Technology / Internet
General Motors to pull $10M paid Ads from Facebook - saying they don't work
21 May 2012 at 22:28hrs | Views
General Motors is planning to pull $10 million in paid advertising from Facebook, after deciding that paid ads on the site have little impact on consumers' car purchases, according to a GM official.
GM marketing executives apparently started reviewing the company's Facebook strategy earlier this year, and eventually determined that it wasn't getting much mileage out of paid ads, unnamed individuals told the WSJ. The automaker, however, will continue to expand its use of free marketing on Facebook.
Marketing chief Joel Ewanick told the newspaper that GM "is definitely reassessing our advertising on Facebook, although the content is effective and important." In this sense, "content" refers to GM's company page on Facebook and similar promotional initiatives that Facebook permits at no cost to companies.
A source close to the situation confirmed GM's decision to end its Facebook ads to our sister site CBS MoneyWatch. I've reached out to both Facebook and GM and will update if and when I hear back.
The automaker's move is probably the last thing Facebook wants to hear right now. The social network is expected to begin trading its shares Friday at a price that could value the entire company at as much as $104 billion. Earlier today, Facebook officially boosted the price range for its offered shares by almost 15 percent, a sure sign of strong initial demand.
GM currently spends about $40 million on its various Facebook initiatives -- but only roughly $10 million of that goes to Facebook directly as ad payments, the WSJ reported. (Those are presumably annual figures, although the newspaper didn't say.) The remainder finances the design and upkeep of GM's other promotional activities on the site, which don't appear to net Facebook a dime.
While the loss of GM's ad dollars won't even amount to a drop in Facebook's bucket -- the site pulled in revenue of $3.7 billion last year -- the loss of the third-largest advertiser in the U.S. is bound to raise some uncomfortable questions about the effectiveness of big-brand ads on the social network.
Business Insider's Jim Edwards notes that clickthrough rates on Facebook ads are dramatically lower than at Google or across the Web at large. Similarly, Facebook has long appeared to be a more welcoming environment for small -- even obscure -- advertisers than for those at huge multinationals.
GM marketing executives apparently started reviewing the company's Facebook strategy earlier this year, and eventually determined that it wasn't getting much mileage out of paid ads, unnamed individuals told the WSJ. The automaker, however, will continue to expand its use of free marketing on Facebook.
Marketing chief Joel Ewanick told the newspaper that GM "is definitely reassessing our advertising on Facebook, although the content is effective and important." In this sense, "content" refers to GM's company page on Facebook and similar promotional initiatives that Facebook permits at no cost to companies.
A source close to the situation confirmed GM's decision to end its Facebook ads to our sister site CBS MoneyWatch. I've reached out to both Facebook and GM and will update if and when I hear back.
The automaker's move is probably the last thing Facebook wants to hear right now. The social network is expected to begin trading its shares Friday at a price that could value the entire company at as much as $104 billion. Earlier today, Facebook officially boosted the price range for its offered shares by almost 15 percent, a sure sign of strong initial demand.
GM currently spends about $40 million on its various Facebook initiatives -- but only roughly $10 million of that goes to Facebook directly as ad payments, the WSJ reported. (Those are presumably annual figures, although the newspaper didn't say.) The remainder finances the design and upkeep of GM's other promotional activities on the site, which don't appear to net Facebook a dime.
While the loss of GM's ad dollars won't even amount to a drop in Facebook's bucket -- the site pulled in revenue of $3.7 billion last year -- the loss of the third-largest advertiser in the U.S. is bound to raise some uncomfortable questions about the effectiveness of big-brand ads on the social network.
Business Insider's Jim Edwards notes that clickthrough rates on Facebook ads are dramatically lower than at Google or across the Web at large. Similarly, Facebook has long appeared to be a more welcoming environment for small -- even obscure -- advertisers than for those at huge multinationals.
Source - cnet
