GM pulls Facebook advertising, big deal

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Facebook ads don’t work, not even a little bit. Well that’s if auto giant General Motors (GM) is to be believed at any rate.

The company, which spends around US$40-million a year on Facebook campaigns, says it is pulling the US$10-million it currently spends on paid-for Facebook ads.

GM’s marketing chief Joel Ewanick told the Wall Street Journal that the company still views putting up relevant content about its products on the social network as an “effective and important” part of its marketing strategy.

In a statement, the motoring giant said: “We regularly review our overall media spend and make adjustments as needed. This happens as a regular course of business and it’s not unusual for us to move our spending around various media outlets – especially with the growth of multiple social and digital media outlets.”

“In terms of Facebook specifically, while we currently do not plan to continue with advertising, we remain committed to an aggressive content strategy through all of our products and brands, as it continues to be a very effective tool for engaging with our customers.”

If the Journal’s “people in the know” are to believed, GM has been dissatisfied with Facebook advertising for some time now. Company high-ups are even reported to have met with Facebook managers in a bid to address the problem.

The move might be read as something of a slap in the face for the social network just days before it finally goes public. Forbes contributor Micheline Maynard, however, reckons it highlights a flaw in GM’s overall business strategy.

The company, she says, just doesn’t build cars that women and millennials — which make up a large portion of Facebook’s user base — want to buy.

The other thing to remember, as fellow contributor Rebecca Lindland points out, is that while US$10-million may seem like a lot of money to you or me, it only represents two days’ worth of advertising spending for the Michigan-based car giant.

If anything was to derail what is set to be one of the biggest IPO’s in tech history, it’s not going to be losing a miserly US$10-million in ad spend — especially when GM is still committed to spending US$30-million on putting up content on the social network.

Facebook’s pitch to marketers has stressed the efficacy of combining unpaid brand pages with paid ads. Facebook executives argue that without additional paid ads, it’s hard for fans of a brand to learn about the unpaid content. According to the Wall Street Journal, Facebook said in March, that only 16% of a brand’s fans are likely to see unpaid content when a brand does not utilise paid options. Conversely, content packaged in a paid ad is said to be seen by 75% of those who “like” a company.

GM’s decision to forgo ad spending while continuing to spend US$30-million on agencies that manage its unpaid promotional content and maintains its brand pages are therefore puzzling. An extra US$10-million seems like a drop in the bucket to prevent a possible loss in engagement of almost 60%.

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