There was some major auto advertising news yesterday: GM has decided to quit advertising via Facebook.
They will still have their various pages on Facebook, but after analysing the results of their significant ad spend, they’ve decided that Facebook ads have little effect on their consumers and they’re going to save their money for use elsewhere.
There are two big takeaways for me from this article.
First, I’ve never been a huge fan of Facebook in general. I understand and agree that it’s a valuable tool that companies can use to reach their customers, however I’ve always questioned the depth of that contact.
I’m a blogger, not a social media expert, so it’s natural I’d take this stance. In my position at Saab, I was responsible for the content on the Inside Saab blog and along with others, for coming up with content strategies for our other social media channels. The positioning of Inside Saab was frequently a matter of some contention as I’d always argue for some increased prominence (usually an uphill battle, but one that we were all better off for fighting).
The point that I always raised was that longer-form blogging gave you a better chance to provoke thought and discussion amongst your readers. This sort of discussion builds relationships and those relationships can do wonders in terms of solidifying the bond between the company and the customer. They can build communities. This theory was based on my experiences with Trollhattan Saab and Saabs United. The latter is enjoying the benefits of a strong community to this day, having recently raised funds to purchase the last Saab produced, a 9-3 Griffin, in order to donate it to the Saab museum.
Conversations on Facebook can be more frequent than long-form discussions on blogs, but they lack a degree of mutual respect and they tend to be short-form ‘fluff’ rather than meaty discussions.
I’ve never looked into Facebook advertising, which is what GM has cut from its social/advertising budget, but I can implicitly understand the reasons for them considering it to be less productive than other forms of advertising.
To my mind, Facebook would be an ideal place to grow a new market for a personal, funky product. It might be a good place to plant new ideas and have them spread. I don’t see Facebook as a place for an advertiser with a reasonably generic product, one who’s already saturating the market. Facebook seems like a place where advertisers with an edge, or an angle, would be more likely to succeed and grow beyond their normal fan base. GM, it would seem, is not one of those companies (and I’m not surprised).
The second startling fact about GM’s withdrawal from Facebook ads is encapsulated in this quote:
GM spends about $40 million on its Facebook presence, but only about $10 million of that is paid to Facebook for advertising, according to the Wall Street Journal which first reported GM’s plans to drop Facebook ads. The remaining budget covers the creation of content and the advertising and media agencies involved, the newspaper said.
That’s $30 million being spent on designing, developing and maintaining Facebook pages, moderating
abuse from Saab fans comments on those pages and keeping the conversation and content flow fresh.
First there was Facebook’s purchase of Instagram for $1billion (with a B). This week there’s Facebook’s IPO, which will value the company at over $100billion (with a B). And now here’s confirmation that companies like GM are spending absolute megabucks to maintain a presence on Facebook. There’s a whole lot of money being paid by various companies to various consultancies and few of the products/services that are being paid for are actually producing much, if anything.
I wrote a few weeks ago about how I thought Saab spent too much on agencies doing work that could/should have been done internally. Yes, we had an agency that handled much of our Facebook content. Well, we had that agency when I first arrived, at least. As our financial situation deteriorated, more and more of their work was handled by my colleague in the social space.
I’m not sure how much we were paying for Facebook management, but I’m willing to bet that we saw a minimal return on that investment. The guys who did it were based in Stockholm and from my brief time dealing with them, knew their stuff really well. It wasn’t their knowledge or capability that was a problem. I simply think it’s a space that provides limited returns and one that a company like Saab needs to handle internally.
GM’s decision is a very interesting one, especially in light of Facebook’s IPO this week. It’ll be interesting to see if other companies follow GM’s lead and if so, what impact that’ll have on Facebook’s stock price.