With its IPO coming on Friday, Facebook (FB) did not need General Motors (GM) pulling its advertising on the social network site like a hole in the head. For Facebook, the move defined inopportune timing, but to understand its complex implications, you unfortunately need to weave together points made by various media outlets. No one covered the unexpected development as traders need it: completely.
In addition to GM’s standing as a top three automaker, it’s one of the nation’s top three advertisers along withAT&T (T) and Procter & Gamble (PG) – a fact that the The Wall Street Journal mentioned. But you have to go to The New York Times (NYT) to see that Ford (F) remains a strong proponent of Facebook advertising. Not all are abandoning the Good Ship Zuckerberg.
The Wall Street Journal was a rarity in passing along Facebook’s contention — which might just hold water — that GM’s Facebook advertising efforts feel short because the auto giant had several advertising firms running its efforts on the site.
But this issue is multi-faceted. As such, Forbes was right (and nearly alone) in linking GM’s move to a recent survey showing that Facebook users don’t feel adequately safe buying on the site. Is there a wider lack of confidence? It’s a question worth asking.
In the end, there needs to be an acknowledgement of the risk at hand: that social media is, despite the apparently rich valuations, in the larval stage, with all the risks and open questions.
Said Forbes, in an essential line many others would have done well to include: “Social media is, well, a new medium.”