GM’s Decision Not to Advertise On Facebook Not Such a Big Deal After All

Everyone is buzzing about the news that General Motors has pulled its $10 million in advertising from Facebook. The reason cited is the advertising is having “little impact on car purchases.” We’ve never noticed any GM advertising and, when taking into account that GM is the third largest advertiser in the U.S. ($1.8 billion) behind P&G and AT&T, it’s not that big of a spending cut for them. With $872 million in quarterly advertising revenue, its not too critical for Facebook either, though of course, the company would want to hang on to an advertiser.

In the course of its reporting, TechCrunch says sources question whether GM’s ads were “social enough” for the site. In that sense, it does raise the question of whether GM approached its Facebook advertising with the right strategy. It’s curious that GM would think that someone would see a Facebook ad and then run out and buy a car.

GM will be sticking around with a Facebook page, saying that the company still finds the social network useful for engaging with customers, exactly what a Facebook presence should do. GM reiterated that message on a post to its Facebook page this morning.

At the same time, the move raised eyebrows because of Facebook’s IPO on Friday. Advertising on Facebook is down 7.5 percent this first quarter and lots of people are reportedly asking questions about the value of advertising on the site, despite FB’s claims that advertising alongside a Facebook page will get in front of 75 percent more people who “like” that brand.

“It reflects that GM does not know how to integrate social-media into a winning marketing play. And it shows Facebook has done a poor job of explaining how they are part of a social-media play,” Steve Goldner, a senior director at digital-media agency MediaWhiz, told USA Today.

Even with bigger ad buys, say a 30-second spot during the Super Bowl, it’s doubtful that a person will see the clip, go to their local GM dealership, and walk out with car keys in hand. Rather, the marketing serves as a traffic driver, prompting potential customers to do research, discuss the vehicles with others, and ultimately, perhaps, take a test drive. GM says it’s reassessing its marketing, and taking a closer look at how consumers are making the decisions to purchase a car these days might be part of that reassessment.

So, the takeaway from this might be that Facebook needs to learn how to better position its advertising proposition and GM needs to fine tune its approach to social media. Analysts are saying that one shouldn’t read too much into this and it shouldn’t have too much of an impact on Friday’s public offering. Facebook has now decided to offer 421.2 million shares, which could be worth $3.2 billion. Despite the fact that everyone knows about and is seemingly on Facebook, the company still has plenty of room to grow. A Wordstream study released yesterday afternoon shows that Google has a broader advertising reach and greater value than Facebook.

The big winner in all of this might be PR, which touts its ability to communicate with target audiences and to use that ability on social media channels without that huge purchase.