GM Pulls Facebook Ads Citing Little Effect

Today the Wall Street Journal reported General Motors pulled their ads from Facebook saying they had little effect on customers and citing “people familiar with the matter.”

The timing is couldn’t be worse, just days before the social site’s much anticipated IPO on Friday. The company’s shares are expected to be valued at around $38, making Facebook worth up to $100 billion. (Hard not to envision Dr. Evil when reading that amount, isn’t it?)

The announcement comes on the heels of the Associated Press-CNBC poll reporting more than 50 percent of Facebook users say they never click on the site’s sponsored ads. The study also shows only 12 percent of respondents say they feel comfortable making purchases over Facebook and the WSJ reported that Google’s ads have a clickthrough rate of more than seven times that of Facebook’s. This begs the question of how the social network can be effectively monetized through advertising or retail. (Of course, I think FB will find its real monetization in social TV, but that’s another matter.)

Still, some tech sites have managed to have huge IPOs even without a clear sense of how they make money. Pandora saw its value surge in the weeks leading up to its IPO, ultimately debuting at $16 per share, even though the company wasn’t profitable at the time.

Of course, we’ll know how Facebook makes out in the IPO soon enough. In the meantime, the frenzied speculation certainly is fun to watch.

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