GM Ditch Facebook ads – I’m not surprised

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.

$30 million!!!!

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.

Bubble, anyone?

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.

You may also like

17 Comments

  1. This is a very interesting article and analysis. Thank you. Perhaps if there is any solace to be had, it may be in surmising that the attention that SAAB fans wrought upon GM’s Facebook pages in the wake of GM’s latest in a long line of bad decisions, actually DID impact their bottom line in a tangible way. At least in a more tangible way than vowing to never buy a GM product again…..

    1. Jen: If that makes you feel good, please keep thinking this way. However, I assure you that the online pressure exerted by Saabisti via Facebook barely moved any needles on GM’s instrument gauges. They simply have much bigger fish to fry. That’s always been GM’s problem with respect to Saab, and will always be GM’s problem with respect to Saab. Saab simply doesn’t matter to GM one way or another.

  2. Good points, Swade. I agree that Facebook is useful tool for spreading a message quickly and raising awareness of a new product, movie, band, etc., because it is so easy for people to re-post something. I sometimes hear about something new first on Facebook, but I don’t find Facebook advertising to influence my purchase decisions much at all. In fact, I rarely if ever look at the ads on the right hand side of the screen.

  3. Ha! I posted this yesterday on….wait for it…. Facebook!

    I, like you, was surprised at the magnitude of GM’s ‘investment’ in Facebook. I think that maanders above is spot on, Facebook is great for posting bits about movies, music, restaurant promotions and the like because, to your point, it’s not a deep conversation. If it can be communicated in a single glance, it’s good for Facebook. Cars are not that kind of sale.

    I know first-hand that big companies such as mine waste more marketing dollars on forays like this than they spend on successful advertising. I’ve been appalled at what we spend money on. (How about $400,000 for the 15th spot on an industry publication’s annual ’25 most influential women in our business’ for our marketing director herself? Strictly a ‘pay-to-play’ deal that we’ve been doing for at least six years.) It’s expected, even encouraged. My analysis? The emperor has no clothes.

    1. Eggs, I’ll offer you the bargain of the lifetime!

      10th spot on Swadeology’s “Most influential men EVER list”, Swadeology Father of the Year for 2012 AND a Swadeology Academy Award for “Best performance in a dog’s Facebook account” – all for just a fraction of what your employer is paying.

      1. Deal, except for that whole ‘dog’s Facebook account’ thing. What are you on? A dog, on FACEBOOK? You’re almost as nutty as the GM marketing department.

        1. Amazing as it may seem, I know several people that have created a separate Facebook page for their dog….and make posts as if coming from the dog.

          1. Eggs was playing possum there, maanders. His dog Rico has a FB account and I think he might have a paw in its operation 🙂

  4. Re; ”doing work that could/should have been done internally”.

    When I was young, employees climbed through the ranks to get higher up. Some made managers, many even higher.

    Todays’ businesses buy in [by way of golden handshakes, etc] their top staff, when in fact many could use the staff they already have.
    Many just do not watch their employees they have. ‘Staff suggestion boxes’, can sometimes still be found, but very few get the credit for any ideas, so many do not bother.

    I hope when the ‘new Saab’ is formed, they use the existing Staff and listen to them too, and grow organically.

  5. Interesting, I don’t see GM as a trendsetter. I’ve been tracking GM for sometime. Their website which refuted such “Myths” as GM is going bankrupt was a real disaster. Is it an improvement for GM not to “waste” money on ineffective advertisement? Yes, for GM. Does it help Saab? Not one bit. Facebook has not and will not affect the way I buy new cars. SaabsUnited does affect the way I buy cars. And, right now I’m on hold. My local dealer still has 5 new unsold Saabs on the lot.

  6. I wonder where all this will lead. Several popular Internet companies are financed by advertisement, above all Google. But how effective will advertising in a web browser be, in the long run? Myself, for one, completely ignores ads in the WWW. I navigate around them, or if they are pop-ups, I focus my entire attention on how to get rid of them as fast as possible, in most cases not even really perceiving what is advertised there.

    And why should I use social media presences of some company, if there is a well-made company website?

    Maybe, any success of WWW advertising is merely based on a lack of experience of the users. They are not yet fast enough in closing pop-up windows, or are erronously click on an advert instead of a “real” link. But they will learn, and what then?

    Will that be the end of the likes of Google, Facebook etc.?

  7. Swade I truly appreciate your prospective. I have followed you through now four blogs. While I write for a living I admire your ability to articulate. Now why I write…I am sitting in a bar in Sydney. My first visit to your homeland, but not my last. I toste a fine australiain draught to you. Please keep blogging. Sincerely. Bama Dr.

Leave a Reply

Your email address will not be published. Required fields are marked *