General Motors (GM) plans to stop advertising on Facebook after the company's marketing executives determined their paid ads had little impact on consumers. I first saw the news via a message sent out by The Wall Street Journal on Twitter:
GM to stop buying ads on Facebook, sees them as ineffective wsj.com
It turned out to be a rumor, however, as GM has not (yet) announced such plans. GM marketing chief Joel Ewanick did however say his company "is definitely reassessing our advertising on Facebook, although the content is effective and important."
GM reportedly started re-evaluating its Facebook strategy earlier this year after its marketing team began to question the effectiveness of the ads. GM marketing executives even met with Facebook managers to address concerns, but were left unconvinced, according to people familiar with the matter cited by the WSJ.
The largest U.S. auto maker still wants to expand its use of marketing through Facebook Pages, which are available for free. That being said, it still costs money to maintain them. For example, GM spends an estimated $40 million towards Facebook marketing, only $10 million of which is for Facebook ads. The remaining $30 million covers content created specifically for Facebook, paying agencies that manage said content, and overall maintenance of the Facebook Pages.
If other large companies follow suit, this could be disastrous for Facebook. Advertisers have always found it difficult to measure the effectiveness of Facebook ads. That being said, with 901 million monthly active users, advertisers know they can't just ignore it.
GM has over 378,000 Likes on its main Facebook Page.
Update at 4:00 PM PST - GM has confirmed the decision.
"We regularly review our overall media spend and make adjustments as needed," a GM spokesperson said in a statement. "This happens as a regular course of business and it’s not unusual for us to move our spending around various media outlets – especially with the growth of multiple social and digital media outlets. In terms of Facebook specifically, while we currently do not plan to continue with advertising, we remain committed to an aggressive content strategy through all of our products and brands, as it continues to be a very effective tool for engaging with our customers."
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