GM Pulls Advertising on Facebook

Social media has become a major form of marketing over the past few years. While there are some companies that absolutely excel at it, others fail. General Motors recently announced that they will soon cease running ads on Facebook, thereby discontinuing the $10 million it spends annually on the social media website. GM has explained that Facebook is not working well as a part of their marketing strategy and that they will be allocating their resources elsewhere in an effort to realize a better return on this portion of their ad budget.

Social media can often be a “hit or miss” when it comes to marketing because it all depends on the conversion rates. Since companies pay Facebook around $2 (on average) each time someone clicks on an ad, the conversion rate is not always cost-effective. Although people may click on the ads, it can be hard to measure or predict how these actions eventually affect sales. This is especially true if the advertiser is not properly tracking visitors and analyzing the relevant data correctly.

Are Facebook Ads Ineffective, or is GM Just Bad at Marketing on Social Media?

GM is facing a budget squeeze and they saw that marketing on Facebook was not creating enough revenue. As GM is stopping their marketing on Facebook, Ford is increasing their marketing on Facebook in an effort to increase their sales. These two companies are taking different paths, although it has yet to be seen if one or the other ends up regretting their decision to pull their Facebook ads, or to keep running them for that matter.

GM has decided that they will not shut themselves off completely from Facebook; they will still manage their page and put content out on Facebook instead of paying for ads. This raises the question of whether Facebook advertising is effective for automotive companies. When buying a car most people have to go through a long process before they decide on the car that they want to purchase. Therefore, when a person sees an ad on Facebook, odds are they are not going to just get up and go buy a car.

Car buying is, for most consumers, a process of considering their options over time before making a decision. At the same time, a well-placed ad will not only serve to provide consumers information about certain models, but the general exposure can be helpful in bolstering the long-term perceptions of the brand. Someone in the market for a new automobile is likely to consult various sources for information such as prices, reviews, and specifications while considering their options. Seeing the Ford logo in the right context, for example, could play one small part in influencing their eventual decision.

Although social media is a major component of online marketing that can work exceedingly well, it is not always the best option for a company. That GM may begin to decrease their marketing on Facebook, this alone does not mean there is something inherently flawed about their advertising model. If marketing with Facebook is not a success for one company, it might simply be a problem with how the company is approaching the medium, not the medium itself. At the same time, more large companies may end up cutting their advertising budgets on Facebook if usability is a problem.

This article was written for Living East by Bill of Spotted Frog Web Design, a web marketing company in the United States. They develop social media advertising programs for clients in a wide range of industries.