The headline in today’s Wall Street Journal put me into a tailspin. It knocked me off the regularly scheduled program and prompted this emergency blog post.
“GM Says Facebook Ads Don’t Pay Off.”
Let me get my reaction immediately onto the table:
1. Is this sour grapes, or what?
2. Are you flippin’ kidding me? Since when do people buy a car by clicking on a Facebook ad? Really?
3. What kind of cover story is this just prior to the Facebook IPO when a publicly traded company attempts to downgrade stock price and pose ponderings about a $104 billion valuation by a start-up with a CEO under 30-years-old?
4. Do GM investors want to snap up more shares for less price per share?
Now let me read the story; hang on a minute.
K, I’m back…here is the gist of the article:
1. GM spent “only about $10 million in 2011 to advertise on Facebook; a fraction of GM’s total 2011 U.S. ad spending of $1.8 billion.”
Uhmm, if that paltry percentage is being spent on Facebook advertising, then naturally someone isn’t going to click on a car ad on Facebook and buy the vehicle from the website…right? I mean, don’t you buy your car direct from a website, sight unseen without the lovely dealer experience?
2. “General Motors plans to stop advertising with Facebook after deciding that paid ads on the site have little impact on consumers’ car purchases, according to a GM official.”
Love the timing of this; just before the Facebook IPO in a few days and it helps get GM some extra publicity. I wonder what GM will do with its $10 million not being spent on Facebook ads? Will it go to charity? Or, maybe they’ll use it on Pinterest where women can click on the picture of a car and go buy a car from a website!
3. “GM’s decision raises questions about the ability of Facebook to sustain the 88% revenue growth achieved in 2011. Facebook said last month its first-quarter ad revenue was down 7.5% from the previous three months.”
I have no idea how to respond to this; it’s got to be the reporters (three of them) playing both sides of the fence. Should the timing of GM’s announcement affect Facebook’s IPO? Will it? Should it even matter? I seem to recall an auto industry bailout that put the U.S. economy into a downward spiral. I don’t recall reading that Facebook ever strayed from its growth goals, so why should it quake in its boots because GM is playing chess? (Although $10 million is likely not chump change to Facebook.)
So, a few disclaimers here – I’m not in advertising. I’m not a Facebook shareholder (but, I’d sure like to get my hands on a few of those on Friday). I’m not a financial analyst or investment adviser.
What I am is this:
A Business-to-Business Social Media Marketer with a Public Relations core (how’s that for key word attention?). I probably should be applauding the GM investor relations team for its smarts to push such a story on the cover of today’s national financial paper. But, it stinks putrid to me (I said to me) in my rantings above.
What do you think?
We have to remember that GM is one of the companies that took a huge bailout from the federal government. To me, it seems GM has not learned its lesson to create a better product that people want to buy. And since Facebook ads show up based on your and friends’ interests it seems to me that GM is not creating effective campaigns to get people interested in them again.
I personally, have never once seen a GM ad pop up in my time on Facebook. The problem here is with GM, not Facebook.
@Anthony_Rodriguez Good Morning, Anthony! Somewhere in my ranting above, I mention the bail out. You’re right, I’ve never seen an ad pop up for GM cars on my FB, either! What does that tell you…either GM’s ad team has its demographics askew (as we both represent two different ones) or they’re full of baloney.
I still can’t believe the audacity of the company thinking a FB ad is going to influence car sales. Actually, I think they think we’re supposed to buy a car from a FB ad. Really?
I think GM is wise enough to know that people don’t buy cars from their website. That’s not the metric they’re measuring. It’s a fair bet GM was watching what did people who clicked on the ad did once they landed on the website. Were the clicks translating into downloads of materials, scheduling of test drives, requests for nearest dealer info, etc. Were click-through customers engaging with content on the site via browsing of features such as selecting color options, watching videos, etc.? Were the click-through visitors sharing the website content via social media channels?
Each of those activities (and dozens more) do translate eventually into revenue. Companies like GM know their internal formula for how these interactions feed into the sales tipping point. It sounds like GM decided their ad program on Facebook wasn’t attracting the kind of consumers who would make it to the tipping point. (Remember TheSalesLion presentation at Social Slam? People don’t buy pools from his website, but they do gather the information needed to educate themselves on the decision and to help the sales team better close the deal.)
What I don’t know (since I’m not an insider on any of this obviously), is what other factors were considered? Were the ads themselves not written in a way that appealed to the right consumer? Is the problem that the GM websites (I couldn’t get Chevrolet.com to load while writing this, by the way) don’t have the right sort of content? There are dozens of variables to consider. It may be that GM will come back at some point, but to make it worth their while they first must reconsider the content they’re providing and the format they’re presenting it in.
I didn’t read anything nefarious in the timing of the story other than the media is pretty much fascinated with all aspects of digital and social topics right now and Facebook is certainly top of mind right now with the IPO looming. If GM had announced they were eliminating $10 million in advertising from the Lifetime Channel or some other media outlet for the same reasons, it would have generated some media attention, but not quite the same as what this story will do.
Grrr… typos… “what did people who clicked on the ad do…”
@shanerhyne TheSalesLion There’s the balanced approach I couldn’t bring myself to write in a spur of the moment. All credible things; all correct assumptions and thanks for that, for sure.
We have a media frenzy right now with the IPO, but the timing of the announcement is perfectly PR. I congratulate my sisters and brothers.
What the story doesn’t do is consider what you did in the opening graph of your comment. This is a valid way to determine influence; measurement.
@Soulati | B2B Social Media Marketing I’m with Shanerhyne. i can’t access the full, original article. But from my understanding of online advertising and what is measured, GM is most likely comparing apples-to-apples on metrics and finding that Facebook doesn’t measure up to other online channels it uses for ads. I’m not sure that’s so surprising. For example, one of the places GM almost certainly advertises is websites and online magazines about cars and that attract car enthusiasts. They also likely advertise on other sites that cater to the same demographic. I’m guessing that they find that a user who is actively reading a magazine about cars and sees a GM ad there is more likely to click than the Facebook users who mention cars in their posts. Add to that the very sophisticated tracking that Google (who may be serving those ads on car mags) has to note whether a user recently searched on trucks or cars, and use that information to serve ads to the user.
I don’t think that means that Facebook can’t deliver on ads, but it may mean that their algorithms aren’t good enough yet. Or that they aren’t good enough for GM’s target.
@Neicolec Of course I’d think you’d be all over the back end of this decision and bring in the analytics of this decision! And, if you were the one telling me to pull the plug on FB ads, then I’d listen because you’ve got the big data goods, Neicole!
@Neicolec @Soulati | B2B Social Media Marketing I still feel like we are missing big pieces of the puzzle here. I want to know more about the goals and expectations.
What do they expect and what is their experience elsewhere. And based upon my own bias/experience I wonder how good the GM people are at understanding the analytics. I have seen more than a few situations in which people didn’t know how to make effective use of the numbers.
@TheJackB @Neicolec You’re right. Big data is not something big corporations get these days. Heck, we’re all trying to figure it out.
I’m gonna go back to the timing of this announcement, too. It was not happenstance; this was a pure PR play to do this pre-IPO to draw attention away from Facebook.
@shanerhyne you have me thinking about the purpose of websites for a product like this. if we think about websites in terms of how audiences use them, what do people expect from the GM website?
The difference between the Sales Lion and GM is that I believe Marcus could more easily track conversions. He was able to see how someone from his email list clicked through his site and then eventually contacted him about a pool. Does Marcus have a showroom/storefront? Can people just show up without contacting him?
Maybe I am just (yet again) another strange web user. I wouldn’t email to schedule a test drive. I’d head on down to the dealership and make a salesman put me in the car (aka just show up)! After looking through a website to make sure the car I’m interested in has the features I want, how much it would cost me, etc.
Not disagreeing with you in the slightest. Great analysis on your part. Just thinking about how customers use websites. For example, last year when I started, my org was in the final stages of finishing a website redesign (huge site – 700 pages at that time). Someone new had also started and she asked in the final hours, hey, why aren’t you putting an “Apply for a Grant” button front and center on the site?
Would make sense to do, right? Except (as we learned from a consultant) potential grantees don’t use the site that way. RWJF did extensive user experience testing on their website, and when tasked with applying for a grant, not a single person clicked that button. When asked they said they needed to understand RWJF’s priority areas, what they funded – the background information – before they’d apply.
Not sure how GM could test such a thing, but I believe it would be worth doing.
@jennwhinnem To be fair, the test drive thing was me riffing off the top of my head. Since I didn’t have any GM pages open, I was just brainstorming ideas of what one might do. I don’t know if one can even do that on the website, but it’s not a bad idea that I bet more than a few busy people would appreciate.
The GM sites (now that I can open them) are fairly robust. You can do a variety of activities such as locate dealers, check your credit score, get an estimate on your trade-in, locate which dealers have a specific car you want, get a quote on a car, schedule maintenance service with a certified dealer, and on and on. You can watch ads, read about Chevy culture, catch up on favorite Chevy race team news, etc.
I’ve had the pleasure of conducting usability studies for client websites (including national brands). I’d venture a guess to say that GM (along with Ford and the others) invest quite heavily in such research.
Your experience is correct in that many organizations design their websites based on their internal perceptions of what the user needs rather than asking the user what would work best for them. Again, I’m not privy to what happens in GM’s marketing department, but I’d be shocked to my core if they weren’t invested heavily in analytics research of how people are using the site, what customers think of the site, usability studies, traffic analysis, etc.
In fact, I’d climb out on a limb and say it was more likely that data from this sort of research led to the decision to drop Facebook advertising for now rather than Jayme’s hypothesis about the Facebook IPO.
I believe GM will return to social media advertising, if not Facebook specifically, once they get a better feel for what messaging will work best and what features they need to spotlight or add to get them closer to closing the deal with the visitor. It just quite likely made sense at this time to quit throwing money at a problem until there was an understandable solution for the problem.
In theory, the argument is valid that no one buys a car from a Facebook ad. But, in reality, no one buys a car from a billboard, a magazine ad, a television commercial or souvenir t-shirt either. Yet, each of these feed into the overall purchasing decision. One of my favorite quotes about advertising comes to mind in this scenario, “Half of my advertising is wasted; the trouble is I don’t know which half.” (John Wanamaker)
GM needed to pull the Facebook ads because the ads, for whatever reason, weren’t feeding positive numbers into the purchasing equation. You can bet they are spending a significant portion of that $10 million savings on research to find out what they need to be doing differently in the digital space. They aren’t walking away, just regrouping.
@shanerhyne @jennwhinnem I’m gonna ask you to be a regular contributor over here; you’re so prolific in comments, imagine what you’d be like in an actual blog post for me!! Thank you, both!
@Soulati | B2B Social Media Marketing @jennwhinnem If only I poured the same energy into my own blog from time to time. Hey, is that the cobbler’s kids I see walking down the street? Why are they barefooted?
@jennwhinnem @shanerhyne Jenn, I love it. Need I say more? Thoughtful and provocative. Thanks for sharing.
Jayme, it’s a perfect point in this scenario of GM leaving Facebook. You got the right points. I believe that it was a mix of getting some attention and trying to shake de IPO situation. But we know that Facebook Ads is not for everyone. I mean, some stuff just don’t fit in the Ads area, and the GM situation that you asked on the title is a perfect example!
They won’t affect the IPO, they won’t shake the Facebook value. They are just attracting bad comments and some funny jokes about this movement.
Best regards from Brazil
@IqueMuniz I am tickled, that means I’m pretty happy to see you Ique! I believe you’re my first guest from Brazil; that’s so cool.
Thanks for sharing and for supporting me! LOL That @shanerhyne is a bit smarter and more thoughtful in his remarks, so I need all the help I can get!!
I don’t ever remember seeing a GM ad on FB. I can’t tell you what sort of tracking they use on their ads or even if it was done effectively. Can’t say that they did a good job or a bad job.
For all we know FB works and GM tanked.
@TheJackB I’m thinking you’re right. Take the in-between approach or the converse. Weren’t those shoes?
Hi, Everyone! Let me break from this regularly scheduled program (borrowing my first line above) and inform the community that Ms. Jenn Whinnem is now a Mrs. She just got married; eloped, I tell you! CONGRATULATIONS Jenn and Steve!
I don’t have a thing to add, Jayme — @shanerhyne covered all the bases!
@New England Multimedia I couldn’t possibly have.
i can’t imagine that someone will buy a car using a facebook ad, of course the ads are good for (brand)marketing but i don’t think that you will have a good RIO (return on investment). Thanks for the post and keep up the good work!