7 things GM doesn't understand about Facebook advertising

Rebecca Lieb
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Social Media Posted on May 22, 2012

Perhaps GM's ad unit needs more of a social life.

It's hard to believe there wasn't some sort of agenda in telling the Wall Street Journal, three days in advance of what's slated to be the biggest IPO in U.S. history, that advertising on Facebook isn't working for GM, but that's what the automaker did. If the company was looking for attention, it certainly got it -- the media was scrambling for new angles on the week's biggest story.

7 things GM doesn't understand about Facebook advertising

Sure, it's a big deal when one of the world's largest advertisers pulls back $10 million in spend (or makes such a public proclamation). Perspective is also warranted in this situation.

Facebook's success as an advertising medium, or a public company for that matter, is far from guaranteed. Blazes of glory in this industry are often nasty, brutish, and short (AOL, Yahoo, Myspace). But here are seven reasons to temper GM's very public proclamation against Facebook's advertising:

Facebook advertising isn't even 1.0 -- it's still beta

Facebook is developing new advertising products, refining them, killing others, and tweaking some more. The company's IPO is a $100 billion bet that eventually it's going to get the model right, just as the search ad model was (and remains) very much in evolution when Google went public. For many advertisers, advances can't come fast enough, but the old term "new media" is very much in play in this contest.

Paid media can't succeed without earned and owned integration

Shortly after the GM story broke, rival Ford tweeted: "It's all about the execution. Our Facebook ads are effective when strategically combined with engaging content & innovation." Sounds simple, but integrating paid, owned, and earned media into a viable, sustainable strategy in which each informs the other is hard. It requires silo-busting, new metrics, and an entirely new approach to media. Yet it's a task marketers and advertisers must master -- first in social media channels like Facebook, then across the rest of digital as well as traditional media.

Advertisers are only now testing the waters

"We believe that most advertisers are still learning and experimenting with the best ways to leverage Facebook to create more social and valuable ads," Facebook says in its IPO filing. Best practices for advertising on social networks, or integrating that advertising with owned and earned media? Barely even embryonic. Like Facebook's evolving ad platform, how to effectively advertise in social channels is still in the earliest stages of evolution.

Facebook advertising is not about direct response

Those ads on Facebook about tooth whitening and belly fat? Going, going, gone says the company. Yet GM's complaint was that its Facebook ads weren't moving enough car sales, a pretty disingenuous argument. GM is certainly sophisticated enough to know that advertising has many purposes other than direct sales: branding, consideration, and purchase intent, for starters. It's very hard to believe the company expected to sell X number of vehicles per Y number of Facebook ads.

Display is down across the board

Why integrate paid, owned, and earned media? Because fewer and fewer consumers engage with display advertising. It would be a lot simpler if that weren't the case. Advertisers could plop creative into ad units and meet goals. But banner blindness and declining click-through rates call for more creative and integrated solutions -- again, particularly in social environments.

Content counts

Even GM cedes to Facebook on this account. "We remain committed to an aggressive content strategy," is one of several quotes GM made in the wake of its "no-advertising" bombshell.

Facebook is biggest media company in history

Ever. Of all time. Why doesn't anyone ever state the obvious? No print or broadcast medium has ever even remotely approached a user base of 1 billion. That old adage about advertising going where the eyeballs are? There are more eyeballs in the world focused on Facebook than anything else manmade. That's a pretty compelling argument to get this advertising thing right -- both internally at Facebook, as well as for advertisers and marketers.

Rebecca Lieb is an analyst, digital advertising/media, for Altimeter Group.

On Twitter? Follow iMedia Connection at @iMediaTweet.

"Young businessman in thinking" image via Shutterstock.

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Mike Bainbridge May 31, 2012 at 3:55 AM

Alternatively the writer could have noted that GM may be doing precisely what Social Media commentators recommend, which is to set clear goals for their social media presence, and maybe they should be congratulated

If that goal is to sell cars [and who can argue that against an auto company which ultimately is required to keep US$100's millions of factory investment running at capacity and 1,000's of workers employed ] then that is a perfectly understandable business objective and facebooks ROI is being evaluated for relevancy alongside other channels as it should be.

Irrespective of how exciting social media commentators find facebook, if it doesn't deliver the business goals it should be evaluated accordingly. You can't bank fans.

And assuming that GM has a competent social media department, you could argue they are a brave bunch to assign the role of facebook not as "car seller" but align it to some intermediate communication goal.

Against that backdrop, then your comments can be seen as supportive of GM no ? :

- Beta - so they did the right thing to wait until if and when it delivers
- Paid,Owned,Earned - yes but the devil is in the details, try presenting that to a Board of Directors as a rationale for investment
- Testing the Waters - see Beta above
- Display - but they may have other uses for the funds rather than non-performing display banners - we just don't know; media is all about allocated scarce resources against the business goal
- Content counts - i.e you agree with GM
- Biggest media company in history - Reach is technically huge but its effective Reach which is critical to bums on seats.

Of course there is a final rationale that social media is good for driving brand equity, but maybe this is a slow burner and it doesn't quite fill the production lines fast enough

And finally finally, there is the viral effects of social media which of course are much beloved of the social media industry but proven by quite a few commentators as to be rare and in any case , supported heavily by paid media. Its not a strategy that you want to bet your job on.

I think the industry needs to stand back, recognise there's more to it than being an evangelist for this or that platform and start thinking like clients. Sounds like GM have tested enough, explored the media effectiveness and decided there are better uses of the funds to drive sales.

Jennie White May 23, 2012 at 9:58 PM

Great article Rebecca, you make a lot of good points! I disagree about Facebook not being a tool for direct response. You're right, Facebook is a great tool for awareness, but here at Nanigans we've seen 100+ advertisers with performance goals like app downloads and purchases--events which fall under "direct response". Working with these big advertisers we've developed strategies that encourage action from consumers. My friend Cheryl wrote a great blog post called, "5 ways e-commerce uses Facebook ads. (http://www.nanigans.com/2012/04/04/5-ways-ecommerce-uses-facebook-ads/) We'd love to hear your feedback, check it out and let us know what you think. Thanks again for the upbeat article, we appreciate it!

Anthony Green May 22, 2012 at 2:15 PM

Agreed Rebecca. We're seeing different goals and objectives via Facebook depending on the nature of the brand. An e-retailer sets different KPIs than say a CPG brand than say a automotive brand.