GM cuts Facebook ads

17 May 2012

NEW YORK: General Motors, the automaker, has "no plans" to buy further ads on Facebook, the social network, a decision taken by some observers to reflect doubts about their effectiveness.

GM has invested around $10m in Facebook ads a year, but is now changing tack. "Currently we have no plans to continue advertising with Facebook," Greg Martin, a GM spokesman, told Business Week.

"We regularly review our overall media spend and make adjustments as needed. This happens as a regular course of business and it's not unusual for us to move our spending around various media outlets."

GM's total Facebook budget is estimated to stand at $40m, meaning some $30m is allocated to managing brand pages, which it suggested have been a "very effective tool" to connect with consumers.

However, the Wall Street Journal reported that Joel Ewanick, GM's chief marketing officer, led a team of executives to meet Facebook earlier this year, but was unconvinced by advertising payback data.

General Motors is the third biggest advertiser in the US, with a measured media budget of $1.78bn, according to Kantar Media, the insights provider, and its decision could have a significant influence.

"My colleagues and I have spoken with several other advertisers who were already thinking of putting their dollars elsewhere," Melissa Parrish, an analyst at Forrester, said.

"Now that GM has done so in such a large and public way, many of the fence-sitters will know that they're not alone in their disappointment about their results."

Ford, however, is increasing its expenditure on Facebook, which it has used to preview vehicles, extend ad campaigns and provide a diverse range of marketing material.

"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," Scott Monty, Ford's head of social media, said.

Subaru of America also dedicates over $5m to Facebook advertising on an annual basis, Dean Evans, the firm's chief marketing officer, revealed. "We like what we're seeing," he added.

"It cost-effectively generates a fan base, generates awareness for the brand and generates traffic for our websites. All of those things we find effective today," he continued. "But exact dollar spent matched to a sale? We haven't mapped that fully yet."

Dianna Gutierrez, senior manager for marketing, advertising and product communications at Chrysler, similarly stated it had "no intention of following GM's lead". "Each of our brands has Facebook as part of its strategy," she said.

Data sourced from Business Week, Financial Times, Reuters, Mashable; additional content by Warc staff