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GM Defriends Facebook

The following video is part of our "Motley Fool Conversations" series, in which industrials editor/analyst Brendan Byrnes and technology and media editor/analyst Andrew Tonner discuss topics across the investing world.

In today's edition, Brendan and Andrew discuss GM's recent decision to stop advertising on Facebook. GM will maintain its free Facebook page but will no longer purchase advertising on the site. Brendan thinks this could potentially affect Facebook more than GM, considering that GM is the third largest advertiser in the U.S. While the amount that Facebook is losing from GM is very small -- $10 million -- the bigger risk lies in other companies following GM's lead and taking a harder look at advertising on Facebook. Andrew thinks this might hurt Facebook a bit but won't have a material impact on the company, as there are still a massive amount of people that can be reached on the social networking site.

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Andrew Tonner has no positions in the stocks mentioned above. Brendan Byrnes owns shares of Ford. The Motley Fool owns shares of Ford. Motley Fool newsletter services recommend Ford, General Motors Company, and Procter & Gamble. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (2) | Recommend This Article (3)

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  • Report this Comment On May 17, 2012, at 8:47 PM, gemoriah wrote:

    Advertising is running into a brick wall. It is so prolific that people are ignoring it. TV every 7.35 min a commercial, banner ads at the top, sides, bottom and in the middle of the text on a web page. Drive down the road and billboards line the way, people stand on the street corners and twirl signs for who knows what. People will and are becoming numb to it. It may still sell, but how much longer will that be.

  • Report this Comment On May 18, 2012, at 11:26 AM, pondee619 wrote:

    What is the "click" rate of an internet ad?

    What is the rate for FB ads?

    How long will companies pay for "ads" that do not draw business?

    How else does/will FB makes money, other than ads?

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