Why GM Doesn’t Understand Facebook

By Carrie Kerpen

When I worked on the brand side of the business, one of my favorite quotes was by marketing and advertising pioneer John Wanamaker, , “Half the money I spend on advertising is wasted: the trouble is I don’t know which half.” In a classic “big company making stupid decisions” move, GM has announced that they are pulling their 10 million dollar ad spend from Facebook, citing “lack of return” as the reason. This news was conveniently released just two days prior to Facebook’s scheduled IPO.

Here are three reasons that GM is missing the boat on Facebook, and what they should do to fix it:

1. GM is thinking of Facebook like television advertising: GM has clearly gone for “awareness” ads on Facebook. They’ve used Facebook as a “branding tool”, just like they use television; homepage ads and other brand based advertising. In most cases (especially for non-ecommerce brands), Facebook ads should be used as a community build tool, and a storytelling tool. The stories you tell are NOT YOUR BRAND’S stories. They’re the stories of your community. Use Facebook ads to promote great feedback from your fans using sponsored stories. GM needs to shift the perception of what this type of advertising is. In many ways, it’s hardly advertising at all.

2. GM did not put enough effort into their pages to make their advertising effective. GM ads mostly directed people to their website. When they didn’t, they directed them to their Facebook pages. At Likeable, we generally use Facebook ads to keep people within Facebook. But when the ads direct consumers to where a brand lives on Facebook, you’d better make sure that the brand is there and an active participant in the conversation. GM’s pages are loosely monitored. There’s no true conversation. While they respond to screaming complaints, they don’t say thank you to fans who love them, generally. There’s about 1 response for every 30 posts across GM’s pages. That’s not enough. When a fan is directed to your page through advertising, it’s only step one. They want to know that if they have something to say, the brand is listening and there to respond.

3. GM is thinking of Facebook as an acquisition tool, and completely forgot about retention. The direct quote from GM was that the pages had “little impact on consumers car purchases”. This is perhaps the most common mistake businesses make. Your new customers are important, but your most important customer is your current one. They are the ones who have already liked you- the ones who tell their friends about their car– the ones who would be most apt to post on a Facebook page. Has GM advertised to their current fan base about service at the dealership? How about newer models? How about using an ad to surprise and delight your fans with a secret landing tab with an offer to thank their current customers? Facebook is not a direct sales tool. GM should, if they have a proper engagement strategy, see a decrease in customer service phone calls, see increased loyalty, and increased brand perception through the use of Facebook. They’re focused on a number that matters, but not the number that will be most affected through Facebook.

My advice to GM: Cut your Facebook ads by 20%. Hire a team for true community management. Use the ads to drive engagement over driving impressions through products like homepage ads. Manage retention and incremental purchase and weight that more heavily than direct sales through Facebook.

What do YOU think of GM’s decision to halt their Facebook ads? Share your thoughts below.

Lorenzo Gonzalez May 29, 2012
Or maybe they timed their "going away party" just right and received the attention they desired. You bring across great points but I honestly believe it just wasn't working out for what they wanted it for. (Facebook ads)
Biggreentree23 May 24, 2012
Carrie, Why did you block my comment? Not vey social ... 
Steve Goldner May 24, 2012
Thanks Jesse! Social Steve
[...] este artículo compartido por mi amigo y compañero Carlos Saldaña en su Twitter, titulado “Why General Motors doesn’t understand Facebook“, cuya tesis es que el gigante automovilístico abandonó su inversión en Facebook porque, [...]
[...] este artículo compartido por mi amigo y compañero Carlos Saldaña en su Twitter, titulado “Why General Motors doesn’t understand Facebook“, cuya tesis es que el gigante automovilístico abandonó su inversión en Facebook porque, [...]
Artem Altman May 18, 2012
Clear example of how people who don't understand social media have the biggest misconceptions about its best use
WiseStep May 18, 2012
what is GM i dnt even understand the word
elogic May 17, 2012
Well stated Carrie... Especially like the budget allocation idea - I'd love to see what the power of a $2 million/year investment in community management would have in multiplying the value of the remaining $8 million.
[...] articles about GM’s decision to halt Facebook Advertising. While most articles point out that GM doesn’t understand Social Marketing, and Ford has already pounced on the topic by pointing out how ineffective GM is as social [...]

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