I knew some big advertiser was going to pull out of advertising on Facebook, as General Motors did earlier this week.
It was predictable, as predictable as the fact that The Wall Street Journal would exhibit positively exquisite timing in breaking the story less than a week before the Facebook IPO. The details -- on the off-chance you missed them -- are that GM, which had been spending about $10 million on Facebook advertising, has decided not to anymore. (It will continue to market on the platform -- on its corporate and brand pages -- just not by buying ads.) Take that, reach generator!
But the timing of the story is beside the point. The fact is that this money -- however small in the big scheme of Facebook revenue -- is leaving Facebook, at least for now. As a GM spokesperson told The New York Times: “It’s not unusual for us to move our spending around various outlets, especially with the growth of social and digital media outlets.” He continued that GM was “making adjustments as we need to.”
As Ford and Chrysler both said after the GM story broke that they were continuing to spend on advertising in Facebook, I can only imagine how the WSJ’s story got the phone lines burning between Palo Alto and metropolitan Detroit.
So what does it all mean? Besides the fact that timing -- and spin -- are still everything?
It’s further evidence that Facebook, the ad platform, is in its infancy, which, given the IPO, is unfortunate. That’s not because I have any plans of buying stock; the family budget does not allow for such dalliances. The true shame is that if the nascent nature of Facebook advertising isn’t understood by the business community, it will lead to possibly unwarranted skepticism about Facebook advertising -- and, by extension, social media marketing.
As a stock price, and quarterly earnings, quickly become proxies for a company’s validity, Facebook may be seen as an advertising failure before any determination about what Facebook advertising can be is understood. Since Facebook is the 800-pound gorilla of social media, this could dampen interest in the entire category.
As I’ve said in many other columns, it’s not time to make that call yet. Facebook is not Google, and requires a new approach to ad creativity, content creation, targeting and metrics an -- an approach that’s still in the works. This was, in fact, the topic of a panel session at Tuesday’s OMMA Social that I happened to moderate hours before the story broke.
Particularly because products like Timeline for Brands are only months out of the gate, none of the panelists, who included executives from American Express, Buddy Media, Clickable, Nasdaq and Performics, had definitive answers on how to use all of them yet. In fact, the general thinking in the room was that advertisers would spend more on Facebook advertising, and ll of the panelists agreed that creating content that compelled users to action has become more important than ever on Facebook. That’s not something you learn to do in the course of a few weeks.
Of course, I don’t have specific insights into why GM did what it did, but I do find it odd that a company with such a gargantuan ad budget dropped out of Facebook advertising in its entirety, not even leaving $500,000 lying around for experimentation. Either the company has so mastered earned media on Facebook that it doesn’t need to spend money on ads, or it mistook some relatively early failure for failure at scale, 900 million users strong.
Facebook advertising isn’t about a quick “yea” or “nay” designation. It’s an alchemy of sorts, requiring money -- but also savvy content creation, fan acquisition and fan activation -- to work. Advertisers can buy all the ads they want, but if they are not creating content that compels users to do something with it, then they’re throwing money down the drain.
Ford’s statement yesterday got at this very point: “We’ve found Facebook ads to be very effective when strategically combined with engagement, great content and innovative ways of storytelling, rather than treating them as a straight media buy.”
So take that, GM!