General Motors Quits Facebook Advertising

General Motors is pulling ads from Facebook, calling them “ineffective”, according to a Wall Street Journal report. It was determined that their ads on the platform “had little impact on consumers,” according to the report. However, GM will continue to market via Facebook’s free brand pages.

The article quotes GM marketing chief Joel Ewanick as saying GM “is definitely reassessing our advertising on Facebook, although the content is effective and important.” Ewanick’s use of “content” in this case refers to Facebook brand Pages.

GM spends about $40 million marketing on Facebook, but only about a quarter goes to advertising- the rest going to creating content for the site, according to the report. GM spends an estimated $1.8 billion worldwide on advertising per year.

A Forrester Research Analyst, Nate Elliott, wrote a blog post on Monday questioning the social network’s advertising. “Somehow Facebook still hasn’t stumbled upon a model that’s proven consistently successful for marketers, or that brings in the massive revenues to match the site’s massive user base,” wrote Elliott. “One global consumer goods company told us recently that Facebook was getting worse, rather than better, at helping marketers succeed. And 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.”

Facebook posted revenues of $3.7 billion in 2011, the vast majority of which came from advertising. However, Facebook’s first-quarter revenues fell from the previous quarter and Facebook’s amended S-1 form, filed on May 10, cited the transition to mobile as a worrisome sign for ad revenues.

Will 2012 see growth in online ads?

From Online Media Daily: Just as gadget-crazed as consumers, advertisers are expected to accelerate their nontraditional media spends through 2012. MagnaGlobal now expects spending on Internet media (including national and local) to grow by 12.2%, this year. That’s up from the Interpublic unit’s previous forecasts of 10.9%, and, if correct, will represent $35.6 billion and a 20.2% market share.

“Encouraged by the rise of smartphone and tablet usage and the availability of scalable platforms, mainstream advertisers are now fully embracing all mobile formats (display, search, video, in-app),” said Vincent Letang, EVP and head of global forecasting at MagnaGlobal.

Letang expects mobile-related online ad revenues to grow by 53% in 2012, to reach $2.4 bil. “iAd and Facebook in particular will create more opportunities for marketers in various mobile environments in 2012,” he said. With $1.6 billion in 2011, mobile advertising already represents 5% of online advertising, and 1% of total domestic advertising.

That said, Internet media is still driven by paid search, as well as online video, which Letang expects to grow by 24% in 2012 to reach $2.2 billion.

In terms of advertising sectors, technology, finance and telecoms are expected to increase their respective expenditure at higher than average rates, according to the company.

Automotive remains a concern, but more for traditional media buyers, MagnaGlobal notes. In 2010, and again in 2011, a double-digit recovery in car sales was matched by a double-digit growth in automotive ad spend. Going into 2012, however, while new car sales were up in the first quarter, protracted unemployment and steep gasoline inflation could hamper further growth.

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