General Motors has pulled $10 million in ads from Facebook because they just didn't work, according to Wall Street Journal reporter Dennis K. Berman,GM is the only major advertiser to pull its ad campaign from Facebook, but it might not be the last, given these click-through rates:
Berman, the Journal's Marketplace editor, wrote on Twitter:
"GM has pulled its $10 million advertising campaign from Facebook. Why? The ads didn't work."
Click-through rates are much lower on Facebook than they are on the internet generally, or on Google, according to WordStream (which manages search ads on Google and thus has a conflict of interest):Farhad Manjoo reflects on FB's advertising quandry:
The problem for Facebook is that one or two ads by beloved companies like Ben & Jerry’s just isn’t going to cut it. To justify Facebooks’s $100 billion valuation, investors are going to expect amazing growth in its revenues—something on the order of 25 to 30 percent per year, according to analysts. At the moment, Facebook makes nearly $5 in revenue per user per year, and just $1 in profit per user per year. Because it will be difficult for Facebook to attract far more than a billion users—there are only so many Internet-enabled people on earth—its revenues must grow by selling each user for more money to advertisers. As my colleague Will Oremus explained last month, Facebook has to find a way to generate an order of magnitude more money from each of us. If it doesn’t make steady progress on that goal every single quarter, its stock price will fall—and even though Zuckerberg is very well insulated from shareholder revolt, a falling stock price will hurt Facebook’s ability to hire the best engineers, to acquire the best startups, and even to attract more ads.