Facebook Refused to Offer GM Page Takeovers [REPORT]

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Sources told AdAge the reason GM decided to pull its advertising is because Facebook wouldn't let the company run "bigger, higher-impact ad units" than what it currently offers -- i.e., small display ads and Sponsored Stories. GM wanted to run a full-page takeover. Facebook said no.

Facebook declined to comment about client meetings. GM could not be reached by press time.

The original report, which was published by The Wall Street Journal three days before Facebook's May 18 IPO, has been blamed in part for Facebook's less-than-spectacular market performance. GM reportedly spends $40 million on Facebook annually, about a quarter of which goes to paid ads. The other $30 million goes towards content creation.

Facebook’s ad revenue has been increasing at a rate of $1 billion per year since 2009, bringing in more than $3 billion last year alone. The social network will face mounting pressure over the coming months to grow those figures without compromising users' browsing experience.

It's a problem, of course, that just about every other online publisher faces. Some, like Twitter and Tumblr, have opted for "promoted" messages over large display units. Even those companies have had to revise products when users reacted negatively, as Twitter did with a hovering mobile display unit called the Quick Bar (or "Dick Bar," as users dubbed it.)

Facebook has thus far dabbled with both display and promotional advertising. Its only large-format display ads, which take up most of the page above the fold, appear when users log out of Facebook.

Ian Schafer, CEO of ad agency Deep Focus, expects that the logout ads are "probably the only bone that Facebook will be throwing into the large-format ad realm for the foreseeable future." That's because "Facebook protects its platform at all costs. That's the Zuckerberg way," he says.

"We need to stop thinking about Facebook as a publisher, and look at it instead as platform," Shafer adds. "To say [Facebook's] ads aren't big enough is begging for a MySpace-like fate for them, and a big dramatic withdrawl from Facebook because they won't give you bigger ads feels so uninspired. It's not about baiting people into clicks, it's about what you do once [users] do interact with the ads," he insists.