What You Can Learn from GM Dropping Facebook

By Herman Pool
In Marketing
May 23, 2012
0 Comments
846 Views

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General Motors decided to stop advertising with Facebook last week. GM’s budget for advertising on Facebook alone was nearly $10 million, so it was no small act to do so. They even put a Facebook post up telling their fans that just because they pulled their advertising campaign doesn’t mean they’re disappearing off of Facebook entirely.

Even though GM is now technically saving $10 million a year, they didn’t necessarily make the right move when they pulled their advertising campaign, and there are a couple of things you can learn from their mistake.

Facebook Has Frugal Advertising Choices

Click-through rate refers to the number of clicks an ad gets per number of views. Facebook doesn’t have a very good click-through rate, and it averages about .05% per ad. Google’s click-through rate is closer to .4%, which is a startling difference. However, instead of paying a flat fee every month like you do to be at the top of Google, on Facebook you can choose to instead pay per click.

So let’s say you see GM’s ad. You probably won’t click on it, but you’ll still have seen the ad and GM wouldn’t have paid a dime for that kind of advertising. Of course, there’s no way to pin a value on free display advertising, but at least GM had been taking up some space that could have been advertising a different car company.

Earned Media is Important

Facebook’s advertising campaign doesn’t work overnight. It takes quite awhile to build a substantial fan base on Facebook, but once you’ve done so, you’re free to sell to that audience as you please. Facebook’s ads help with building the audience in the first place. With Facebook’s new ad campaign, you can even build a story for your company and your brand, thus forming more personal relationships with your audience (which will help with selling later on).

This also gives you an excellent opportunity to get to know your audience better and thus create ads that target them more clearly. Not only does this help you build your reputation on Facebook, you’re also able to sell to the established audience better because you got to know them.

Don’t Lose Sight of the Bigger Picture

Look at your marketing budget. How much of it are you spending on Facebook ads? In GM’s case, they were spending a total of .5% of their yearly budget on Facebook. It just doesn’t make sense to cut something that takes up so little space in your budget if you’re not absolutely positive it’s not working for you and your business. So instead of worrying about “$10 million,” they should have been focusing on “.5%,” and kept on going. Dropping Facebook ads after it’s done them so much good and grown their community to over three million strong will only hurt them in the long run, and it would hurt you, too.

 

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