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General Motors pulled its paid advertising from Facebook stating that ads have had little to no impact on consumers’ car purchasing. This begs the question: Are sponsored ads on Facebook effective?
Personally, I don’t think I’ve ever clicked on a Facebook ad. (Other than an accidental slip of the mouse here or there) Does anybody out there ever click these ads? I’m not sure I’ve ever heard anyone say that they’ve bought something in direct response to a Facebook ad.
The dialog created on Facebook’s free pages seems to be a more effective use of the medium than the paid advertisements. That being said, why do companies spend millions of dollars on these ads? GM reportedly spent $10 million last year on Facebook ads promoting their products. That seems like a lot to spend when a well put together free page may create just as much buzz as paid advertisements.
What does this move by GM mean for Facebook? According to an article in the Wall Street Journal, GM is the third biggest advertiser in the country across all forms of media. Will other companies follow GM’s lead and also pull their advertising dollars and focus on the development of the free content Facebook provides? This could happen, which would mean a big reduction in revenue for the social media giant.
The timing of the move by GM may be a bit suspicious as Facebook is expected to begin to sell public shares of stock. Was this move by GM in retaliation for something Facebook did to anger the automotive company? I can only speculate. Here’s a great article that adds to the speculation on GM’s motives.
Whatever happened between GM and Facebook may never be publicly known. But it brings to light a debate between companies use of dollars on advertising or social PR. I think that GM’s money would be better used growing their social media pages and creating a more comprehensive dialog between the company and it’s consumers. To me, engaging consumers is a more effective strategy than only running basic ads on the site itself.
As social media continues to grow, it will be interesting to see if more corporations will take dollars originally allocated for advertising and instead invest in growing their brands through social media sites.