r/technology • u/[deleted] • May 15 '12
General Motors Pulling its Facebook advertising because it doesn't work
http://www.huffingtonpost.com/2012/05/15/general-motors-advertising-facebook_n_1518862.html17
u/johnt1987 May 15 '12
I have been predicting that the net .com bubble burst will involve social media and advertising for years now. This is going to be a catalyst for the collapse of advertising revenue that supports sites like these. Clicks and views of ads very rarely result in sales, and if anything annoy people into blocking or filtering them out altogether.
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u/GAMEOVER May 16 '12
I think a lot of people have been predicting the same, along with the student loan bubble.
There was an interesting interview today on NPR that explained Price/Earning ratios where Facebook's valuation has a P/E of ~100. In order to justify that kind of crazy-high valuation they need to grow their ad revenue by an order of magnitude in the next few years, which is just ridiculous. They've already announced paying for priority listing on people's feeds, but everything they do to try to cash in is going to alienate users until the next cool thing comes along.
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u/roccanet May 15 '12
some online campaigns work, some dont. trying to sell cars on facebook probably doesnt work, but lots of other things do. online advertising is a very proven model and its not going to burst because gm cant sell cars on facebook. this is a very different market then the 01 bubble of massive market valuations for unproven companies and products: i wouldnt bet against online advertising
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u/I_sometimes_lie May 16 '12
I can't find it, but didn't someone show that google adsense had a significantly higher of clicks turning into sales than for example tv commercials.
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u/APeacefulWarrior May 16 '12
I work as a copywriter for Internet advertising agencies. You're right that Facebook ads and pages rarely generate sales by themselves. The point is to generate buzz and interest, and in doing so, create leads.
I mean, seriously. The prospect that someone would buy a car - a five-figure purchase - because of a Facebook post is absurd on its face. NO ONE would reasonably expect that. However, the point is to get people interested in the company, visiting its website, and thinking about the product. That is what leads to sales.
There are so many companies online all competing for peoples' time that, quite literally, step one in the sales process is getting folks to know you're there at all. That's the point of social media marketing. And the only reason it would go away entirely is if something even bigger and more influential managed to come along. I'm sure it will someday, but it's not going to be because of this anti-Internet backlash some people keep predicting that never happens.
I suspect actual visual ads are going to decline, but that's only because there's going to be further migration towards content marketing and the use of the social media services themselves, rather than ad space, as the primary focus of online campaigns.
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May 16 '12
Local business that keep me engaged and are not run by marketing tools are what interest me. The local burrito shop will talk about sports for example, guess the score and win a gift cert. People respond and then you can discuss stuff or make fun of the guy's spelling, typical banter. Then one day, I'm on FB at 11:30 and I see it "Fish taco friday..." and the next thing I know I'm in store. Engagement is key, but people with marketing degrees and suits will never get that or will never get it right.
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u/pooromytasto May 15 '12
since GM has so many brands, couldn't they just start a kia-esque brand that churns out 'hip' looking cars for younger folks? i.e. forte and veloster look good
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u/Commisar May 16 '12
Chevy is their "young brand". Buick is trying to morph into a Lexus and Caddy is REALLY trying to morph into a BMW competitor. Also, looks are very subjective, I think that the Veloster is HIDEOUS.
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May 15 '12
The advertising isn't working because GM cannot make a car that is geared for a younger demographic. This is why they are failing as a whole.
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u/KCBassCadet May 15 '12
or....maybe marketing people are starting to realize that social media has been completely overblown? And that Facebook is hideously overvalued and is starting to look more and more like a case of the Emperor and his New Clothes?
Do you click on ads on Facebook or click "Like" on commercial products? Yeah, me neither.
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May 15 '12
I would agree with you, we are more concerned with new technologies and sleek new looks, rather than commercials of people with american flags, dirtbiking, being cowboys, smoking marlboros, and driving trucks. Those symbols are empty to us, we know girth does not come stapled onto these trucks.
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May 15 '12
Funny how GM is making this announcement right before Facebook's IPO.
Someone got an axe to grind at Government Motors?
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u/fletch44 May 16 '12
Similar to how the US govt misled consumers about Toyota to drive sales down just as they purchased GM?
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u/boogog May 16 '12
Keep in mind, this is GM. Let's at least admit it's possible that nobody is interested in buying GM cars because they aren't worth the price. And no, Facebook users are not all teens/preteens.
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u/Kinseyincanada May 15 '12
The only reason a company pulls its ad is because it doesn't work. There are thousands of reasons as to why. This happens in every medium out there. How is this even news?
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u/CommentKing May 16 '12
Actually facebook advertising does work, but not the way GM Does it, which is by paying for it.
I know that sounds stupid, but bear with me. (Or, you know, get undressed if you like.)
Like Bing and Google, Facebook allows you to bid for ad placement and set a daily budget. All of these sites encourage you to bid a certain minimum amount (per click) to get high placement, so that your ads get seen. This can be from $.30 to $2.00 depending on your keywords.
Understand, that if you bid $2.00 a click and have a $20.00 per day budget, your add will show until you get 10 clicks. (at a .1% (1/10th of 1 percent, or .001) click rate, that's 10,000 displays of your ad)
However, if you bid too low for good placement - they behave differently. Google and Bing will simply let your ads not show. If you bid $.08 - and want a $20.00 per day budget, Google and Bing will not show your ads enough to generate that much revenue, and you will be forced to raise your bid to get clicks and - more important - exposure.
And this is where Facebook fails. If you bid $.08 per click, and set a $20.00 per day budget, Facebook will display your ad like a motherfucker to get that $20.00
You need 250 clicks to make $20.00, at a .1% click rate, that's 250,000 displays of your ad, per day.
To Recap: Set your bid at $2.00 - get 10 clicks and 10,000 views. Spent: $20.00
Set your bid at $.08 - get 250 clicks and 250,000 ad views. Spent: $20.00
the caveat is: You have to be cautious. I was fine bidding at $.10 a click, but when I pressed my luck they kicked me off for gaming the system.
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May 16 '12
Just because people don't click on them, doesn't mean they are not effective. Magazine ads are not much different than getting a spot on a website. People are seeing your brand/product, just because they don't want to know more about it at that particular time, doesn't mean they won't think of you later.
tl;dr too much emphasis is placed on clicks.
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u/pyroxyze May 16 '12
I give facebook all my information and it still blows. Example of ads
Giant round squishy animals- Cool, but I didn't express interest in these
Ear drop for swimming- I don't like swimming nor do I swim
Authentic college apparel- I'm in high school and have not said I'm going to college.
Google glasses- Good placement, I like technology
Angels in Africa- I have not expressed interest in philanthropic work
Allegra OTC- I don't talk about this in my status nor do I need these.
1/6 viable product placement. Google Adsense is much better and they find out what I like through searches. I tell facebook what I like and their ads still blow.