By Jeremy C. Owens,San Jose Mercury News –
SAN JOSE, Calif. — As it prepares for its highly anticipated IPO, Facebook continued with the business of being the world’s largest social network Tuesday, dealing with the loss of a large advertiser even as it “acquired” a small London company.
General Motors, reportedly the third-largest advertiser in the United States, is halting its paid Facebook advertising, the company confirmed.
“We regularly review our overall media spend and make adjustments as needed. This happens as a regular course of business and it’s not unusual for us to move our spending around various media outlets — especially with the growth of multiple social and digital media outlets,” a GM spokesman said Tuesday in an email statement.
A report from The Wall Street Journal said that GM was pulling out of the paid Facebook ad market because the company found its ads on the Menlo Park company’s social network to be ineffective. The Journal, which reported that GM spent $10 million a year on paid Facebook advertising, cited unnamed sources for its information.
Analysts say GM is not the only company doubting Facebook’s ability to woo consumers with paid ads.
“Companies in industries from consumer electronics to financial services tell us they’re no longer sure Facebook is the best place to dedicate their social marketing budget — a shocking fact given the site’s dominance among users,” Forrester analyst Nate Elliott wrote in a Monday blog post, according to the Journal.
Bad news on the advertising front reflects poorly on Facebook just days before an initial public offering expected to reap billions for the company and value it at up to $104 billion. Advertising is Facebook’s main revenue stream, and it has already admitted that it is not yet able to convert its mobile app’s growing popularity into more advertising dollars.
An acquisition announced Tuesday could help Facebook in its mobile attempts, however — the company agreed to acquire the team behind a London-based mobile firm called Lightbox.
The deal is solely for the employees of the small company, which produced apps and products similar to Instagram, which Facebook has agreed to acquire for $1 billion, but Lightbox has more of a focus on Android devices while offering nonmobile options.
Lightbox will stop accepting new members and close its doors in about a month.
“The Lightbox team has incredible experience developing innovative mobile products that people love,” a Facebook spokeswoman said in a statement to Dow Jones Newswires.
The deal is similar to Facebook’s acquisition last week of Glancee, a San Francisco-based location-sharing mobile app. No terms were disclosed in either deal, but both are believed to be solely for the companies’ workers, which will help Facebook boost its mobile teams with experienced employees.
Facebook is expected to execute its IPO Thursday night, with shares hitting the Nasdaq stock exchange Friday morning under the ticker symbol FB.
