The majority of Facebook’s 900 million users do not click on the social network’s adverts and sponsored content on the site, according to a new survey.
The report, conducted by CNBC and Associated Press, found that 57 per cent of Facebook’s users never click on or engage with any commercial content on the site, with another 26 per cent saying rarely never do.
The decision by GM, the third-largest advertiser in the United States, marks
the first highly visible crack in Facebook's strategy and underscores doubts
about whether advertising on Facebook works better than traditional media.
"This does highlight what we are arguing is the riskiness of the overall Facebook business model," said Brian Wieser, Internet and media analyst at Pivotal Research Group.
"It is not a sure thing. It sure looks likely that it will be one of the most important ad-supported media properties, but it's not certain because there will be marketers who are challenged to prove the effectiveness of the marketing vehicle."
For now, these worries do not appear to be impeding strong investor demand, with Facebook increasing the size of its offering by 25 per cent to raise about $15 billion.
Facebook, founded eight years ago by Mark Zuckerberg in a Harvard dorm room, is expected to start trading on the Nasdaq on Friday.
GM said it will still have Facebook pages, which cost nothing to create and for which it pays no fees, to market its vehicles and added that it is not unusual for it to move spending around various media outlets.
"In terms of Facebook specifically, while we currently do not plan to continue with advertising, we remain committed to an aggressive content strategy through all of our products and brands, as it continues to be a very effective tool for engaging with our customers," GM said.
Facebook declined to comment on GM's move.
"This does highlight what we are arguing is the riskiness of the overall Facebook business model," said Brian Wieser, Internet and media analyst at Pivotal Research Group.
"It is not a sure thing. It sure looks likely that it will be one of the most important ad-supported media properties, but it's not certain because there will be marketers who are challenged to prove the effectiveness of the marketing vehicle."
For now, these worries do not appear to be impeding strong investor demand, with Facebook increasing the size of its offering by 25 per cent to raise about $15 billion.
Facebook, founded eight years ago by Mark Zuckerberg in a Harvard dorm room, is expected to start trading on the Nasdaq on Friday.
GM said it will still have Facebook pages, which cost nothing to create and for which it pays no fees, to market its vehicles and added that it is not unusual for it to move spending around various media outlets.
"In terms of Facebook specifically, while we currently do not plan to continue with advertising, we remain committed to an aggressive content strategy through all of our products and brands, as it continues to be a very effective tool for engaging with our customers," GM said.
Facebook declined to comment on GM's move.
