Why General Motors Pulled A $10 Million Ad Campaign From Facebook (GM)

General Motors has pulled $10 million in ads from Facebook because they just didn't work, according to Wall Street Journal reporter Dennis K. Berman,

Berman, the Journal's Marketplace editor, wrote on Twitter:

"GM has pulled its $10 million advertising campaign from Facebook. Why? The ads didn't work."

GM will continue to use Facebook's free media to promote its brands, the WSJ reported.

GM is the first major advertiser to state in an unvarnished way that it is dissappointed with Facebook and will reduce its spend:

GM, started to re-evaluate its Facebook strategy earlier this year after its marketing team began to question the effectiveness of the ads. GM marketing executives, including Mr. Ewanick, met with Facebook managers to address concerns about the site's effectiveness and left unconvinced advertising on the website made sense, according to people familiar with GM's thinking.

The report comes awkwardly in front of Facebook IPO, expected Friday. It's part of a drumbeat of background noise to the offering, suggesting that advertising on Facebook is less effective than clients would like it to be.

Click-through rates are much lower on Facebook than they are on the internet generally, or on Google, according to WordStream (which manages search ads on Google and thus has a conflict of interest):

Facebook: 0.051%
Google: 0.4%
Average: 0.1%

The other issue is whether Facebook is right for all advertisers. Search advertising?the kind Google provides?tends to be more effective on customers who are actively doing pre-purchase research. Facebook, on the other hand, is more of an entertainment medium; no one is shopping for cars on Facebook?a fact GM seems to have now learned.

GM had previously invested heavily in Facebook-oriented products and media. In 2011, it allowed customers to customize their vehicles on Facebook and share the designs with friends. GM also integrated Facebook with OnStar, alowing drivers to respond to Facebook messages with voice commands.

Facebook has also been a source of stress for GM. In November, Saab lovers virtually occupied a GM Facebook account, flooding it with messages urging the brand be preserved. The social network was also the medium through which environmental groups embarrassed the company into ending its funding of the Heartland Institute, a global warming denialist group.

steve johnson norman reedus norman reedus sears office max office max cyber monday deals 2011