(Reuters) - General Motors Co will stop advertising on Facebook, a move that comes during the same week the social networking website is due to go public.
The U.S. automaker confirmed a report by the Wall Street Journal. A source familiar with the automaker’s plans said GM’s marketing executives decided Facebook’s ads had little impact on consumers.
GM said it will still have Facebook pages marketing its vehicles, but it will drop use of paid ads. Anyone can create a Facebook page at no cost. GM pays no fee to Facebook for its pages, which allow the automaker to reach consumers directly.
“We regularly review our overall media spend and make adjustments as needed...it’s not unusual for us to move our spending around various media outlets - especially with the growth of multiple social and digital media outlets,” GM said in a statement.
“In terms of Facebook specifically, while we currently do not plan to continue with advertising, we remain committed to an aggressive content strategy through all of our products and brands, as it continues to be a very effective tool for engaging with our customers,” GM said.
GM spends about $40 million on its Facebook presence, but only about $10 million of that is paid to Facebook for advertising. The rest covers the creation of content and the agencies involved, The Journal said.
GM, the country’s third largest advertiser behind Procter & Gamble Co and AT&T Inc, spent $1.11 billion on U.S. ads last year, according to Kantar Media, an ad-tracking firm owned by WPP PLC. About $271 million of GM’s total ad spend last year was for online display and search ads excluding Facebook advertising.
Facebook Inc, founded eight years ago by Mark Zuckerberg in a Harvard dorm room, is expected to start trading on the Nasdaq on Friday. The world’s No. 1 social networking site raised its price range on Tuesday, potentially giving the company a valuation of more than $100 billion.
(This version of the story has been corrected to show that Facebook raised its IPO price range on Tuesday, not Monday, last paragraph)
Reporting by Ben Klayman in Detroit, additional reporting by Deepa Seetharaman; Editing by Leslie Gevirtz