely that it will be one of the most important ad-supported media properties, it’s not certain marketers can prove it works.
GM said it will still have Facebook pages, which cost nothing to create and for which it pays no fees, to market its cars.
Ford at least is OK with Facebook. It told Reuters that it was committed to advertising on Facebook and is boosting its spending.
The company spends a fifth of its marketing budget on digital and social media.
John Battelle, chairman of the Internet advertising network Federated Media, told Reuters that Facebook needed to build relationships with major advertisers.
It might need to come up with customised advertising offerings, even though such efforts would likely be less profitable than traditional display or pay-per-click advertising.