Saturday, November 28, 2015
Did GM Just Do Facebook Investors a Favor?

NEW YORK, May15 (DPI) — In what looks like a frontal assault by an old manufacturing giant on a new tech monopoly, GM announced today that it was pulling its paid advertising from Facebook because it was not effective.

The timing of such an announcement — just days before Facebook’s planned initial stock offering to the public — suggests some ill-will at the highest levels of GM’s management toward Facebook, or toward online advertising generally. The Wall Street Journal reported that GM, the third largest advertiser in the nation, spends $40 million annually on its Facebook presence, but only $10 million of that on actual paid advertising.

Whatever the motivation, such implicit criticism may actually help potential investors in shares of Facebook. After all, Facebook’s pre-IPO valuation was getting “frothy” or “ahead of itself” according to some Wall Street analysts.

A second report — originating on and picked up by CNN today — focused on a survey claiming that nearly half of respondents regarded Facebook as a fad likely to be overtaken by another social-media platform in the future.

Given the stakes in the IPO for everyone involved — Facebook’s young management, lead underwriter Morgan Stanley and the investing public — it’s natural that tech competitors like Google, Microsoft and even Apple would encourage negative publicity. But there is no evidence to date of Facebook competitors being behind the recent reports.