It was reported today that automaker GM will no longer be spending $10M of its annual $40M Facebook marketing budget on paid advertisements. The reason? According to Joel Ewanick, GM’s CMO, after months of analysis, he and his team came to the conclusion that the ads’ impact on consumers wasn’t great enough and didn’t warrant such an expensive investment. In short, users just haven’t been clicking through. Today’s announced cutback doesn’t mean GM’s overall commitment to Facebook has waned or that its other investments on the social site aren’t still providing healthy ROI — clearly they are, as GM will continue to allocate $30M toward maintaining its corporate page.
GM’s pullout isn’t likely to cripple or even cause much of a cramp in Facebook’s multi-billion dollar revenue. What it could do, and significantly if others follow GM’s example, is cast doubt on the site’s reportedly $100B+ valuation, set for IPO this Friday. Further complicating Facebook’s case is a new AP/CNBC poll out today that confirms on the user-end what GM discovered: paid advertisements and sponsored content on Facebook aren’t very popular with consumers. With more than 1,000 Facebookers ages 18 and over surveyed, the poll showed an overwhelming 83 percent of respondents “never” or “hardly ever” clicked on brands’ Facebook ads and sponsored content. 12 percent reported they “sometimes” did, and just 4 percent said “often.” Given these numbers, it’s no surprise that GM made the decision it did today. Now, we’ll just have to wait and see if other heavy ad hitters follow suit (Chrysler and Ford have already publicly stated they have no intention of joining GM), and how, if this is the case, a wide-scale retreat will affect the social networking site.