Commentary
GM Drops Facebook Ads
- by Erik Sass , Staff Writer @eriksass1, May 16, 2012
With timing that can only be described as “bad” for Facebook, General Motors has decided to pull its paid advertising from the social network, according to the Wall Street Journal. The move comes just a couple days before Facebook’s initial public offering, scheduled for Friday, May 18. The question now is, how will Facebook respond? And will other advertisers follow GM out the door?
According to WSJ, GM determined that “its paid ads [on Facebook] had little impact on consumers’ car purchases,” which is pretty much saying they failed completely and utterly. It’s worth noting that GM’s complaint was not with, say, the quality or quantity of data and analytics for its advertising provided by Facebook, which, given GM’s investment -- $10 million per year -- must have been fairly substantial. The data and analytics were presumably there; the ads just plain didn’t work.
This is food for thought, and not just for potential investors ahead of Facebook’s IPO. Judging by statements from a number of analysts, Facebook has yet to prove itself as a marketing tool -- which is at the core of its business model and the main grounds for valuing the company.
The skepticism about Facebook ranges across advertising disciplines, including the mainstays of search and display; marketers working in both categories have long bemoaned low click-through rates. Indeed, even before the GM announcement Forrester analyst Nate Elliott wrote this damning judgment: “Marketing on Facebook doesn’t work very well, and marketers can’t count on things improving anytime soon. We wish we could predict this IPO would serve as a new beginning for Facebook’s marketing offering, and that a new focus on becoming a grown-up business would inspire the company to put even half the energy into serving advertisers that it does into serving users. But we doubt Zuckerberg’s going to wake up any day soon having acquired a taste for advertising, or even a proper understanding of it. And so every day more smart marketers are going to wake up and look for other places to dedicate their social resources.”
With this sentiment in mind, it’s also worth noting that Facebook’s growth prospects are apparently less promising than they first appeared. Growth slowed from 2011-2012, dipping from 55% year-over-year in the last quarter of 2011 to 45% in the first quarter of 2012, according to the Financial Times. And eMarketer recently revised its forecast for Facebook’s 2012 advertising revenues down from $6.1 billion to $5.06 billion -- that’s a $1 billion+ reducation, or 17%.
Erik Sass is editor of Publishers Daily. You can reach Erik at eriksass@gmail.com.
Not trying to sound like I know more than the gurus that were running the FB ads for GM, but people go to Facebook for entertainment and they go to a search engine for information. So you can't hard sell someone on Facebook as is apparent in this ad.
What you can do is target demographics very well in FB, and if you know how to layer the engagement (there is a process to go from entertainment to lead gen) then your results will be much better. Maybe it is not about FB, maybe it is about the way GM was using it.
Jerry makes a great point. As someone involved with both Chevrolet and Buick's past marketing efforts it was always a CYA mindset to protect the fiefdoms. FB may have just quantified results too well using now antiquated ROMI metrics. FB just needs some help in communicating with this old school automotive marketing mindset. However the timing stinks and in my opinion the big question is why now?
Jerry and Stan...great comments. I agree that the the problem is not with Facebook in general, however it is how companies are using this platform for advertising/marketing. The old methods of display/banners never worked very well and they certainly do not work on a platform designed for entertainment and community building. Companies must be more thoughtful with regard to their audience engagement methods on Facebook. In my opinion the answer is real-time (daily) branded content...its relevent, entertaining and highly engaging. I am referring to multi-media content, not textual content. Brands must become content publishers to keep up with the voracious pace of media consumption. Full disclaimer, I am the president of a company called Tauntr Media, we are the market leaders in the production and distribution of "real-time branded content". We make the content in-house every day for brands and distributed it throughout the internet. While I do not mean for this to be a pitch for our company I feel very strongly that this the solution for advertising/marketing on social platforms.
Branded online ads (banners) and their old fashioned CTR as a success metric should be the smallest part of a media buy on Facebook; instead the focus should shift to earned media, activating brand influencers, and increase total branded shares initiated. Focusing on traditional online metrics on a non-traditional online platform can carry huge mistakes as far as how someone interprets success on Facebook, ie. revenue loss, just like GM decided to stop advertising on Facebook. Social media and its various platforms and elements are here to stay, but how you measure it and what creative asset you post (not banner buys please on Facebook) to activate your branded fan base, is a totally different discussion and thinking. The research and ROI metrics should be different for social than for anything else online (search, banner, e-mail, etc.). Believe in social media, just do think of it as your 'usual' online buy! My recommendation is to look at companies like trueAnthem, who offers ground breaking measurements, solutions and social analytics for social media advertisers.