GM Says Facebook Ads Ineffective, Pulls $10M Campaign. Money-Saving Move Or Big Whoops?
So, GM pulled its $10 million Facebook ad campaign because their marketing team feels the ad platform is ineffective. This is an interesting move, considering Facebook’s IPO is due out on Friday, but that’s not what I want to talk about. I’m wondering if this really was a wise decision. (On a slightly unrelated note, the Business Insider’s headline is a fantastic example of a link bait headline. Anyway, back to my rant… er, I mean post.)
This is from the WSJ article:
“GM marketing executives, including Mr. Ewanick, met with Facebook managers to address concerns about the site’s effectiveness and left unconvinced advertising on the website made sense, according to people familiar with GM’s thinking…”
Given that I don’t know GM’s campaign particulars, I can only guess why the ads weren’t performing. That being said, I can’t help but think GM’s marketing agency got it seriously wrong somewhere along the line. This has left me with a number of questions and quite a bit of confusion.
Are GM’s Low Click-Throughs Really an Indication of an Ineffective Platform?
First of all, Business Insider reports GM’s $10 million Facebook ad campaign suffered from a low click-through rate (CTR). Business Insider suggests part of the problem could be the fact that Facebook ads have a lower than expected ROI in general. I’m not so sure you can make this assumption, or lay the blame on Facebook’s ineffectiveness.
With a budget of that size, I think it’s fair to assume that the company was paying for a huge number of ads. Combine that with a low CTR, and I can’t help but think targeting and segmentation were significant factors here. It suggests to me (keep in mind that I’m purely guessing at this point) that one (or more) of three things happened:
- They targeted far too wide of an audience.
- They targeted the wrong audience.
- They approached the right audience, in the wrong way.
Can You Really Compare Facebook Ads to Other Platforms?
I also question the comparison of Facebook and Google AdWords. (Before I go any further, I want to say that I have a huge amount of respect for Wordstream. I will happily recommend them to anyone, and I do so regularly. This is not critiquing the company, their report, their quality, or their work. I’m merely exploring the topic and questioning BI’s use of the study in this context. With a bit of luck, I’ll maybe even inspire a bit of healthy debate that I can learn something from.)
With no way to see the data, how it was collected, or where it came from, I don’t feel I could confidently make the assumption that Facebook ads are less effective than Google ads. (Not that I’m 100% confident with any of my other assumptions in this big rant little post, either.)
Another reason why I don’t think it was an appropriate use of the study in this instance is because Google AdWords and Facebook ads are far too different. It’s like comparing apples and oranges.
I enjoy these kinds of studies and find them helpful, but at the same time, I don’t think the Wordstream team intended the study to be used in this manner. I think it was merely intended to make people think about where their money is going and make sure they consider all the options. I think it was also a great way for them to publish their findings and encourage discussion.
To put this another way: The scientific or healthcare communities don’t make major decisions based on a single study. They subject the study to a peer review and perform multiple studies on the same subject before making a broad, definitive decision like cutting a $10M ad campaign.
So, do I think Facebook ads are less effective that Google’s paid ads? Not yet. I think they’re two very different systems, with different users, different advertisers, and as a result, the two systems are worlds apart.
And while we’re on the topic, let me present this idea: When users search Google, they’re actively searching for a solution to a particular problem. When users are on Facebook, I don’t think their sole reason for being there is to research a product. So, the idea of measuring the ROI of your Facebook ad campaign by the number of sales and click-throughs you get is a bit flawed.
(According to one Oracle study (Word Doc), “24 percent of consumers say they incorporate their online purchasing activities on social networks such as Facebook, Twitter, and MySpace, nearly the same number of people said they didn’t even know this is a possibility.”)
The Buying Process, Yardsticks, and How Facebook Ads Fit Into It
Now, I don’t know about you, but the buying process I go through when I want to purchase a vehicle is quite a bit different from the one I follow when buying a pair of shoes, a magazine subscription, or music. I have, on rare occasion, been known to click on a Facebook ad to purchase a Christmas gift. BUT, I can promise you that I’ve never clicked on a Facebook ad to purchase a vehicle. I don’t research vehicles on Facebook, either. (I usually talk to mechanic friends of mine to find out what they’ve been fixing lately.)
What if 5% of these click-throughs resulted in a sale? What’s the value of a click-through, anyway? How many of those click-throughs are converting? It could be very little. It could be almost all of them. In truth, you just don’t know. Someone could be clicking on the GM ad, checking out the car, and looking at the vehicles offered by their competitors, before stopping in at the dealership on his or her way home from work the next day.
Alternatively, let’s say a wife saw an ad with the picture of a car she likes. She realizes it’s the car from the TV ad she saw the night before. So, she turns to her husband and says, “This car looks really interesting. I hear it has x, y, and z features. Maybe we should get one of those?” The husband then stops at the dealership to look at the car. They may not make the final decision for weeks or even months after that. Are they going to say they heard about the car on Facebook when they made the purchase? Not likely.
Because GM has a fairly strong presence on Facebook, it might not notice much of a difference, but I’m worried that they won’t realize what they’ve missed out on. That’s like saying you lost the $5 million lotto prize because you forgot to buy a ticket for Monday’s draw.
I’m not the only one considering the validity of the Business Insider article and GM’s decision to pull the ads. Marty Weintraub of Aim Clear also has doubts and published his own rant on the topic, which has a number of other issues I didn’t bring up here. Business Insider also made some interesting arguments on both sides of the fence.
I don’t know. Am I way off base here? The only thing I’m completely sure of is this: I would have loved to hear the arguments GM’s marketing team gave against the campaign. I think it would have been quite interesting and informative.
May 16, 2012 at 7:33 pm | Marketing | No comment
