Days after the news broke, we’re getting the inside story on why General Motors decided to stop spending ad money on Facebook. “GM's decision followed Facebook officials' failure to convince top marketing executives at the U.S. automaker of the benefits of Facebook's paid ads at a meeting that took place in the past few weeks,” reports Reuters, citing sources. Apparently, where Facebook officials really went wrong was by first focusing more on touting the social networking site's free pages.
"It kind of backfires on them in a funny way," a source told Reuters. In the end, GM dropped its Facebook ads because they were less effective than other options, such as Google's AdSense, sources say. Facebook's ads reportedly garner about half the clicks per page view, a measure of effectiveness, compared with the average Web site.
What’s more, Facebook's ad prices were expected to rise after the company's IPO. GM officially announced its decision to drop Facebook paid ads on Tuesday in what Reuters calls, “the first highly visible crack in Facebook's strategy and illustrated doubts about its perceived advantage over traditional media.”