GM Kills $10 Million Facebook Ad Campaign Because It Didn't Work

×
Facebook GMBy Jim Edwards

General Motors has pulled $10 million in ads from Facebook because they just didn't work, according to Wall Street Journal reporter Dennis K. Berman.

Berman, the Journal's Marketplace editor, wrote on Twitter:
"GM has pulled its $10 million advertising campaign from Facebook. Why? The ads didn't work."

UPDATE: GM will continue to use Facebook's free media to promote its brands, the WSJ reported. The $10 million was the entirety of GM's Facebook ad budget, the Journal noted.

GM is the first major advertiser to indicate disappointment with Facebook and reduce its spend. GM is the third-largest advertiser in the U.S., and although the cancellation isn't material to Facebook's numbers, it will be psychologically devastating to sales management there. The Journal reported:
GM, started to re-evaluate its Facebook strategy earlier this year after its marketing team began to question the effectiveness of the ads. GM marketing executives, including Mr. Ewanick, met with Facebook managers to address concerns about the site's effectiveness and left unconvinced advertising on the website made sense, according to people familiar with GM's thinking.

The Journal also noted that of the $40 million GM devotes to creating content for Facebook, only $10 million of it actually went to Facebook in the form of paid media.

The report comes awkwardly in front of Facebook IPO, expected Friday. It's part of a drumbeat of background noise to the offering, suggesting that advertising on Facebook is less effective than clients would like it to be.

More from Business Insider



Click-through rates are much lower on Facebook than they are on the internet generally, or on Google, according to WordStream (which manages search ads on Google and thus has a conflict of interest):
  • Facebook: 0.051%
  • Google: 0.4%
  • Average: 0.1%

The other issue is whether Facebook is right for all advertisers. Search advertising -- the kind Google provides -- tends to be more effective on customers who are actively doing pre-purchase research. Facebook, on the other hand, is more of an entertainment medium; no one is shopping for cars on Facebook -- a fact GM seems to have now learned.

GM had previously invested heavily in Facebook-oriented products and media. In 2011, it allowed customers to customize their vehicles on Facebook and share the designs with friends. GM also integrated Facebook with OnStar, alowing drivers to respond to Facebook messages with voice commands.


Facebook has also been a source of stress for GM. In November, Saab lovers virtually occupied a GM Facebook account, flooding it with messages urging the brand be preserved. The social network was also the medium through which environmental groups embarrassed the company into ending its funding of the Heartland Institute, a global warming denialist group.

See Also:

Data: Google Totally Blows Away Facebook On Ad Performance

Follow Jim Edwards on Twitter.



Increase your money and finance knowledge from home

What is Short Selling?

Make a profit when stocks prices fall.

View Course »

Managing your Portfolio

Keeping your portfolio and financial life fit!

View Course »

Add a Comment

*0 / 3000 Character Maximum

280 Comments

Filter by:
dukebballfan2011

I think that Facebook should have been priced at about $22. When you consider the company only makes revenue off ads. that aren't even on mobile device apps. and that their actual earnings over the past 8 years are over 25 times lower than they are valued at, it is obvious why most consider them such a risk! I have a website that has addressed Facebook and its surrounding social media sites fairly in depth over the past few days. It is DayTradingUpdates.com. Looking at this now is risky, but when you look at a site like Pandora, which is boosting more members than even, has revenue coming in from different facets, I believe it is a better media buy. I bought it and had a 11% increase on it shortly after this week and I don't think it is nearly close to finished! For more updates please visit my site.

May 25 2012 at 2:19 AM Report abuse rate up rate down Reply
Arthur B Raleigh

I don't think I have ever clicked on an Add on Facebook. I only go on there to connect with friends- no games, etc.

May 20 2012 at 4:49 PM Report abuse +1 rate up rate down Reply
NoPaper7

ITS BECAUSE FACE BOOK IS BETRAYING THEIR CONSUMER BASE, PEOPLE NO LONGER TRUST FACE BOOK. THEY MAKE IT EXTREMELY DIFFICULT TO CANCEL OR EVEN DELETE ANY OR ALL OF YOUR INFORMATION. THEY ARE ALLOW TO KEEP YOUR INFORMATIN ONCE YOU THINK YOU HAVE DELETED IT. THE LIST GOES ON AND ON. I WOULD NEVER USE FACE BOOK. PEOPLE ARE NOW BECOMING AWARE HOW INFORMATION CAN BE USED AGAINST THEM. I SAY PEOPLE KEEP YOUR INFORMATION TO YOUR SELF.

May 16 2012 at 11:19 PM Report abuse +1 rate up rate down Reply
Ronald Malozi

I'm so sick of hearing about FaceBook. It's over hyped

May 16 2012 at 9:31 PM Report abuse +1 rate up rate down Reply
hsstempe

Government Motors will probably utilize this 10 mill for executive bonuses. Crappy cars that miss the mark almost all the time.

May 16 2012 at 6:20 PM Report abuse rate up rate down Reply
tallonplumb

FGM

May 16 2012 at 3:05 PM Report abuse -1 rate up rate down Reply
Carabella

The Facebook IPO will be way overpriced. Even Warren Buffet states he won't be investing in the company. Needless to say, we won't be investing ourselves.

May 16 2012 at 2:01 PM Report abuse rate up rate down Reply
Gumby

Ford cars sometimes last without any trouble.. It is always a crapshoot! I hope that Zipcar.com will put a few cars in my hometown so I dont have to worry about keeping my own anymore..

May 16 2012 at 10:22 AM Report abuse -1 rate up rate down Reply
Gumby

Foreign cars use American made parts that last longer than foreign parts used in American cars.. See the opposite? American managment is committing suicide repeatedly without any success so far!! I love driving Ford cars but it breaks down too often. Why?? Please explain to UAW or whomever responsible.. maybe we should explain to the managment and give them some medication ??? I dont know really??

May 16 2012 at 10:19 AM Report abuse +1 rate up rate down Reply
Gumby

GM should put that million in better parts not glitzy advertisments.. Everyone would noitce better parts in their cars .. GM can easily explain to UAW that better parts protect jobs . Part suppliers get paid squat so they make squat parts!

May 16 2012 at 10:16 AM Report abuse +1 rate up rate down Reply