General Motors Doesn't Like Facebook Ads

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Car company General Motors will pull its $10 million ad campaign from Facebook, The Wall Street Journal reported this afternoon.

The Journal says that GM executives felt that the display "had little impact on consumers." The company will continue to use Facebook for marketing, but without paying for ads.

The news obviously is badly timed for Facebook, which is gearing up for an IPO that values the company at a jaw-dropping $104 billion. But Facebook's economic worth depends largely on its prospects for ad revenue; if the social networking service can't retain advertisers, it could disappoint a lot of people.

It's not clear yet what factors Facebook used in deciding which GM ads to show which users. But the news that GM wasn't happy about how the ads performed raises a whole new set of questions about Facebook's ad targeting -- including whether the social networking service will face pressure to expand its targeting efforts, both on its own site and on other publishers' sites.

Facebook on Friday put out a new proposed privacy policy that allows it to use data it has collected about users in order to serve them ads on other sites. As of now, though, the company hasn't yet indicated that it intends to combine its own trove of data with users' Web-surfing activity on other sites.

Marketing experts at OMMA Social this morning seemed generally bullish on behavioral targeting, indicating that it could benefit brands and consumers. But whether consumers will appreciate it is another question.

At an OMMA panel discussion about privacy and social-media advertising, RadiumOne vice president Chris Emme downplayed the likelihood of a consumer revolt should Facebook follow through with its plan to target users offsite. He contended that people are already accustomed to seeing Facebook everywhere, noting that many consumers already use their Facebook IDs to log in to outside sites.

Of course, as Engauge senior vice president for technology Raghu Kakarala retorted, users opt in when they affirmatively sign in to other sites with a Facebook ID. Receiving targeted ads based on far more passive activity -- failing to log out of Facebook -- might not go over as well.

Consider, several separate studies have concluded that consumers aren't nearly as bullish on personalization as marketers. Last year, Consumer Reports noted that 45% of respondents to a recent survey weren't comfortable with receiving ads based on their online browsing purchase history -- even when the information used to target ads wasn't tied to names or otherwise personally identifiable.

Before that, in 2009 researchers from the University of Pennsylvania's Annenberg School for Communication and the University of California, Berkeley, School of Law released a report showing that two out of three Web users don't want customized ads.

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1 comment on "General Motors Doesn't Like Facebook Ads".

1. Jill Kennedy from Manka Bros.
   

   commented on: May 15, 2012 at 7:31 p.m.
   Well, yeah, we saw this coming. I'm just surprised more companies haven't stopped spending on Facebook. It's easy enough to have a robust presence there without paying for ads (that don't work). What's scary is what Facebook will have to do next to appease disappointed advertisers in order to appease expectant shareholders. It's really the beginning of the end for Facebook... http://mankabros.com/blogs/onmedea/2012/01/27/facebook-and-the-disappearing-valuation/

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