General Motors Pulls Out $104 Billion Budget on Facebook

General Motors pulled out its advertisements from social networking giant Facebook amid doubts that Facebook is not able to entice users with paid ads. 

This is the first company in the United States to express its fears over Facebook’s performance. General Motors ranks third among the top advertisers on Facebook. Industry observers are expecting that more advertisers will follow GM’s lead. 

Nate Elliot said GM’s move is shocking especially since Facebook is without a doubt the most popular site in the world. Elliott is an analyst from IT and marketing research firm Forrester. 

The news of General Motors’ pullout is bad news for Facebook. Advertising is a major revenue stream for Facebook. The tech giant is set to launch its public offering in the next few days, where it is expected to rake in billions for Facebook. Industry analysts said Facebook is likely to be valued at $104 billion. 

Despite the advertising pullout, General Motors still maintains its Facebook pages. Fan pages, however, cost nothing and anyone can create a fan page for free. If enhancements like apps are needed, development of these is done by third-party agencies and not Facebook. 

A spokesman from General Motors said the company regularly reviews its media spend and would make budget adjustments when necessary. He added that this is a routine practice in many companies and GM’s pullout is not unusual. 

It may not be unusual for GM but the pullout has definitely piqued the interest of industry observers. According to Brian Wieser, the pullout can bring more concerns about Facebook’s business model.