GM gives Zuck a slap in the Facebook
GM's Facebook cover ... not much else to say about that.
The Wall Street Journal broke the story at 2:52 pm on Tuesday, May 15 with a tweet: “GM to stop buying ads on Facebook, sees them as ineffective.” Dare I say, the tweet heard round the world. It was actually only a rumor at that point (General Motors didn't confirm until several hours later), but the news caught fire immediately, as of course it would.
GM — the third biggest advertiser in the U.S., behind P&G and AT&T — isn't going to stop marketing on Facebook. It's just going to stop paying Facebook for the privilege of doing so. The automaker still plans to maintain its page, where it has more than 378,000 “likes.” That, of course, is free. Well, free for regular people, not marketing behemoths. According to the Journal, GM expends about $30 million a year on agencies to develop its Facebook content and on staff to maintain the page.
Joel Ewanick, GM's head of marketing, proffered this rather bland statement to the press regarding the company's decision: GM is “definitely reassessing our advertising on Facebook, although content is effective and important.”
What GM spent on Facebook ads — just $10 million — was only a tiny fraction of its total marketing budget. Considering Kantar Media estimates the company dropped $1.8 billion on advertising in 2011, that's about as noticeable as a fly on an elephant's rear.
What this means for Facebook's long-awaited, highly anticipated, much-discussed and extensively pondered upcoming IPO is on the mind of every blogger, analyst, journalist, marketer and investor from here to, say, China — the only country in the world other than India whose population is still higher than the number of Facebook users: over 900 million.
However a marketer feels about the usefulness of Facebook ads, it's unwise to ignore a website that has more active users than almost triple the population of the United States. But Facebook doesn't hold all the power. If other large advertisers decide to chuck FB ads, Facebook could be cooked, as the Friending Facebook blog on ZDNet rightly points out.
How often do Facebook users really click on those ads in the right-hand column? One of my coworkers told me she was able to track down a service she was looking for through a Facebook ad, so for her it worked like a charm. But 57% of users polled by AP/CNBC in a recent survey said they never click on paid ads or sponsored content when they're on Facebook. [CNBC posted the results of the poll on Facebook. Both meta and cheeky.]
For a company like Facebook — the Journal says the majority of Facebook's $3.7 billion annual revenue comes from sales — that is certainly unpleasant news.
As for me, the effectiveness of Facebook ads is zero. I've never clicked on a single one.
Allison Schiff is web editor at Direct Marketing News.
(Zuckerberg image credit: zipmeme.com/)