OK, So GM Pulls $10M in Facebook Ads, So What?
Every Tom, Dick and pundit is putting in their heavily discounted two cents (it’s like there was a Groupon for pre-IPO Facebook hype and speculation and everyone appears to have bought it) and it is getting pretty silly.
The latest chicken little concern is the pulling of Facebook ads, to the tune of $10 million, by General Motors. Here is the tweet from the Wall Street Journal’s Dennis Berman that set all of this in motion.
In the world of “no good tweet goes unpublished” we head out to the article in the venerable Wall Street Journal that cries
General Motors Co. plans to stop advertising with Facebook Inc. after deciding that paid ads on the site have little impact on consumers’ car purchases, according to a GM official.
GM will continue to promote its products on Facebook, but without paying the social-media company, the GM official and other people familiar with the matter said.
We are talking $10 million out of $3 billion in total advertising that Facebook collected last year (that’s .003% of the total ad revenue for Facebook. Not exactly the churn rate of a dying company) . All Things D’s (another WSJ property) Peter Kafka put together a list of reasons he gathered from various sources giving some insight and context for this pre Facebook IPO advertising revelation / revolution
Obviously there’s a back story here. If GM didn’t want to keep advertising on Facebook, it didn’t have to announce that two days before an IPO.
Big Fuel, GM’s social media ad agency, didn’t do a good job. That’s why GM fired them in December. For the record, here’s a quote from a Big Fuel rep: “GM never seemed persuaded of the value of social media in general and Facebook likes in particular. In a sales-driven culture, it is very hard to wrap your head around putting money in places where you don’t see immediate results in an uptick in sales.”
Starcom, GM’s media buying agency, didn’t do a good job. That’s why GM fired them in January.
How the heck did GM spend $3 on Facebook “content management” for every $1 it spent on Facebook ads, as the WSJ reports? That’s a sure sign that someone was doing something wrong.
Ford loves Facebook.
GM is pulling $10 million out of Facebook. Facebook did more than $3 billion in ads last year.
Pretty interesting stuff that leaves plenty of room for possible explanations of why this happened, not the least of which is the hint of over-selling by an agency or two which should come as no surprise to anyone who has been paying attention to this space over the past several years.
So what does this all mean? Well, if the IPO goes as it seems it will on Friday (which is to say that the rich will partake and get much richer) then it will mean nothing. Why? Because everyone will be crowing about how well the IPO went, they will then basically forget about this “news” regarding GM and get back to the business of over-selling marketing options like Facebook. It will be business as usual with a few naysayers trying to pop Facebook’s balloon.
If the IPO goes south (which seems pretty unlikely because this is about making money for those in the know, it’s not truly about the state of affairs in social media or business in general as we like to promote and glamorize) then Facebook will go on, limping a bit and licking its wounds, but still having the VAST majority of its 900 million plus users updating their friends and families as if the IPO didn’t even occur.
Is this to say that Facebook is impervious to being taken down? Not at all but the pulling of ads by one company is not a trend, it is an event. Very different indeed.
But wait a minute you say, what about these headlines?
Confirms GM story and gives quote from Forrester citing uncertainty amongst various companies about the effectiveness of Facebook ads.
DATA: Google Totally Blows Away Facebook On Ad Performance – Business Insider
Well, it’s the Business Insider, They write headlines. That’s what they do.
Ahead of IPO GM To Stop Advertising on Facebook – New York Times
Eye grabbing headline for sure but this quote about social media savvy Ford Motor Co. (thank you Scott Monty) tells a different story ” One company that disagreed with G.M.’s decision was its Detroit rival, Ford. In a statement, the company said, “We’ve found Facebook ads to be very effective when strategically combined with engagement, great content and innovative ways of storytelling, rather than treating them as a straight media buy.” That’s just a way for them to say that they actually understand social media while
Government General Motors isn’t smart enough to get it. Nice dig.
There are more headlines and stories like these and there will be more for sure. In the end, though, this is a great time to be grabbing free press and headlines by using the Facebook IPO as the catch all, ‘too big to be ignored’ event. In the process, the press, social media and all of of us involved at varying levels are being sucked into a game that will likely be forgotten come next week.
Why you ask? In the end, it’s safe to say this (IMO, of course) –
- Facebook is a force to be reckoned with for at least the foreseeable future.
- It is a developing ad platform and if we didn’t know that before this “news” then we are asleep at the wheel for sure.
- People will get rich on Friday in ways most of us cannot imagine and that will have zero impact on our daily use of the site.
- Most of the 900 million or so users of Facebook don’t know what an IPO is.
- Regardless of its performance on Friday Facebook will be the target of many advertisers budgets because of the sheer volume of people there and it beats many other more “tried and true” advertising options even if it is in its nascent stage of development.
- Facebook will flood the market with success stories immediately following the IPO because it will no longer be required to “be quiet” so they will bury the negativity.
So how about this. Let’s just act for the rest of the week like Facebook isn’t doing its IPO thing on Friday. Let’s act like we have to do business today and that business may actually involve marketing vehicles other than Facebook. Let’s keep the perspective that even if Facebook blew up like a big ol’ balloon in the next 30 / 60 / 90 days that we would have to somehow. some way carry on in a seemingly dreary Facebook-less world. You get the picture.
So what say you about Facebook and its advertising potential? Is it as close to the edge of destruction as headlines would imply? Is it a good place to be? Will the IPO impact your use of Facebook in either direction? Are you in a holding pattern to see if another 1/3 of 1 percent of Facebook advertisers fold up their tent and go home?
Let’s hear you in our Facebook powered comments section. Oh the irony.