GM gives Zuck a slap in the Facebook

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/)

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