Three days before Facebook’s initial public offering, General Motors announced it was pulling its Facebook (FB) ads and criticized the social network for failing to deliver results.
GM is a big advertiser—the third-largest in the U.S.—with a lot of clout, and some view these announcements as an indictment of these two ad mediums. But really they’re much more telling of GM’s own lack of social media prowess.
Despite GM’s turnaround last year, 2012 is off to a slow start, and the company is losing market share to Toyota Motor (TM), Ford Motor (F), Chrysler, and others.
Even though GM outspends each of these rivals in advertising by more than 50 percent annually, that effort is failing to help build sales. This is largely because GM is more comfortable with old-school marketing tactics that don’t work as well as some of the new online and social media tools.
Facebook and the Super Bowl represent two leading-edge social media tools, so it’s understandable that a frustrated GM would want to be public about its decision, hoping that others follow suit. GM reportedly spent $10 million on paid Facebook ads last year, accounting for just 0.3 percent of Facebook’s total ad revenue, hardly a setback for the social media giant. Facebook’s ad revenue grew more than 60 percent last year and is expected to increase by close to that again this year.
Facebook and other new media require advertisers to develop much more thoughtful ads and create a deeper engagement with consumers than traditional media does. Many traditional marketers such as GM—and their ad agencies—are geared toward producing shallow 30-second TV ads, and therefore struggle with this. But those who master social media find it’s often a much more powerful and cost-effective tool.