General Motors: "Facebook Ads Aren't Worth It"

Fluffeh writes "General Motors spends around $40 million per year on maintaining a Facebook profile and around a quarter of that goes into paid advertising. However, in a statement, they just announced that 'it's simply not working.' That's a bit of bad news just prior to the Facebook IPO — and while Daniel Knapp tries to sweeten the news, he probably makes it even more bitter by commenting 'Advertising on Facebook has long been funded by marketing budgets reserved for trying new things. But as online advertising investments in general are surging and starting to cannibalize spend on legacy media, advertisers are rightfully asking whether the money spend is justified because it has reached significant sums now.'"

Comments

NPR Looked at Pizza Delicious

[eldavojohn]

If you're perhaps wondering about how this works out for smaller businesses, NPR built an anecdote out of a small locally owned pizza joint in New Orleans trying their hand at targeted social advertising. For $240 they doubled their Facebook fans (at the cost of nearly $1 per 'like') and weren't so sure they'd see the return on that money after asking customers one evening where they heard about Pizza Delicious.

Re:NPR Looked at Pizza Delicious

[wcrowe]

I'm not a fan of Facebook -- deleted my account last year -- and I am inclined to believe that they are overvalued. However, I don't think NPR's experiment is valid. Let's say there's this place I know called Bob's Bar where they also serve pizza. A number of my friends know about Bob's Bar too. Let's say Bob's Bar has a Facebook presence, and buys some advertising targeting myself and some of my friends. Then, while on FB, me and some of my friends (some of whom have never been to Bob's Bar) decide we're going to meet at Bob's Bar for drinks and pizza on Friday night. If someone interviewed us at Bob's Bar, neither me nor any of my friends would say we had heard about Bob's Bar via FB. But that doesn't mean the advertising didn't pay off. We could have met up anywhere for pizza and drinks, but because Bob's was on our collective FB radar, we went to Bob's.

Re:NPR Looked at Pizza Delicious

[Baloroth]

I also heard on the radio this morning that one survey said 50% of Americans think Facebook is a fad. That doesn't bode well for their future, even if most Facebook users aren't American.

Re:NPR Looked at Pizza Delicious

[jitterman]

They don't believe so (I also heard the story this morning), as they asked people who came into the store if they had done so because of the FB exposure. No one had (though one generous soul donated $10 on line because of it). Not a great way to spend $240 on advertising.

Re:Whaaaa????

[AngryOldGuy]

The problem isn't so much Facebook users (this includes pretty much everyone), but too high prices for non-targeted users. Yes, you can target by age and gender and such, but unlike with Google and AdWords you cannot target to specific interests or queries. Yet Facebook charges almost kind of prices per click than Google does.

I was actually surprised when I was looking at the prices the first time. I had the idea that I could advertise and get people much more cheaper from Facebook. But the prices are ridiculous. It's much better to use AdWords or Bing's AdCenter for some actual targeted queries if the price is going to be the same.

Re:Whaaaa????

[geekoid]

It's nice that you don't understand th demographics of Facebook, and still not let your ignorance prevent you from writing a post.

Well done.

You know who is a large demographic of Facebook users? Married Women 25-33. The second largest is men in the same age range.
Your example is the minority.

That's not the problem, the problem is that it's global. The majority of users are outside the US. So, selling 40,000 dollar car to someone in turkey isn't exactly going to work.
Here is a breakdown.

http://www.kenburbary.com/2011/03/facebook-demographics-revisited-2011-statistics-2/

Works only for local business

[John3]

Just my two cents as a small business owner that has dabbled in all the online media options...spending money on social media is a waste, especially if you're a company that extends their reach beyond a single community. For local business owners, Facebook can be a great tool to send updates on events such as new interesting products, employee recognition, etc. Many customers like keeping in touch with their local business, whether it's a hardware store (like mine), restaurant, or other business that may hold special events of interest to the community. All that is free, and spending beyond that seems to be a waste of cash.

Making sure you are listed accurately on Google will cover 95% of your needs currently. Update the Place page, and if you sell products make sure you're uploading a data feed of your inventory. Both are free and generate tons of traffic to your website plus lots of in-store visits (if you have brick and mortar locations). Adwords is a waste of money IMHO...we won the Google/Amex video contest for Small Business Saturday and it included $5000 in Google adwords funds. I've burned through about $4000 in a month and a half and have seen negligible incremental business even with click-through rates in the 2% and higher range (and ad position average of 1.6). Sure, it's nice to know people are visiting our site, but plain old Google search still generates 95% of the traffic versus 2% from adwords.