GM cuts out Facebook

General Motors (GM) confirmed a report by the Wall Street Journal on Tuesday, saying they will stop advertising on Facebook. The timing of the announcement comes just as the social networking giant plans to go public with its stock. 

NEW YORK, NY (Catholic Online) - The automaker says the ads have had little impact on consumers. In an explanatory statement GM said, "We regularly review our overall media spending and make adjustments as needed. It's not unusual for us to move our spending around various media outlets - especially with the growth of multiple social and digital media outlets."

"In terms of Facebook specifically, while we currently do not plan to continue with advertising, we remain committed to an aggressive content strategy through all of our products and brands, as it continues to be a very effective tool for engaging with our customers," the statement read.

According to the Journal article, GM has paid about $10 million to Facebook for advertising services and another $30 million to ad agencies for Facebook content creation and management.  
The announcement is significant, and not only for its timing. GM is the third largest advertiser in the nation, just behind Proctor & Gamble and AT&T. 

Meanwhile, Facebook will start public trading on Friday. The stock is expected to be a hot commodity, however some experienced investors warn it is already overvalued and on a bubble. At least one editorial considers the Facebook IPO to be a potential "tulipmania," referring to the infamous bubble in tulip prices that crashed the Dutch economy in the 17th century. 

It is unlikely that Facebook, despite its high initial offering, has the potential to do any significant harm to the economy, although investors at some point are bound to lose. Following a rise in the company's IPO prices, the company is now valued over $100 billion. 

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