Is General Motors Pulling Out of Facebook Prematurely?

If I hadn’t written columns for the last few weeks questioning the maturity of Facebook’s ad model, I wouldn’t have the nerve to say what I’m about to.

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.

Sheryl, get Scott Monty on the line!!!”

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!

5 comments about "Is General Motors Pulling Out of Facebook Prematurely? ".
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  1. Noah Wieder from SearchBug, Inc., May 16, 2012 at 7:54 p.m.

    Seems awfully coincidental that a billion dollar company would pull 100% of their business just prior to FB going public. I smell a negotiating power play.

  2. George Parker from Parker Consultants, May 16, 2012 at 8:14 p.m.

    Cathy... As you know, I am not a fan of most social media, But I don't care what Ford says, GM gets all the advantages of Facebook in terms of creating conversations etc. They don't NEED to spend $10 million on stuff that doesn't work. No one clicks through to buy a $35K vehicle. As has been well reported, the CTR for Facebook is pathetic. OK, this will not kill Facebook, ZuckerNozzle will still be richer than God on Friday. Lucky bugger!

  3. Anthony Green from Optimal, May 17, 2012 at 7:09 p.m.

    Catherine you are spot on with this, and we'll be reading about how GM are allocating budget to Paid social media within 3-6 months. Owned cannot succeed without Paid.

  4. Scott Monty from Ford Motor Company, May 21, 2012 at 9:57 p.m.

    George, I love ya but there's more to online advertising than CTR and lower sales funnel activity. For automakers, Facebook is more about awareness, consideration and brand perception - very much upper funnel activities - than it is about sales. If you're focused on CTR on Facebook, you're focused on the wrong thing.

  5. Real Creatives from Real Creatives, May 23, 2012 at 4:30 a.m.

    The whole idea that social media is the new holy grail for advertisers is delusional nonsense. If your granny or buddy said you should buy a Mercedes would you? If your Mummy said you should eat Kelloggs Cornflakes would you? If you best buddy said you should drink Coke or eat at McDonalds would you? What kind of uneducated, facile, juvenile thinking is this? Worse, if the Facebook IPO Reuters story gains traction the bad news about FB might
    really boomerang against this service and other social networks. Hello My Space here we come.

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