Matter Chatter

Facebook Shrugged: the GM–Facebook Ad Saga

After General Motors, who’s next?

That is, which brand is going to follow suit and either cut back or completely kill their Facebook ad campaigns just as GM has done, to much fanfare?  That is the question that marketers and investors everywhere are asking themselves just a few days before Facebook’s watershed $100 billion IPO this Friday.

GM caused a few tremors this week across the social strata when it announced it was pulling its $10 million Facebook ad campaign due to …. stop me if you have heard this before …. a lack of measureable results with the medium relative to the investment made.

The $10 million figure is actually less significant than it sounds, if that is at all possible.  It is just a fraction of GM’s total 2011 U.S. ad spending of $1.8 billion, according to this WSJ piece.  It is also a proverbial “drop in the bucket” of Facebook’s total 2011 revenue of $3.7 billion, most of which was advertising sales.

So what is the story behind the story here? Maybe more questions than answers…..

Was this an orchestrated attempt by GM’s communications team at news jacking on Mr. Zuckerberg’s week-long IPO party? GM’s timing has been questioned by many bloggers and investment types as curious at best and at worst, a downright orchestrated and opportunistic move by the auto giant to grab some headlines of its own. Most press reports note that GM expressed doubts over the ROI of its Facebook ads for several months, so it certainly does beg the question, why now?


Do any of us really buy cars or anything remotely as substantial, complicated or expensive based on Facebook ads? My sample size might be pretty small and less than scientific, but my answer is a resounding NO!  The same goes for insurance, mortgages or other financial services products, but there still 900 million (and inevitably a billion) reasons for brands to continue evaluating, testing and deploying ad campaigns given the breadth and depth of audience reach and the relative affordability of Facebook ads.

And, it’s the fundamental reason why Facebook – post IPO – has its mighty guns trained on Google so it can dominate social search.  Mark Zuckerberg has made no secret that is his Holy Grail, not, God forbid, advertising.

Will Kia, Honda, Ford, fill in the blank of your favorite auto maker brand collude with GM and pull their ads? Don’t count on it. Kia, for its part, is actually increasing its ad spend, WSJ reports.

Does Zuckerberg care? Does it really matter to mighty Facebook? As any marketer knows, paid ads constitute only one part of what can be done to build brand awareness, buzz and engagement on Facebook. There’s so much more that brands and their agencies can collectively do here that doesn’t require cutting a check. These include Sponsored Stories and the recently announced Reach Generator solution and of course, Brand Pages. After all, GM hasn’t cut back on those activities. In fact its’ investment here is three times its former ad spend, or for the mathematically impaired $30 million per year.

So expect the dollars to continue to flow to Facebook’s coffers and the debate about social media effectiveness to continue raging.

Death and taxes, you have company.