GM Plans to Pull Ads from Facebook

VOA Breaking News
May 16, 2012 at 5:20 am (UTC-4)

U.S.-based General Motors says it will stop all of its paid advertising on Facebook, raising doubts about the viability of the popular social network ahead of its eagerly awaited debut as a publicly traded company.

A spokesman for the world's largest automaker says it decided to pull its ads off Facebook because they have not been effective. GM, the third-largest advertiser in the United States, spent about $10 million a year to advertise on Facebook.

The loss of paid advertising from GM will have little affect on the Internet giant, which earned $3.7 billion in revenues last year. But financial analysts say this could lead other businesses to reconsider using Facebook as part of their overall advertising strategy. The company's advertising revenue growth has slowed in recent months, and it has yet to devise a strategy to attract advertising on mobile devices like smartphones or tablet computers.

Facebook's value is expected to increase to more than $100 billion when it begins trading on the U.S. stock market's Nasdaq exchange on Friday. The company on Tuesday raised the price of its initial public offering from $28 a share to at least $34 a share.