Report: GM to drop all Facebook advertising

Updated 4:40 P.M. EDT: In what could speak to Facebook’s viability as advertising medium just days before what is shaping up as a possible record initial public offering, General Motors says it will drop all paid advertising on the site, the Wall Street Journal is reporting.

According to the report, the auto giant's marketing executives "determined their paid ads had little impact on consumers."

GM marketing chief Joel Ewanick told the Journal that the automaker "is definitely reassessing our advertising on Facebook, although the content is effective and important."

The automaker will continue to use free options on Facebook.

The largest American automaker spends about $40 million to maintain Facebook presence, the Journal reported, with about $10 million in paid ads.

GM, the country's third-largest advertiser behind Procter & Gamble and AT&T, spent $1.11 billion on U.S. ads last year, according to Kantar Media, an ad-tracking firm. About $271 million of GM's total ad spend last year was for online display and search ads excluding Facebook advertising.

The move raises a question mark about Facebook's current business model as the social network stands at the brink of going public. A new AP-CNBC poll released earlier Tuesday showed that 57 percent of Facebook users never click on ads or other sponsored content when they are on the site.

A mere 4 percent of users said they often click on ads. That's slightly more than the 2-3 percent experts use as the benchmark for effective banner ads, CNBC said. Of course, with Facebook's massive user base, even that amount makes for a lot of eyeballs on an ad.

Facebook raised the price range on its IPO Tuesday from $34 to $38 a share in response to strong demand, a source familiar with the situation said, giving the social network a valuation exceeding $100 billion.

The company is scheduled to price its shares Thursday, and they will begin trading Friday on the Nasdaq stock market.

Reuters contributed to this report.