General Motors just made a dramatic update to its status on Facebook.
Just days before Facebook’s expected initial public offering, spokesman Tom Henderson said GM is “reassessing” the value of buying ads on the social network site. He wouldn’t provide details, saying “We regularly review our overall media spend and make adjustments as needed.”
Here is the Havas Media Social Analysis about the announcement of General Motors to stop advertising on Facebook.
Firstly, the article suggests that GM is just planning to stop its investment in paid ads on Facebook – at this stage, the decision has not been finalised yet.
Secondly, GM are re-evaluating only 25% of their total Facebook investment (or 10$M), the rest – $30M – is spent on creating and maintaining content on free brand profile pages.
Havas Media response:
Our collective opinion is that GM’s advertising will struggle without the paid ads, because managing visibility on Facebook without paid ads will require a lot of work. The work is essentially Facebook SEO: content creation and management to ensure relevance, visibility and freshness. We know SEO cannot replace SEM in Search, because they must work well together. The same is true within the Facebook ecosystem.
Facebook statistics show that any piece of content (post) will only appear in 16% of your fans’ news feeds. This is because there is so much new content being published and depending on a fan’s recency and frequency of logging in, he/ she may or may not see certain pieces of content. Paid (either Reach Generator or Standard / Premium Ads) gets extra mileage and provides added visibility, by continually resurfacing content reaching more than 16% of your fans’ screens.
The frequency of ‘natural appearance’ of content depends on the Edgerank paramater; the higher a Brand’s Edgerank is, the more eyes the Brand’s content naturally reaches on Facebook. So unless GM is particularly advanced with their Edgerank optimisation (Facebook SEO) – which is highly unlikely – GM will need the help of paid Facebook ads to get into their fans’ feeds.
In addition, this is a slightly misleading article as it mentions that in GMs opinion Facebook paid ads have little impact on Car Sales.
Sales numbers should not be a KPI for a social media channel – especially with high price-point items like cars. For the FMCG industry this could work; for example (according to Facebook) Ben and Jerry’s ice cream are getting back $3 for every $1 spent on Facebook. But that is because their fans wouldn’t think much before clicking on a coupon for 50% off on an ice cream.
For the Automotive Industry – Social Media plays a completely different role. Commerce within social media is not a common behaviour amongst social audiences – to buy straight from these sorts of communities would be unusual with cars. It does – however – have a significant impact on brand value and awareness with its audience. The large spend that GM have already placed on social media to grow their communities gives them a base to work from to communicate with their audience for free – something we would recommend to any client.
For example, the Chevy Sonic Facebook Page has 424,000 Likes already. It may be that they have reached critical mass with this community and are focusing less on fan acquisition and more on engagement ; or maybe they are flagging this community through other integrated activities/channels.
But then again, it is difficult to say where the threshold of a critical mass is. If you take a look at some of the stats on the public Like info here (Chevy Sonic) – there has been a serious dip in both talkability and acquisition – probably due to reduction in paid ads: https://www.facebook.com/chevysonic/likes
And a final point, there has been a great, exaggerated hype just before the Facebook IPO (announced for 18 May) that many of these articles might be intended to simply use the opportunity for extra PR. In Brazil, among other markets, there have been hourly news on Facebook IPO price ranges, fluctuations and Warren Buffett’s forecasts.
To sum things up: the alleged GM move away from paid advertising on Facebook, should not alarm us and should not influence the social media strategy that we are currently following.