Facebook's stock is continuing to fall in its second week on the market, now trading around the $30 mark, and all because of the social network's own stubbornness. Throughout its whole IPO ordeal, Facebook's IPO has so far continued its droopy trajectory because the market doesn't trust its advertising model. And, for good reason, Facebook hasn't proven it can capitalize on mobile, they say. Its ad revenue model isn't sustainable, say others. But an Ad Age article, which details how the General Motors-Facebook ad deal fell through, shows how some of its ad problems are of its own making.
Just as Facebook was about to IPO, GM announced it would pull its $10 million ad campaign. In the scheme of Facebook's multi-billion dollar ad business, the move only hurt the company symbolically. With the timing of Facebook's public debut, that happened to hurt a lot since Facebook needed to show it had a strong ad model. But it turns out that rather than GM losing faith in Facebook's platform, it was Facebook that quashed the auto giant's interest in a campaign. Facebook nixed GM's request to use a Facebook Page as advertising. "GM asked if it could take over a page. It was told no," writes Ad Age's Cotton Delo. Selling pages to advertising is an obvious way Facebook could make money, especially from big advertisers willing to pay that premium. Yet, Facebook has relented, claiming it would alienate its audience. "We have 900+ million people on the platform and our job is to make the advertising on the platform as good and as compelling as content from [users'] parents or their friends or their boyfriends or girlfriends," Facebook's VP-Global Marketing Solutions Carolyn Everson told Delo. "So when a marketer asks for something like that, that's just not what works on Facebook, so we would say no."