"General Motors Co. GM -0.97% plans to stop advertising on Facebook after the company's marketing executives determined their paid ads had little impact on consumers, people familiar with the matter said, a move that comes as more companies question the effectiveness of advertising on the social networking site.
GM spends about $40 million on its Facebook presence. About $10 million of that is paid to Facebook for advertising, the rest covers content created for the site, agencies that manage the content and daily maintenance of GM's pages, people familiar with the figures said.
I recommend you go read that story before going further because A) we should all pay them the respect of the click and B) it reads like a story publicized by senior marketing people who don't know much 'bout Facebook.
Brian Morrissey, Editor ad Digiday Tweeted it best: "GM thinks it can stop buying ads on FB and still market there effectively. it will probably find otherwise.
So, there's that, which is true. Put simply, Facebook is just an internet within the internet, and so the same rules apply - if you build it ("it" being a Facebook campaign, app or the like) you must advertise it. You might be thinking that GM can get around advertising by publishing Facebook updates about the content. But the truth is, you can only do that so many times before updates about a particular subject become ineffective. And second, if it's true that GM spends $30 million on Facebook content per year (a figure I balk at: BALK BALK), they are going to lose out on engagement if they don't advertise.
Let's jump back to that $40 million figure for a moment, because this is another area of consternation. Nowhere in the story is this figure qualified, so it's hard to know where that money goes and how much of it is monthly agency fees versus hard production costs for Facebook content. Is it $40 million globally or nationally? Didn't they just fire the social media agency Big Fuel?
And then there's other things, like, if GM is scrapping their Facebook ad buying plan, why not also get rid of all banner ads (assuming they still buy them)? This question leads to a deeper one - why did GM choose this timing to make the announcement? As a publicist, I'm sure there's a nice defense for the reason, but the news cycle is centered squarely on the Facebook IPO, so one can assume this is a shot across Facebook's bow, from GM. But why?
Maybe it's sour grapes - Ford has done phenomenally well on Facebook, whether launching new cars or just interacting with fans, they do a great job. So, could this news be some sort of jab at the network that has so aptly helped grow their competitor's brand?
Whatever the case, GM in the last year has squarely shirked convention - firing Big Fuel, reorganizing their general market advertising and now, this. It forces one's eyebrow into a skeptical curve, at a time when the company is again on the rise. Until GM clears things up, or someone uncovers the truth, we'll be all Double Rainbow Guy, wondering "what does it all mean?"
Image sourced via Automobile magazine