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.