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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.'"
You mean my loser friend from high school who spends all day in front of his computer posting updates on his shitty life *isn't* the perfect person to target with an ad for a $40,000 new car?!?!?
What political party do you join when you don't like Bible-thumpers *or* hippies?
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.
My work here is dung.
but that doesn't seem to stop anyone. I've found that marketing rarely has ever been able to prove that the money they spend actually generates returns.
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Wait... $40 million dollars, a quarter of which ($10 million) was advertising. The rest was $30 million dollars of which $0 went to Facebook (accounts are free). Where did the rest go, does it really take $30 million dollars of payroll expenses to have a couple of people post status updates and photos? I realize they probably had review teams, photographers, marketing folks, customer service, etc - but $30 million dollars seems absurd.
Hey GM, I'll maintain your profile for $2 Million a year. By Grabthar's Hammer, oh what a bargain!
Marketer 1: "hey, we don't have enough budget to advertise on Facebook"
Marketer 2: "how do we reach the facebook crowd without spending money?"
"Marketer 1: I know! Let's do a press release that says we can't afford advertising on Facebook, but spin it as us not wanting to advertise on facebook"
Marketer 3: "that's a great idea! let's announce it just days before facebook's public IPO for maximum impact!"
moox. for a new generation.
Facebook has many eyeballs, but those eyeballs don't on average stick around as long as they do for television, or even print media.
If you're a business and you're looking for real bang-for-buck, you're talking Hulu -- the 'middle ground'.
Facebook IPO'ing now is a cash out, not a strategic move. If you remove Zynga from Facebook, it's not really worth anything.
One day a social network will become something permanent, but Facebook won't be that network.
You mean my loser friend from high school who spends all day in front of his computer posting updates on his shitty life *isn't* the perfect person to target with an ad for a $40,000 new car?!?!?
Probably not. Although convincing him that the 2011 Chevrolet Aveo (with an MSRP of $12,000) is the best investment he could make now that his rusted out junker needs a new transmission might be worth a few bucks to GM. If he has income and can get an auto loan from a bank, they're interested in him. America is full of losers like your friend that still need cars to go to their shitty job so they can afford their shitty food, pay their shitty rent and make shitty car payments. Transitioning these sales strategies of "most dependable" or "safest in its class" from TV to online hubs of entertainment isn't too far of a stretch, is it?
My work here is dung.
You know who else are losers? Slashdot users: Freetard neckbeards who only want to talk about Linux, hate all end users, and have poor hygiene.
Am I doing it right?
What did the walrus say to the penguin? "No soap, radio."
If GM had spent that money on a bit of engineering to get their cars a bit closer to the efficiency of European cars, perhaps people would buy them more? No amount of avertising money will get enough people to buy yesterdecades technology cars
On a more serious note I totally feel for you GM. I spent 20 million advertising my "INVASIVE ANAL PROBE CONSULTING" business and it's just not working. Must be Facebook.
Facebook is not your target audience. You should try direct marketing to the TSA.
"I know that 50% of my ads are effective, I just don't know which 50%"
Attributing conversions (ie, purchase of a new car) to ads is tricky for any business, let alone one like GM where the eventual purchase takes place offline. You can track leads from Facebook ads to your website, but how can you be sure the ads contributed to a purchase down the road? And even if you ask someone who comes into a car dealership "Did you see our ad on Facebook?" or give them a coupon to print and bring with them, how can you be sure how much of that purchase was driven by that ad vs the ads she saw on TV vs the radio vs print?
Facebook ads command a hefty premium over more mainstream online ads because of the ability to finely target specific types of people (ie, people who have "Liked" GM, people who have listed "cars" as an interest, people who have mentioned the Chevy Volt in a conversation...). It's a big problem for Facebook if brands can't attribute this premium ad spend to a measurable increase in sales.
There are ads on the internet? Who knew. Seriously, even people who don't use ad-blockers don't see the adverts. People have just conditioned themselves to not see them.
Some mornings it's hardly worth chewing through the restraints to get out of bed.
Facebooks's pricing has to reflect their ability to do targeted advertising, which is valuable to businesses selling niche products. But if you're selling mainstream products like cars or beer, then broadcasting the same message to everybody (or at least broader groups, e.g. TV show demographics) is probably more efficient.
I've almost never intentionally click on a FB ad since they are generally not relavant. Right now, my FB shows 6 online dating ads (even though I haven't been single for over 5 years), one ad from Wells Fargo asking me to help write a love letter to San Francisco (what!?) and one Marathon discount ad that might be relevant, but when I clicked on it, the site wanted my email address before it would even show me their site.
I use Google a lot (email and searches), and I typically click on one Google ad a day because their ads are typically quiet relevant to me. If a little creepy - I searched a Chevy Aveo mentioned in an earlier comment, and now my current Gmail ad is from Ford. Creepily relevant.
You have to make duckface while saying that.
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.
"We make our world significant by the courage of our questions and by the depth of our answers." Carl Sagan
Quoting the article that you cite, "Researcher Soraya Mehdizadeh from York University in Canada asked 100 students, 50 male and 50 female, aged between 18 and 25 about their Facebook habits."
Clearly, that is not a representative sample of 900 million people. Your unwarranted generalization is rejected.
Seems odd to me how corporations can file chapter 11 and a few years later still have millions to waste on shttiy advertising mediums.
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Hey! - how did you turn on my webcam?
My elite math skills tell me they are spending $30 million dollars per year on Facebook, where none of that $30M can be accounted for by paid ads.
Until I get a clear understanding of that, I have to think that some kind of legendary incompetence is happening at GM, so I don't know if I get much out of their conclusions.
Assuming it costs $50k/year for GM to pay someone to upload pictures of their cars, type status updates ("Looking forward to tomorrow's release of car X!" or "OMFG car X is sooo beautiful and fast, I don't even care what it costs!") I can't help but imagine they're paying 600 people to do that kind of work.
"Believe me!" -- Donald Trump
General Motors spends around $40 million per year on maintaining a Facebook profile and around a quarter of that goes into paid advertising.
So, that's 10 million into ads, where does the other 30 go?
If you're seriously paying some shmuck 30 million dollars a year to upkeep a facebook profile, fire him.
I'll do the job for only 5 million.
What do I know, I'm just an idiot, right?
$30 million isn't as much as it seems when taking into account operating costs, salaries, consultant fees, and other expenses.
OK divide it out. I'm not on FB so I can't directly comment, but a good metric might be posts per day. $30M is $82192 per day. I can't imagine following a feed with more than 10 posts per day, unless its a pr0n star posting pics or something, too spammy. So thats $8219.20 per post.
Someone in India would make spam posts for maybe $0.01 each, but they would be terrible. So stand on a street corner at a university with a stack of $20 bills and give one to each marketing major who makes a decent post. That leaves $8199.20 per post for executive bonuses.
I checked some graphics artist freelance rates and they seem to charge about $75/hr. 10 posts per day is 2.4 hours work per post. So one dude (more realistically you need 5 dudes for 24 hour 7 day week coverage of a slot) could do all the work for $180 per post. That leaves a mere $80392 per day left over for the office slush fund, foozball tables, exec bonuses, etc. Honestly I think they're earning their $75/hr if they can think of ten interesting things to post, 365 days per year. I really like my ancient Saturn, but I'd run out of ideas the first week if not sooner.
"Science flies us to the moon. Religion flies us into buildings." - Victor Stenger
I was advertising one of my ebooks with adwords and decided to try FB to see how it compared. Though the number of impressions was quite high, sales immediately tanked. As soon as I shut down the FB ad run and switched back to adwords, sales went right back up.
A lot probably depends on the product you're advertising. All I know is my target market wasn't on FB and that is apparently true for GM as well. I'm just glad I tested it before moving a bigger chunk of my advertising.
My sense is people go to FB to advertise what they're doing, not go shopping.
That's our life, the big wheel of shit. - The Fat Man, Blue Tango Salvage
Except that's not a data driven examination, but, instead, a stereotype. If you can't see the difference there, that's a serious problem.
I don't think it's a problem with Facebook. I think it's a general issue of society being over-saturated with ads.
Take GM for example. They advertise on TV, radio, in magazines, in newspapers, and online through every venue available, including Facebook and YouTube. Everywhere you turn, you will see GM advertising.
People are burned out.
They don't care about supposedly "new" products that are more of the same with minor tweaks and new version numbers or names.
GM's real failure is not in their advertising, but in their products. With the sole exception of the Volt, every single vehicle they sell could be rubberstamped from a Ford, Chrysler, Honda, or other factory and the customer wouldn't know the difference if there was a GM logo on the front.
Welcome to the mainstream, GM. You're a commodity, indistinguishable from a horde of "me, too" vendors.
Please feel free to blow a few million more on another Superbowl ad that will garner you maybe a few thousand actual unit sales.
In the meantime, I will not share your YouTube videos on Facebook or "like" your page because I don't like advertising, and the only thing I get by "liking" a vendor's page is advertising posts thinly disguised as "information" that doesn't actually tell me anything useful. If you want me to shill, pay me. :P
Only a fool would astroturf for a vendor without compensation. You'd lose all your friends and get nothing in return.
And personally, the respect of friends and family is worth far more to me than you'd be willing to pay me to shill your crap.
I do not fail; I succeed at finding out what does not work.
This is something that has always bugged me about advertising: why do large corporations need to do it? For companies like GM, GE, Ford, Google, Microsoft, Johnson and Johnson, etc, they have a well-known brand that has been around for decades. Although there are people constantly entering and leaving the market, these companies have such an established position that their brand will always be circulated in discussions about products similar to the ones they make/sell. Rather than pushing their brand constantly, it would seem that the only things they'd really need to occasionally advertise are a product or nifty idea they've come up with.
To make a specific example, consider car sales in the US. With a few exceptions, the majority of sales are handled by a dealer who tries to ascertain the customer needs/wants and translate that into an available vehicle (ignoring any 'screw the customer' factors). It's socially established that there will always be a variety of cars at a dealer and that one can go in to find what they want, and they work with the dealer to meet their needs. From that perspective, it shouldn't make sense for go GM to spend millions on ads to random places pushing 'the car of the season', because there's an already established place to get that information. Instead, they should focus on promoting local car dealers with GM products, because that's what the populace would be interested in learning about. They might consider promoting a catalog/directory describing each car and feature or a general fund for independent car reviews if they're looking to target the people actively looking for car information; but they have an established market that will always be around until it's phased out by cultural and social changes.
Similarly, Microsoft can always expect people/companies to want on OS, J&J can expect a need for adhesive bandages, etc. And, they can expect people will actively seek these out, and that they are so commonly expected that advertising wouldn't do much to inform people of the existence of these products/services. If they can always rely on that, why bother advertising for those products and services?
Now, advertising makes a lot of sense for a small company trying to get its name out to the world or a company trying to sell a genuinely new or unexpected product, but for established markets and big companies it just doesn’t make sense to me why they'd even bother with advertising like Ads on Facebook.
"Our goal each year should be to increase the number of goals we set for ourselves!"
Gas is really cheap. For what my young male cousin is paying in monthly car insurance, despite having a clean record, he could fill up almost weekly and drive about one thousand miles per month, or about 30 miles per day, which is actually a hell of a lot of driving. Just for the cost of insurance alone.
Of course he also has to pay for the car itself, and maintenance and afford to pay for whatever it is he's driving to, unless he's just cruising or getting into trouble with friends ($20/person average movie cost, shopping, blah blah).
Gas is probably the cheapest cost of owning a car.
"Science flies us to the moon. Religion flies us into buildings." - Victor Stenger
It's fine for anything people get enthusiastic about and want to form social communities around. So bands, books, movies, various clubs, and other things that people form human attachments around are a good target for facebook. But a car even if you really love your car isn't the basis to form a relationship with someone else that might happen to have the same brand much less model of car.
Who knows the name of their mechanic let alone the name of the every guy in town with the same make of car? If you're a band then having a facebook page makes a lot of sense.
I'm sure there are car buying websites... sites that specialize in reviews for cars. That's where I'd put the money. If someone goes online to figure out which car to spend money on, they're likely going to wind up on one of those sites. Facebook is a waste of time for that sort of thing.
Every company from fabric softeners to mattress companies wants a facebook page. Utterly useless. Unless you're in a business that people form human attachments around don't waste your time with facebook.
I've decided to stop wasting my time responding to AC trolls/sockpuppets... so if you want a response from me... login.
They could license the tune from "Get on my Horse" from Weebl and turn it into "This is our car, our car is amazing".
My first Journal Entry ever, in 8 years! http://slashdot.org/journal/365947/aphelion-scifi-fantasy-horror-poetry-webzine
I wouldn't say Facebook's global nature is the problem either. The fact that the majority of its users are outside the USA doesn't mean any fewer USA based users are viewing a given advertisement. I'm sure FB even allows targeting the ads to the extent where you can restrict them to only be viewable by people coming from particular countries. (I remember trying out a bit of FB advertising myself, for my on-site PC repair business, and I believe it even let me target the ads down to within so many miles of a specific zip code. Either that, or it was effectively doing something similar when I asked it to only display it to "local" users.)
I think GM is correct, that Facebook ads simply aren't a very effective way to sell new cars to people. Everyone I know who becomes interested in a new car purchase switches from a mode of ignoring all the advertising out there to paying a lot of attention. So that means, first of all, advertising really does very little to persuade someone to buy a car they didn't already decide they wanted. It's simply too big of a purchase for most of us (unless you're someone like Jay Leno, maybe!).
When a person decides they DO want a new vehicle (likely motivated by such things as expensive repairs they had to pay for on their existing one), they start doing some information gathering. For car enthusiasts, that might include reading all the available articles on the vehicles of the type/class they'd like in magazines like Car & Driver, or reading reviews on Consumer Reports or the Edmunds website. Others are influenced more by what they like, styling wise. (I know plenty of women who only get interested in cars they think look "cute". Then they narrow them down by tangibles like price, cargo space, seating, etc.)
Advertisers can actually market "cute". Look at the Kia Soul Hamster ads, for example. I guarantee you those sold a LOT of Souls. But Facebook ads don't really work well for that... You can't get in someone's face as they're watching something on TV, and "hook" them for 30 seconds. All you can do is pop up a link for them to optionally click on, with such a limited amount of info in the initial link or blurb, it can't convey an abstract like "This car is cute and fun!"
And because the Internet is more of an active experience, throwing ads in people's faces while they're trying to use it is a big negative ... much more so than TV commercials.
No, no, you're doing it wrong. I'll do it for 45M. It is even more than GM is currently spending, so it must work better!
"If you have nothing to hide, you have nothing to fear." - Every fascist, ever
From my experience with an iPhone iPad app Google performs far better than Facebook. Google ads are also 1/3 to 1/4 the cost.
Facebook has value in creating a social presence and in having a "conversation" with potential customers, but its ads have little value.
At about $100 a day for my small service based business (with a pretty wide demographic), I saw ZERO conversions. I pulled the plug pretty quickly.
They come in the dark, only in the darkest.
I've done some analysis of Google vs Facebook ads with respect to an iPhone iPad app. I rotate between no ads, only google ads, only facebook ads, both google and facebook ads. I look at hits on the web page and at actual downloads. Google ads are somewhat effective. Facebook ads are ineffective and they cost 3 to 4 times as much.
Facebook can be useful for establishing a social presence and communicating with communicating with people, but I have serious doubt about its advertising. It has nice targeting by demographics but it just does not seem to perform.
For the love of Turing, could you please shut up? I am so fed up with that song, now imagine hearing it every 10 minutes between your favorite shows!
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
What the fuck do you think Slashdot is?
Antisocial media.
Seriously, what 'social media' site allows you to identify people as friends but does not provide a mechanism for sending them messages?
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