General Motors has announced that it will no longer advertise its cars and trucks on Facebook according to a report in the Wall Street Journal. The poor performance of GM ads on the social network isn't necessarily an indictment of Facebook advertising, though. It may just be the wrong thing to market on Facebook.
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The beauty of Facebook--and Facebook marketing--is the social aspect of it all. A commercial like the post-apocalyptic Silverado ad GM ran during the 2012 Super Bowl has tremendous appeala|on television. However, a social network is a different medium entirely, and it takes a completely different strategy to conduct a successful marketing campaign.
Facebook is about word-of-mouth. The value of marketing on a social network is the sharing between friends and family. One person tries a restaurant and likes it, and shares that experience with the rest of their social network. Someone finds a pair of shoes that are comfortable, and posts it online for everyone to see. That type of interaction is less likely for big-ticket items like cars, but it's a gold mine for small businesses that can't afford Super Bowl ads.
One of my PCWorld peers shared research from a Wordstream research study indicating that the "click-through" rate of Google ads beats Facebook ten to one. Based on that information alone, it would seem that any business would be better off marketing with Google ads instead of Facebook.
Facebook is nowhere near as mature as Google--its primary rival--when it comes to online advertising. But, it has the audience, and that audience spends more of its online time engaged on the social network than doing anything else, so the potential is there. As Facebook evolves and expands its marketing options, it will be fertile ground for online advertising--just maybe not for General Motors.
Larger companies like General Motors, or Coca Cola, or McDonald's can still benefit from marketing on Facebook or other social networks, but it should probably be viewed from the context of brand penetration and recognition as opposed to trying to measure sales resulting directly from the ads. Smaller businesses, on the other hand, can hit the jackpot with the right Facebook marketing campaign, and word-of-mouth advertising of the social network.
The $10 million account was a lucrative advertiser for the social network, and the ad revenue will be missed. But, the loss of GM as an advertiser won't exactly break Facebook. Facebook generated $3.7 billion in revenue in 2011 from advertising, making GM a mere fraction of a percent of the overall pool.
This story, "Why Facebook Marketing Doesn't Work for GM" was originally published by PCWorld.