Why Facebook Walked Away From A $10M Annual Deal With GM

There has been a tag of war brewing between Facebook and General Motors which finally ended up with GM pulling out of Facebook’s advertising platform just before the company went public a few days ago. Some speculate that this was a move by GM to inflict maximum injury on the social network giant that boasts of having roughly 900 million users. The conflict between the two successful US companies started when GM wanted to have larger and more flashy adverts on Facebook, a request which Facebook would hear none of because it meant serving their wide membership base with several classy customized ads from GM, a move that would have made other companies line up that would have led to Facebook becoming an advertising platform rather than a social platform where family and friends catch up. Despite Facebook walking away from a $10M annual deal with GM which constituted of about 5% of their annual revenue, they are still confident that their advertising platform, both their normal paid ads and sponsored ads that integrate into users news feeds will serve their cashflow well. Looking at the big picture, several other companies have also requested to have bigger and flashier ads to reap the maximum benefits out of the social network giant as they were not sure about how much traffic the usual ads on Facebook generate and this is why Facebook came up with a new metrics tool that shows page owners exactly how much public attention their posts can generate with paid ad promotion.

GM however said they are still planning to invest $30M in advertising via the giant social network, an amount which they plan on not giving Facebook a penny of.

“It’s all very well having millions of fans talking about you on a Facebook page, but how much is that selling product?” says Simon Mansell, founder and CEO of TBG Digital, which helps marketers craft and manage Facebook campaigns.