Since General Motors has come to symbolize everything that's wrong with Facebook's business model, it's no wonder the social network is attempting to win the carmaker's ad dollars back. As you may recall, GM pulled its money from Facebook just as the social network was prepping to IPO, making its widely reported advertising problems look like a real issue, at a very bad time. Now, as Facebook stock sits well below its $38 debut point, The Wall Street Journal's Sharon Terlep and Shayndi Raice have sources saying Facebook COO Sheryl Sandberg is having discussions with GM's Daniel Akerson to bring General Motors back onto Facebook. Considering the tiny percentage of money General Motors represents in Facebook's billion dollar ad business, this move looks more symbolic than economical.
When General Motors pulled its ads, Facebook lost a $10 million dollar deal, which makes up a whopping .27 percent of the $3.7 billion Facebook brought in last year. But even with that small amount of money, General Motors' move came to symbolize Facebook's ad woes. The move happened during the IPO roadshow, when the company was already facing scrutiny for its business strategy. Then, after the stock's debut, as share prices fell to embarrassing lows, it looked like GM knew all along about the weaknesses in Facebook's business model. The reason the company pulled out, it said, was because the social network couldn't give it proper metrics to prove its ad model worked. Now, sources tell the WSJ, Facebook promises it will give GM just that. "Facebook is willing to provide GM with better data on how their ads can turn into dollars, as it has agreed to do with other advertisers," an unnamed person told Terlep and Raice.
Given its unfortunate circumstances, Facebook has attempted to fight its bad-at-business image. It put together this biased study with Comscore that offered data on how brands can make money with both paid and unpaid presences on Facebook. As it faced surveys saying users ignore ads, it pointed to data that has found otherwise. But, with analysts predicting the stock will take a full year to make it back up to its $38 debut price, it doesn't sound like they've done the best job convincing anyone.
Getting GM back, however, might -- in some symbolic way -- prove the social network has a big kid (but not yet grown-up) advertising plan in place. As of now, GM hasn't committed to coming back, saying it will only return if the social network can better prove its effectiveness, sources tell Terlep and Raice. That caveat right there is the whole reason nobody believes in Facebook. It needs to prove its paid advertising works. Now that everyone has eyes on GM, if Facebook can win the stodgy car-maker back, it can make an example of it. If it's good enough for stubborn old GM, this social advertising thing really does work, they can say. Right now, though, we just get the following PR dribble. "It is a myth that Facebook advertising doesn't work," said Brad Smallwood, head of measurement and insight at Facebook in a June interview, note Terlep and Raice. Oh really? Prove it.
This article is from the archive of our partner The Wire.
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