Thanks GM, That Leaves More Facebook Ads Impressions For Me

Posted in Facebook Advertising

General Motors,  in a widely reported Facebook-IPO-week #Fail bail, has quit their social media agency of record and abandoned Facebook Ads.  We understand the former, but not the latter. The most common reason for Facebook Ads failure, or in any channel for that matter, is a serious misunderstanding of the channel.

Hey there Mr. and Ms. online marketer. What would YOU do with about 24 billion paid Facebook Ads impressions, served to the largest sampling of humans on earth with the end goal of selling GM cars? Would you target social ads broadly, run promotions, attempt to drive users to external landing pages for one-touch car-building conversions, gradually raise up a new generation of brand-friendly customers and/or socialize users for later marketing efforts? How tightly would you segment users? Would the campaigns be part of a deeper, multichannel and long term strategy?  Would you expect to sell cars after one, two or three direct response FB Ads touches?   Would the 10 million bucks be worth spending compared to less quantifiable buys like television ads, radio or print brochures? Would you track results holistically, shooting at appropriate KPIs after setting realistic expectations?   Well, if you’re General Motors, apparently the answer is none-of-the-above… no, no, no, no, and no (at least not anymore)!

As an agency, all hinges on our client’s willingness to look at appropriate long-term KPIs informed by predictive modeling on the front end, serious targeting grids, bleeding edge creative and analytics monitoring in a reasonable attribution model.   A good social media marketing agency FIGHTS for their clients at KPI setting time. Dude, it better be real. At very least, one must understand the implications of making a brand even more famous to laser-sharp demographics.

From brainwashing the next generation of consumers (in uplifting ways) to influencing the influencers, FB is replete with marketing opportunities for the informed creative social/search hybrid team…

We doubt GM had all those variables lined up prior to their eerily public and blatantly timed fail-bail from Big Fuel Interactive and Facebook Ads. Good for everyone else! After all, FB Ads are sold at auction. Fewer advertisers = more impressions, for less money, for marketers to leverage FB’s social targeting might.

Predictive Modeling
Assuming an average CTR, CPC, great targeting, bleeding edge creative and expecting extraordinarily low conversion for direct response car-selling here’s what the program may have looked like, run by a team that knows what they’re doing.

Even with the conversion rate cut in half from what we’ve modeled here, and excluding future cross-channel conversions (including new brand searches by SEO & PPC) tracked by multichannel attribution funnels, we’re still talking about selling lots of cars here. GM is quitting FB Ads? Hmmm.

Not everyone agrees with GM. A recent Forrester study concluded that Facebook fans are twice as likely to buy brands they ‘like.’ In Gina Sverdlov’s Market Insights Professionals Blog, she posted this infographic citing the propensity of impact of Facebook fans at buying time. Of course, every vertical is different. Cars are different than rakes or AppleTV.

Impact Of Facebook Times

It is interesting to note that the Forrester study was also publicized the very week of FB IPO Madness. Hmmm.  Do ya’ think that this IPO is open PR warfare?

A Like is basically a viral subscription, where brands can re-market to users once subscribed, at the same time as using Sponsored Stories (second degree of separation ads) to amplify marketing messages to users’ friends. Our data shows that FB, as a paid channel, usually yields fewer direct conversions at a higher cost than other channels. However, in harmony with other channels over time, the FB channel can be a blockbuster.

Direct response, that is selling cars directly as the immediate focus of an ad, is not the only way (or best way) to skin the Facebook ads marketing rat.  Wiring up legions of friends by providing incentive for them to like your brand can be highly effective.  There are many ways to use FB ads to procure users’ likes. THAT does not need to cost ten million bucks.

Let’s assume you have the likes. GM has over 300K users that like the GM brand, not a bad start.  Once a brand has users in-community then the marketing mission is about providing the community with meaningful discourse, valuable tools, content to demystify products and remove barriers to sales.  All of this activity can lead users down the future conversion path. The screen capture below shows Monday’s post on the GM brand page as an example of the creative they tender to fans in their community.

How can this type of messaging lead a community member down the conversion funnel path? Looking back over the GM FB content posting strategy (re-marketing to users who have liked), there are months of self-congratulatory rhetoric, posts of questionable value, and little or no engagement or reason for users to engage. Maybe GMs problem is not Facebook Ads.

GM leaving paid FB as a channel is good for everyone but G.M. Ultimately, or at least temporarily,  G.M.s bail will very slightly lower the cost of FB ads for our clients. We doubt it will slow the FB IPO freight train. It would be a surprise if G.M.s reallocation of the the ten million + agency fees will sell more cars than they would have priming the social pump with FB Ads.

 

Photo by © Anatoliy Meshkov – Fotolia

 

  • Megan

    At WordStream, we just released an infographic illustrating exactly why Google advertising is superior to Facebook advertising.

    http://www.wordstream.com/articles/facebook-vs-google-display-network

    Facebook is absolutely a great platform for businesses to interact with existing and potential customers, but as a paid advertising method is doesn’t really hold up against Google.

    Ultimately, people got to Facebook to play, Google to conduct real research and make purchases.

    You noted that “A recent Forrester study concluded that Facebook fans are twice as likely to buy brands they ‘like.’” But did they make that purchase via a Facebook ad? I’d say not likely.

    So yes, Facebook has value for businesses. Is advertising on Facebook worth it? Eh, maybe not so much.

    • Marty Weintraub

      We’ve sold RFID chips, fire stop chemicals, and hotel reservations using FB Ads. The point you make about the “Close” not being by FB ads is correct. Most often there are too few too expensive last touches on FB. However:
      – FB bumps brand searches often. Test it some time with a brand name you just made up.

      -FB makes things famous to the “right” highly targeted users

      -FB builds highly focused communities (in the rare instance it’s done right) where friend of friend marketing (second degree of separation) builds “paid organic” communities of tightly wounds friends and interests.

      -As a remarketing channel, FB often out performs, or at least equals, an email address. How much would you pay for a REALLY good, email list

      -FB makes the phone ring. Have you ever done call tracking on FB Ads?

      -If a marketer does not know what “Second Degree Of Separation Demographic Research Is, then they probably don’t get Facebook

      -The CPA is astonishingly low. It is so much more targeted than TV. I don’t care if I sell much of anything last touch in FB. Take a good FB program away, and all can go to shit, or at least slow down a bit :).

      Thanks for the thoughtful comment. Your infographic is nice and we don’t mind promoting it.

  • Chris Elwell

    “There are months of self-congratulatory rhetoric, posts of questionable value, and little or no engagement or reason for users to engage.”

    The only time GM or any of the car companies sounded genuine in their communications/advertising was when they were begging for bail out money from “we the people.”

    Now that they’re profitable again, they’re getting arrogant and stupid again. Not spending a few shekels on Facebook illustrates that point.

    • Marty Weintraub

      @Chris Elwell: What do you really think? :). Yep, we are the freeeekin’ world. Etc… Looking forward to seeing you at #SMX Advanced friend. One of the best of the year always.

  • Ryan Jones

    The problem with FB ads is that people won’t treat them like TV ads. They want to treat them (and compare them) to paid search. In the auto industry the main focus is on lower funnel KPIs. Things like Building and pricing a car, searching inventory, or locating a dealer that indicate the consumer is futher along in the buying cycle. Many auto manufacturers even have monetary values associated to those KPIs.

    When they look at their cost per KPI from Facebook ads it’s a lot higher than the value of the KPIS. But that’s all they’re looking at. It’s hard to measure the value of branding and awareness so many companies fall into the Cost per KPI trap – which works for paid search but no so much for Facebook ads.

  • Cleofe Betancourt

    Curious…is their any data available from other car companies (like Ford or Chrysler) on how effective FB ads are for them? And while some would pan the move as shortsighted, wouldn’t the old GM have continued to blow money on ads that don’t work (and probably blow additional funds on pages/ads for Oldsmobile, Pontiac, Saturn, etc.)? I’m playing “devil’s advocate” here, but there is nothing wrong with taking time out to reassess the situation and get the right Social Media team in place to make effective use of those millions.

    In the meantime, Marty, you can reap the benefits of a heavyweight leaving the space. Perhaps a post recommending that Ford and Chrysler take a break be in order? Cha-ching :)

  • Eric Garrison

    The magic question. Sure, CPA is lower. But what is the quality of those leads?

  • Mr. Risky Startup

    Great article! Thank you.

    Just this week, I added my new business to Facebook. Getting the business page going was a breeze, but then I made crucial mistake – I decided to advertise with them too.

    Wow, what a mess! I have done $10K or more in annual advertising with Google and Yahoo before, but Facebook advertising process is terrible. I went through the process of setting up the ad, but when I added my credit card as a payment option, it all went crazy. Apparently, FB (who, by the way, successfully charged my card for $1 as a test), decided that my account activity is “unusual”. First, how can my activity be “unusual” when all I did was to add my credit card number and open the account that very day. What is unusual about that?

    Now, my account is disabled, only way to reach FB is via idiotic self-serve help section which (after a lot of work) gets you to their form where you can submit your question.

    I did that, but now I am in catch 22 – they tell me that ad is rejected because my account is disabled, but they don’t tell me how to enable it again. Then, I use the same process again, and answer is the same – your ad is rejected because your account is disabled… They use no-reply email addresses to email me, so I cannot have 2 way conversation with Facebook.

    They may be worth $100B, but if they treat their advertisers the same way as they do general public, will their revenues keep coming in? Anyone has better idea how to reach FB and ask them to fix this issue? Or am I better to start a new page from scratch and use my wife’s credit card to pay for ads?

  • Jim Banks

    The underlying link in that post was to a posterous page http://generalmotors.posterous.com/gms-bat-house-project-draws-cartoonists-atten

    In total they received 110 clicks from Facebook visitors and 32 Twitter posts. Assuming they had something even half decent on their Timeline they could expect a lot more than that.

    You’d think a company the size of GM would have some analysts who knew about attribution.

    I am sure free cars, open day invitations, test drives, brochure requests would get a lot of people into their sales funnel. As a multi-channel company they have to right?

  • Dave

    The reasoning underpinning this post reminds me of the old legal standby: If you can’t argue the facts, argue the law.

    GM did the math and concluded the ads were not right for them. I suppose that hurts if your business includes selling FB ads to clients because your clients begin to wonder.

    • Marty Weintraub

      Dave, and if you can’t argue the law, pound the table :)./

  • Jeff C.

    Just the other day we were looking at shopping comparison engine traffic and found a ton of hits from Facebook via Pricegrabber which strangely were resulting in NO conversions. And these were the same products that were converting on other networks with the same ads.

    So I can speak from my own experience managing ad campaigns for several retail companies on a wide variety of platforms (AdWords, Bing, Yahoo, FaceBook, DoubleClick, etc. etc.) And in all cases the ROI on Facebook display advertising was dismal in comparison to the other networks, especially Google Adwords. This seems logical considering the mindset the majority of users are in when they access Facebook – they aren’t shopping. In my opinion this is also one of the major reasons their IPO faultered a bit.

    The important point though is no company’s budget is unlimited. I bet they had pretty convincing data the money was better spent elsewhere. Facebook has a HUGE uphill (and possibly impposible) battle to compete with Google on gaining a larger chunk of any company’s advertising budget.

  • Heidi

    Thanks Marty.

    “Would you target social ads broadly, run promotions, attempt to drive users to external landing pages for one-touch car-building conversions, gradually raise up a new generation of brand-friendly customers and/or socialize users for later marketing efforts?”

    Kindly give an example FB campaign towards your insights above using a GM product…Image to use, Ad Copy, Landing Page template (plus your reasoning to all this.)

    “How tightly would you segment users?” Meaning different marketing messages to diverse age groups/sex – demographics and psycho-graphics…? An example would again suffice.

    All in all, Marty I do get your implications but would love it better if you came up with a sample GM FB marketing campaign explaining all your insightful thoughts.

    Thank you and I LOVE Killer Facebook Ads!

    • Marty Weintraub

      Thanks Heidi. CREATING the plan is obviously what’s next. GM would have to pay us for that :).