GM Had 1,999 Reasons to Crash Facebook's IPO Party

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GM FacebookGeneral Motors (GM) really knows how to time an exit.

The automaker has announced that it will no longer advertise on Facebook, just days before the social networking giant is set to go public.

GM doesn't have a beef with the content on Facebook. It's just not satisfied with the effectiveness of the paid ads that it's been placing on the wildly popular website.

Maybe that's not a surprise: When's the last time you clicked on a Facebook ad?

Search marketing manager WordStream compared the click-through rates at Facebook to Google (GOOG). It discovered that just 0.051% of Facebook ads -- or 1 in every 2,000 impressions -- received clicks for advertisers.

By nature, folks don't like clicking on ads. Even on Google.com, where visitors are there expressly to be taken somewhere else, users prefer the organic search results over the sponsored entries. WordStream found that Google ads generate a click-through rate of 0.4%, or 1 in every 250 impressions.

Is Facebook too good at what it does? Are its more than 900 million active users so addicted to the platform that they don't want to click on an ad that will take them away from what they're doing?



Taking a Free Ride

GM isn't giving up on Facebook as a promotional platform. It will continue to milk the social-viral nature of the website, reaching out to visitors of its official fan pages and those who have GM and its cars in their Facebook news feeds.

It makes sense. Why buy the cow when you can milk it virtually for free? However, Facebook isn't going to look too kindly at this practice if more large corporate customers follow suit.

Facebook will never make individuals pay to use its site, but we may eventually reach a point where the social networking behemoth installs a pay-to-play requirement for corporate accounts. Why should a company be able to set up a fan page, reach an audience whose members choose to follow it, and not pay Facebook for the leads and the perpetual contact?

Better Ads

There's a better solution, of course. Facebook can just improve the monetization of its page views. Improving its ad-targeting technology to make sure that sponsored messages are reaching more receptive audiences is one place to start.

Facebook will also benefit as local advertisers grow to the point where they can muscle out national marketers. Users are more likely to click ads by area venues and service providers that will be more relevant and realistic.

Obviously Facebook is just starting to cash in on its gargantuan traffic. GM may be peeling out in a very public manner -- at a lousy time for Facebook -- but it's the social networking giant that's probably having the last laugh.

After all, in just eight years Facebook has achieved a market valuation that is three times greater than what GM has amassed in more than 100 years.



Motley Fool contributor Rick Munarriz does not own shares in any stocks in this article. The Motley Fool owns shares of Google. Motley Fool newsletter services have recommended buying shares of General Motors and Google.


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kvja54

screw gm !!nothing but a bunch of junk!!

May 18 2012 at 8:13 AM Report abuse rate up rate down Reply
Wwhatever747

Good for him to become the youngest billionare.

AOL's the best I won't register with huffPost they're too nosey. Now they are at my throat trying to get me to register with them along with AOL. It sucks.

May 18 2012 at 3:52 AM Report abuse rate up rate down Reply
Wwhatever747

Yawn.

May 18 2012 at 3:48 AM Report abuse rate up rate down Reply
Mom and Dad

Businesses are stupid and wasteful. They will continue to buy F***Book ads. F*c*book will never sell anything. If somone says "like us" on F*c*book, I flip them off. There should be a link that says "f*ck us". I'd click on that.

May 18 2012 at 1:04 AM Report abuse +1 rate up rate down Reply
bukasa

like a gossip magazine. Peiole dont work anymore . This lazy generation is is getting worse because of facebook and texting. Might as well use telegraph. Not one person will purchase anything tru facebook, it is not designed for advertising. Waste of money.

May 17 2012 at 9:04 PM Report abuse +2 rate up rate down Reply
mftllb

I have build more cars than can be imagined, for corp. and personal,I have worked on every brand.GM Ford Chrysler Honda Toyota,You name it, GM is and will always be one of the best manufactures of cars,ever, if somebody thinks they know a better brand buy it and you will get what you pay for.But stupid off the wall comments from people that dont know anything about cars just show their ignorance!

May 17 2012 at 7:49 PM Report abuse rate up rate down Reply
1 reply to mftllb's comment
artorius317

And they still can't build a car to beat the Ford GT, lol. When a GM car wins a 24 La Mans, let me know.
http://en.wikipedia.org/wiki/List_of_24_Hours_of_Le_Mans_winners

May 18 2012 at 8:14 AM Report abuse rate up rate down Reply
Master Chief

I HATE facebook ads. I hate ads anywhere. Especially video ads that I can't skip. Drive me bonkers.

May 17 2012 at 5:34 PM Report abuse +4 rate up rate down Reply
gdad321

Why would someone invest in Facebook if it's CEO doesn't even know how to dress or buy clothes?

May 17 2012 at 3:01 PM Report abuse +3 rate up rate down Reply
1 reply to gdad321's comment
Wwhatever747

Re: He's addicted to his bank balances, stock portfolos, lawyers advices, etc, just forgot how to do himself when it comes to fashion? It's nice that he's comfortable with himself. Till he gets a girfriend or a gay lover that will demand a change in him?

May 18 2012 at 3:50 AM Report abuse +1 rate up rate down Reply
dreester08

why doesn`t anyone remember that FORD went and "borrowed money acouple of years before GM???? they couldn`t get anymore-that`s why

May 17 2012 at 2:58 PM Report abuse rate up rate down Reply
phil.smith2

Paige Parkerson Allegedly Murders Clifton 'JR' Barkin

Parkerson, whose Facebook page lists her favorite quotation as, "if looks could kill i would be da murder of all my haters,"

So, she posts her propensity to kill on Facebook and the company did nothing to alert authorities?

May 17 2012 at 2:55 PM Report abuse rate up rate down Reply