General Motors announced it will stop advertising on Facebook, after determining that paid ads on the social network have had little impact on car purchases. The company will, however, continue to maintain free Facebook pages, reports the Wall Street Journal.
The decision is significant, since it comes at a time when Facebook is determining how it will monetize its 900 million users and justify a potential $104 billion IPO.
GM is the nation’s third largest advertiser and its decision may influence other companies that have said they are also finding it difficult to measure Facebook’s ad effectiveness.
“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,” suggests Nate Elliott, an analyst at market research firm Forrester.
Elliott believes other companies will begin shifting advertising dollars elsewhere. According to a related SlashGear report, Elliott notes Facebook’s “inconsistent jumping between different advertising strategies as it desperately hunts for something that will actually make it money” as a main reason for frustration.
Facebook has also struggled to profit from the growing number of users on mobile phones and tablets. A wide variety of businesses have told Elliott that “they’re no longer sure Facebook is the best place to dedicate their social marketing budget.”
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