News that General Motors is pulling its $10 million ad campaign from Facebook—just days before the social network’s historic IPO—is making waves and casting doubt on Facebook’s sustainability.
A GM official told The Wall Street Journal that paid ads on the site had little impact on consumers’ car purchases. With a captive audience of more than 900 million users—more than desirable for advertisers—is Facebook’s evolving ad platform stable enough for investors? Or did GM err in executing its social media ad campaign?
In Facebook’s IPO filing, the company writes that, “We believe that most advertisers are still learning and experimenting with the best ways to leverage Facebook to create more social and valuable ads.” Those are possibly unsettling words for traditional ad buyers, but remember: Facebook sold $3 billion worth of ads last year. If this is the first iteration of Facebook ads—unsettled, experimental and all—Facebook ad revenue is bound to increase. Big-time.
GM’s $10 Million Blunder
The $10 million the automotive company invested in Facebook ads may seem like a hefty figure. But, according to Kantar Media, GM’s total ad spending in 2011 topped $1.8 billion. GM is the third-largest advertiser across all media in the U.S. after Procter & Gamble and AT&T. They’re well-versed in advertising, so what could have gone wrong?
Here’s a quote from a Big Fuel rep, courtesy of All Things D. Big Fuel is GM’s former social media ad agency, which GM fired in December:
“GM never seemed persuaded of the value of social media in general and Facebook likes in particular. In a sales-driven culture, it is very had to wrap your head around putting money in places where you don’t see immediate results in an uptick in sales.”
All Things D didn’t list further details, but the scenario is all too familiar: Businesses, wary of this new thing called “social,” aren’t entirely convinced of it, but jump in because they feel it’s something they should be doing. Or, perhaps in this case, it’s something they’re told they should be doing, but without grasping why, they fail in the execution.
In interviews with CIOs who have successfully infused social into their businesses, a consistent theme emerges: To see results and reap the benefits, you need to know why you’re in the space, have clear goals and a execute a well-thought-out plan. From what Big Fuel experienced with GM, it doesn’t appear this was the case.
On the day of Facebook’s IPO, is GM’s Facebook ad failure an omen? I don’t think so: Facebook has the audience that advertisers crave, and its platform—in its infancy—is only going to get better. Businesses will get better at it as long as they, too, evolve and embrace the new notion of social.