Why General Motors Pulled Out Facebook Ads?

An article on why did really General Motors pulled advertising from Facebook?

facebook ads

Story 1: Days before Facebook’s IPO, General Motors made a sensational disclosure in the media that it is pulling its ads from Facebook since it found them “ineffective” as reported by Wall Street Journal. A sensational movie plot as Facebook was betting heavily on the advertisement business so that it could justify its sky-high valuation of  $104 billion to its investors. Whatever be the reason but the timing was interesting and it created a lot of buzz since last year GM had spent close to $10 million on Facebook advertisement.  Besides this another reason being that GM is the third biggest advertiser across all media in the US after Procter & Gamble Co. and AT&T. But then why did GM pull out? Was it the limitations of the platform or was it the ineffectiveness of the brand managers to understand the nuances of Facebook ads?

According to the report, Joel Ewanick, GM’s marketing chief along with other marketing executives had met Facebook managers before taking the decision. The meeting was futile and the GM managers left unconvinced. Subsequent to this, Ewanick made a statement about his company that:

“Is definitely reassessing our advertising on Facebook, although the content is effective and important.”

The message was clear that GM was no more interested in spending on Facebook ads but at the same time it will keep on using the Facebook brand pages which it considers effective. Ewanick refers to the effectiveness of content in the statement to the content it generates on the Facebook brand page.  According to the WSJ article, GM spends close to $30 million on content creation and maintenance of the Facebook brand page.

Facebook that has been already severely criticized for its valuations and the advertising business model state that the GM’s methodology of involving multiple agencies to manage the Facebook ads on the site, has costed it dearly. Besides this Facebook has also blamed it as “seasonal trends” and also pointed that greater number of users are outside US, where the ad rates are lower.

This also gave a chance to other competing auto brands to poke some fun on GM. Ford went ahead and pointed out how effective Facebook ads  has been for the sheer reason that they understand the medium better than their competitor.

Story 2: All said and done everyone thought that it is an old story. But we have some more bits on the story. According to a recent story produced by AdAge, GM wanted more than the current set of advertisements that Facebook is now offering to everyone. Ewanick and his team who had met Facebook sales executives preferred to run bigger and impactful ads so to reach a larger audience. Facebook had to refuse this offer and hence GM pulled off its ads from Facebook saying that it is not “effective”.

I have a few questions to Joel Ewanick and his team of experts:

1. What has been your objective of running Facebook ads? Were you thinking that people would buy a car by seeing Facebook ads. If you create an exciting Facebook ad with an exciting call for action then they might keep you in mind or may refer some one. But seems that it was not your objective. I guess you are mixing the traditional medium and social media. Both are not same.

2. Why do you want bigger and effective ads? What I can make out from the reports is that you may have wanted those full-page ads that you have been doing in traditional media. Given a choice, how many would like to see a Facebook ad. Having a marketing budget and understanding what the customer wants are two different things. Besides that, Facebook is a social network first and brands need to understand and respect that.

3. Your competitors such as Ford, Chrysler have found success from Facebook ads as they have used the ads with great content and effective engagement. So don’t you think that it is time to review the work of your agencies and ask them how can it be improved.

I am glad that Facebook has refused the propsal made by GM and would love to quote Mark Zuckerberg here, which he stated while filling the Facebook’s IPO to it’s investors:

[pullquote id =”lhi_pull” class=”center_pull” ] We don’t build services to make money; we make money to build better services.[/pullquote]

I feel the onus is on the brands and how they are using Facebook ads. Along with this, the focus should be on how are they mixing it with rich content that is aligned to the objective and the engagement they are pulling from the platform. But it would be interesting to see how long will Facebook say no to brands as it has a board sitting with it now!

Perhaps it is time for Facebook to have premium brand pages. What say?

Slider image courtesy: markramseymedia.com