By Priya Ramesh (@newpr)
A week before the big Facebook IPO, General Motors (GM) announced that the company was going to pull off its $10M display ad budget from Facebook. GM marketing chief Joel Ewanick told the Wall Street Journal that GM “is definitely reassessing our advertising on Facebook, although the content is effective and important.” GM will continue marketing on Facebook, but its display ads will go away.
Of course this announcement threw all big to small brands in a quandary in terms of re-assessing their Facebook marketing strategy, especially Facebook ads. So I started investigating the “real” reasons why General Motors is unfriending Facebook while its arch rival, Ford Motors claims to be more than happy with their ROI from Facebook ads.
Ford claims to have seen a 104% jump in sales of the Ford Explorer when they switched their Explorer advertising from Super Bowl to Facebook according to Bruce Goldman, Richmond Advertising Network. “Their Fiesta Movement Facebook campaign produced tons of qualified leads for test-drives at dealerships, and the test drives produced an amazingly high conversion rate.”
According to a Forbes report, Ford combined paid advertising and content on Facebook in a “customizer” app for the Mustang, which included sponsored ad of a video on the Facebook logout page. Ford got ONE MILLION views in one day from this display Facebook ad.
So why hasn’t GM reaped similar results? Why is it that Facebook ad strategy works for Ford and not for GM? Is Facebook more focused on user experience than keeping its advertisers happy? GM spends $40 M in total for Facebook marketing and one-fourth of it $10M was being allocated to Facebook ads. That’s a sizeable income for Facebook NOT to make it a priority to meet GM’s advertising needs. But it doesn’t look like Mark Zuckerberg is too alarmed by the GM announcement and will be making any big changes to better serve Facebook advertisers. So if you are currently invested in Facebook marketing/advertising, here are some key things to keep in mind especially in light of the GM announcement:
- Facebook ads don’t perform as well as the Google Display Network: As soon as the GM news hit online, Larry Kim, founder of WordStream released a comparative analysis of Facebook ads versus Google ads network. According to WordStream, Facebook has a substantially lower average click through rate (CTR) than Google — 0.051% vs. 0.4%. Why is this? It might have something to do with Facebook’s relatively limited ad formats and targeting options which are key to driving ad relevancy as compared to Google.
- Facebook’s advertising growth hasn’t kept up with the exponential growth in its user base: While 86% of Facebook’s revenue comes from advertising, brands are yet to see more tangible ROI from Facebook advertising. Part of the problem is the lack of detailed analytics and metrics reporting from Facebook ads. This is another area where Google clearly outweighs Facebook with its industry standard analytics tools to help advertisers measure ad performance against KPI’s and make informed decisions on future ad spend.
- Facebook doesn’t offer mobile advertising: Yeah this is probably what keeps Zuckerberg awake at night. Facebook ads currently don’t show up on smart phones on tablets and as admitted by King of Social Network, Mobile Advertising is a HUGE gap for Facebook right now. With more and more consumers seeking information at the palm of their hands, advertisers need to be able to retarget their messaging based on key-word based searches made via smart phones and tablets. It’s ironic to me that while one of the top engagements via smart phones is to log-in to Facebook, the social network hasn’t re-aligned its product roadmap to help its advertisers target the mobile audience.
- Facebook’s ad formats are limited compared to Google’s display ad options: Facebook has just two options: the standard Facebook ad (text plus an image) and a relatively new, sponsored stories. This is paltry compared to Google’s display network ad format options: text ads, image ads, flash-based image ads, in-video ads, as well as ads for mobile web and mobile games.
- Facebook advertising MINUS creative content strategy: According to sources at Ford, part of GM not realizing any ROI out of their $10M ad budget is the fact they failed to combine their advertising with a creative content strategy. The Ford and GM automotive wars are somewhat similar to the ongoing Coke-Pepsi, A&T-Verizon brand wars but I do think Ford has a valid point in that GM’s campaigns lack creativity and smart engagement tactics which has become the hallmark of Ford’s social media campaigns. Must read the Business Insider srticle on Ford: GM’s Facebook Ads Don’t Work because GM Sucks – Ours Work Fine.
- Too many cooks in the Facebook kitchen can result to no returns: During the speculations and analysis posts that followed GM’s Facebook ad announcement, GM did admit to letting too many vendors share the Facebook sandbox. While its common to partner with multiple agencies when you are servicing a global brand, let’s be honest, when did we ever get anything accomplished when there are too many agencies and vendors whit conflicting philosophies trying to make sense of an emerging ad platform like Facebook? Yeah, I can see your eyebrows rise up. Dear Mr. Client, please do us a favor, pick one or a few agencies that have actually demonstrated results with Facebook advertising and let them lead the charge and hold them accountable for your Facebook ad spend instead of letting too many amounting to too little with your budget.
Now, I wouldn’t let the GM announcement throw you off the Facebook path, remember, it is still a growing network connecting 901 million active users (defined as people logging in at least once a day) across the globe BUT yes definitely re-think your ad strategy with Facebook especially if you are seeing good results from the Google Display Network.
Here are some additional reads on how to best invest in Facebook marketing efforts: