It's just not worth it for General Motors to spend its advertising dollars on Facebook, the automaker announced Tuesday
"We routinely evaluate our media spend," says Tom Henderson, a GM spokesman. "We're doing that all the time, and making adjustments when necessary. For competitive reasons, we don't get into the details of why we make certain decisions."
All Henderson would say is that the decision was based on the "overall value" of the advertising, which will end by midyear.
"Value is measured in a number of ways," he says.
For some companies, notably GM competitor Ford, those measurements are proof that Facebook advertising does have value. It's all about what a company's expectations are.
Scott Monty, Ford's head of social media, says he doesn't want to compare Ford's Facebook advertising strategy directly to GM's, but he did say the company is committed to advertising there. The tipping point for Ford came when the company unveiled its 2011 Explorer on Facebook.
"From that moment, we really discovered the true power of paid, earned, and owned media working together in a truly integrated fashion," Monty says. "It's kind of given us a different mindset for how we approach advertising on social platforms."
For example, this year, Ford ran an ad on Facebook's logout screen—a screen about 35 million people see each day—based around its Mustang Customizer application.
"In a single day, we had 1 million engagements around the customizer and the content that people were creating as a result," Monty says.
He points out that the ad was more than just a photo of a car and some text. It was a game in which people could design their own virtual Mustangs and challenge them against their friends. It was shareable.
Paid advertising on Facebook has to amplify free Facebook content, Monty says. Focusing on "the bottom of the sales funnel" is the wrong way to look at things.
"It's at the beginning of a relationship, rather than at the consummation," he says. "It's like walking into a bar, striking out, and saying, 'You know what? I'm not going to bars anymore, because they just don't work.' You haven't invested any time in the relationship. It's more than a one-off thing."
What do you want?
If you're looking to tie sales and revenue directly back to your Facebook ads, you're likely going to end up in the same situation as GM, says Alex Becker, CEO of internet marketing company Highly Relevant.
"Most of the clients that my company has worked with, including big brands like Universal Music Group and Burger King, were not successful with Facebook ads," he says. "We spent a lot of financial resources and man-hours incorporating Facebook advertising into our menu of services, but results were few and far between. Therefore, we spent our advertising dollars elsewhere."
Miles Daniels of digital communications firm milesmaria agrees that, if you're looking for traditional ROI, you probably aren't going to get it. Even so, he says he's "rather pleased" with the Facebook advertising campaigns he's run.
For example, one campaign was for a C-level executive who simply wanted a bigger Facebook network. He found an audience that's sticking around, Daniels says.
"Another campaign was for a startup selling kid's accessories," he says. "We were able to move them from fewer than 500 'likes' to 5,000-plus in just a few months. Again, most of their FB community is still with them and highly engaged around posted content."
Likewise, Rachel Margaritis of ViralFashion.com says Facebook ads have done a lot for her business's visibility.
"In less than one year, we've added more than 7,500 people to our Facebook audience," she says.
Margaritis warns that an ad in itself won't do much, though. You have to give the people seeing your ads something desirable, clearly presented, and accessible.
Small businesses may be the ones to benefit most from Facebook ads, says Mike Poller, co-owner of Poller & Jordan Advertising, because they can be so focused.
"Imagine I sell prom dresses," he says. "I can run Facebook ads in March, April, and May targeting only women, 16 to 18 years of age. That's pretty darn efficient."
Nothing is forever
GM's Henderson says the company isn't at all abandoning Facebook—GM's got 8 million Facebook fans in the United States, after all. And cutting funding for Facebook ads doesn't mean that paid content on other social media sites is ending.
"I don't think one decision in one medium affects what you're doing in others," he says. "Each one offers different results and different ways of engaging with your audience."
Plus, as part of those regular evaluations he discussed, there's a chance Facebook advertising could return to GM.
"We will always be evaluating," Henderson says. "Plans can change accordingly."
San Francisco-area social media consultant David Howard is quick to note that GM's official statements never said that its Facebook ads were out-and-out not working.
"Marketing managers have to decide all the time where best to spend available dollars," he says. "GM may be shifting that $10 million to other social media strategies that provide higher return for them."