GM Pulls The Plug On Facebook Advertising Deal.

You could never accuse big business of being sentimental.

Then again, it’s arguable that they would never have become a big business if they weren’t hard-nosed and focused. So although General Motor’s decision to pull the plug on its paid advertising deal with Facebook may have shocked some members of the marketing community, the majority just accepted the decision without emotion. So what if the deal with the social networking site was pulled in possibly the biggest week in its rather short history – the week of its purported $12 billion flotation on the markets?

Over half of Facebook users respond to social media marketing

All’s fair in love and war – and business, so it seems. Why did the automotive giant feel it was necessary to break free from the $10 million social media advertising deal? Because GM believed that Facebook ads don’t work. Why did it do in such a sensitive week? Well, no one knows for sure, but suffice it to say, it was probably because it could.

So what sort of reaction has this public slap across the face to Facebook received over the pond?

Well many industry experts see it as a clear indication that GM is out of its depth, and has no clear idea about how to use the social media network effectively. Ford, though steering away from direct criticism, has publicly confirmed its support for Facebook and suggested that companies who walk away from paid advertising deals are foolish and fail to see the bigger picture. Other marketers are a little more cynical, and view GM’s decision to walk as further proof of the growing realisation that Facebook cannot work miracles and cure every ailment.

What the majority of ‘experts’ in the field do seem to concur on is that Facebook is not really a place suited to traditional advertising, though no doubt Ford would argue against that: it’s more geared up for content and attracting brand fans – a fact that Ford would definitely agree with. The interesting point is that in the week of the IPO few still know the real value of Facebook’s advertising business, other than the fact that it currently accounts for only 1 percent of its total turnover, yet most are quite happy to question its advertising effectiveness.
Speaking to Forbes, John Ellet, CEO of nFusion, and formerly head of Dell Computer’s North American marketing argued:

“Is it possible that the lack of results was GM’s approach to using Facebook? It doesn’t appear that GM’s brands are very ‘talkable’ or ‘sharable’ within Facebook. The platform is used best to amplify the voice of brand fans. Without passionate advocates on Facebook, GM may have been wasting their money. But whose fault is that?”

Mat Zucker, former chief creative officer at OgilvyOne, has argued that it was “very bold to uniformly declare Facebook ads don’t do enough for your brands and yank it all. Auto has the pressure of measuring dealer interaction (drives to dealer), so if they don’t see it happening, that is a big deal.”

“Ford successfully unveiled a car on Facebook, but perhaps priorities are different. At least GM will maintain a brand presence and content flow, which is important though that’s little revenue and consolation to Facebook. I wouldn’t be surprised if GM soon puts a toe back in to test some advertising at some point. It would be foolish not to with things changing so quickly. What shocks me, however, is to do this right before someone’s IPO. It’s like announcing in the synagogue newsletter that my Hebrew isn’t very good one week before my Bar Mitzvah.”

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