General Motors is pulling $10 million in Facebook advertising, but does that mean you should follow suit? Is this one of those defining “abandon ship!” moments?
Before I answer, let me first propose that we’re asking the wrong question. It’s not about “Should I stop advertising on Facebook?” The real question is, “Should I be advertising on Facebook in the first place?”
Here at Luckie & Company, we’ve generated literally billions of ad impressions for clients on Facebook, typically at a miniscule cost compared to other media options. And what we’ve consistently seen is that Facebook ads are incredibly effective — with a few caveats. Namely, your brand has to be committed to both Facebook and creative flexibility.
General Motors is citing poor sales-related ad performance as the reason to pull its money from Facebook, and I’m sure that’s true. But those of us who deal with Facebook ad campaigns every day quickly found ourselves wondering if GM was really trying hard enough.
By audience size alone, it’s clear that General Motors has struggled to keep up with its peers, especially at the global level. Let’s look at some numbers for comparison
Automakers | Facebook Likes
Hyundai Worldwide: 2,430,572
Kia Worldwide: 1,925,231
Volkswagen USA: 1,169,401
Toyota USA: 935,990
General Motors: 378,491
Auto Sub-Brands | Facebook Likes
Mercedes-Benz (Daimler): 7,319,676
Audi USA (Volkswagen): 5,215,038
Mini (BMW): 2,969,017
Chevrolet (GM): 1,215,242
Cadillac (GM): 1,167,853
GMC (GM): 660,359
Land Rover (Tata): 386,392
Buick (GM): 411,908
Smart (Daimler): 283,079
Acura (Honda): 173,020
What these comparisons show us is that GM has been a respectable player in the Facebook marketing space, but clearly not a leader. The automaker admitted as much when it fired its social media ad agency in December (read more here), after which the agency complained that GM never understood the value of social media as place to build brand instead of just racking up sales.
So let’s get back to the real question: Should YOU pull your ads from Facebook? Or maybe kill that big campaign you had in the works?
Facebook ads remain tremendously effective (compared to the alternatives) at driving awareness and audience growth within Facebook. True, Facebook is saturating a bit, making it tougher for brands in lots of ways. More businesses are competing for limited ad space, and consumers are becoming jaded by the tedious and unexciting ads they see stripped down the side of each page.
Looking at the numbers
I had our agency's Facebook ad guru, Keith Browder, crunch some comparison numbers to see if Facebook is really losing its punch as an ad forum. Here’s what he found:
Comparing a Facebook campaign we’re running now to a similar one we ran this time last year, we’ve seen the click-through rate (CTR) rise from .04% in 2011 to .07% in 2012. Those numbers might sound low, but with the staggering number of ad impressions Facebook generates, it’s really not bad at all.
And while this case study sounds like good news for Facebook, it probably says more about our agency's ability to tweak creative and improve our targeting to yield better results.
Things are a bit less rosy on two other fronts: cost per Like and cost per thousand impressions (CPM). There, we saw the cost of new Likes rise from $1.30 each in 2011 to a number that hovers between $1.48 (for Sponsored Stories) and $2.75 for display ad units.
The nice thing about Facebook is that we can, at any time, adjust the current campaign to bring our costs down and increase our effectiveness. That’s a time-consuming process that requires experience and expertise, but it’s the only way to ensure your Facebook campaigns are consistently effective.
Apples, Oranges, Google and Facebook
Many pundits are using GM’s exit from Facebook as a reason to compare Facebook ads side-by-side with Google’s ad options. But any social media savvy marketer know that this is a real apples-and-oranges debate.
Google has a myriad of ad options ranging from search and mobile to YouTube pre-rolls and Google+ Circle targeting. Facebook, on the other hand, has Facebook ads, which have notoriously (and intentionally) few bells and whistles. Facebook has never wanted to be seen as primarily an ad platform, though Wall Street investors are sure to disagree once the stock goes public.
So in summary, if Facebook is important to your business, by all means keep advertising on Facebook. But keep some of these tips in mind:
• Facebook ads can’t be your only growth strategy. Ensure that your business’ page is being promoted on your products, in stores, on traditional ads or anywhere else you can reach your audience. And sure, try some Google search ads and see how they perform as a driver to Facebook, not just your home page.
• Be flexible. If your Facebook ads aren’t working, try something else. Change your targeting. Change your creative. Kill the ads that aren’t working and enhance the ones that are. Are you wasting money on audience-growth ads that hit existing fans? Are your thumbnail images cluttered and confusing? Are your headlines saying anything worth acting on? Be hard on yourself and set aside the time to treat your campaigns with professional diligence and creativity.
• Keep people within Facebook. The best ad units offered by Facebook are those that generate Likes, not click-throughs. So focus on Sponsored Stories, Like ads and display ads that explain the benefits of becoming a fan. It’s worth experimenting with Facebook advertising as a driver to your website, but I doubt you’ll find it to be the best option. Instead, focus on building and engaging your audience, then producing content that fans the flames.
And remember, no ad medium is ineffective by nature. Dismissing an entire outlet, whether it’s Facebook or radio or rich media, is just a cop-out. Think about what you’re trying to accomplish, then find the right tools for the job. From this perspective, the recent ad flap may say more about General Motors than it does about Facebook.
Photo credit: H Aoki on Flickr.