General Motors Decides to Stop Advertising on Facebook

June 4, 2012

Unlocking Word Meanings
Read the following words/expressions found in today’s article.

1. impact (n.) – effect or influence on something
Example: The impact of television advertising on the company sales is very great.

2. interact (v.) – to communicate or do things together
Example: Skype helps people from different countries interact with each other.

3. customized (adj.) – made to fit the needs and wants of the customer
Example: There are customized cars built for people with disabilities.

4. banner (n.) – a large advertisement, usually found across the top of a web page
Example: Most websites earn money when people click on their banners.

5. polish (v.) – to make better; improve
Example: Companies need to test and polish their products before selling them to the public.

Read the text below.
Last year, General Motors Co. (GM) spent $40 million on Facebook advertising. This year, GM has decided to stop advertising on the popular social networking site, saying Facebook’s advertising lacks impact on the market.

However, GM will continue to maintain its free Facebook pages through which it markets products and interacts with consumers.

Since GM is the third largest advertiser in the US after Procter & Gamble and AT&T, its decision has caused some to doubt the effectiveness of advertising via new media like Facebook.

John Batelle, the chairman of Federated Media, says GM’s decision to discontinue advertising on Facebook is a warning. He advises Facebook to work on its relationship with major advertisers and to develop   customized advertising options for them.

But there are some who still believe that advertising on Facebook is worth the money. Ford Motor Co. spends 20% of its marketing budget on social and digital media and even plans to increase spending on Facebook ads.

Another automaker, Subaru, willingly pays for Facebook banners, and has free content posted on Facebook as well.  Subaru’s spokesman, Michael McHale, says having both advertisement and content on Facebook results to more clicks on the company’s website, which is what the company wants.

Meanwhile, Facebook seems to be polishing its advertising strategy, hiring Carolyn Everson, an ad industry veteran who used to work for Walt Disney, Viacom MTV Networks, and Microsoft. Facebook also hosted a big event last March which featured its latest ad options.

Viewpoint Discussion
Enjoy a discussion with your tutor. 

Discussion A

·         In your opinion, are Facebook ads or ads on social media sites effective? Why or why not?
·         What do you think is the most effective method of advertising? Does this advertising method also get your attention the most?

Discussion B

·         Do you think a company should spend the biggest part of its budget on advertising? Why or why not?
·         What else should a company focus on besides advertising (e.g., research and product development, human resource, production. etc.)? Why do you think so?


June 4, 2012