Ford up their Facebook spend as GM depart paid for Facebook
The timing of the announcement by GM this week that it was pulling advertising from Facebook was doubtless designed to inflict as much damage as possible on the Facebook IPO. But it failed.
Was it sour grapes from GM that their market capitalisation is just $30 billion with Facebook’s set to hit $100 billion after it floated? Or are GM’s analytics so blunt that they don’t rate the exposure on Facebook as of any consequence, and just measure click thrus as evidence of success? Who knows?
But Ford obviously see that advertising is all about exposure, not just the instant, and measurable, rate of clicks. Just because a click-thru rate can be measured doesn’t mean that only clicks have any validity. Just like all other forms of advertising, the subliminal effect of brand marketing is significant, something Ford seems to understand and GM don’t.
In response to GM’s announcement it will stop its $10 million annual spend on Facebook (which, as a percentage of their annual $1.78 billion advertising spend, is actually insignificant) Ford has said they plan to increase theirs. Ford Tweeted:
It’s all about the execution. Our Facebook ads are effective when strategically combined with engaging content & innovation.
And they’re right. Online advertising isn’t just about click-thrus (in fact, for the savvy, it’s very little about click-thrus in many areas) and all about effective exposure in the right places.
Silly GM. Clever Ford.
Actually in this case, the day after Facebook’s disappointing IPO, GM is correct. Had it not been for the intervention of Facebook’s underwriting banks, the IPO would have closed under the offering price. But this is only chapter one of what will be a battle that will play out over years.
Facebook is wildly overvalued and when the insiders cash out in the months to come, I will be surprised if the stock price stays above $30/share.
Facebook can possibly build brands, but as GM saw, it doesn’t move the metal. While Facebook crosses demographic categories, it is strongest among 15-25 year old enthusiasts who spend every waking hour on Facebook. Unfortunately, here in the US, these people are under-employed or unemployed and simply can’t afford to buy a car, much less a brand new car.
And it’s been my observation that driving isn’t even important to this demographic. They would rather own the latest smartphone than a car that was so important to those in my generation (I’m 57).
I wrote about this on my website Thursday, in anticipation of the Facebook IPO. You can read my blog at http://automotivetraveler.com/jump/3980.
There’s much in what you say, but the timing of the announcement by GM was without doubt designed to affect the IPO. And really, marketing is about a diversity of presence and the $10 million spend GM has on FB – just over 0.5% of their advertising spend – seems to be of little financial consequence.
I think that you’re giving GM much to much credit about trying to derail the Facebook IPO although I must admit I originally thought the same thing. GM is still participating on Facebook with Facebook pages for their various brands and specific models like the Camaro. But what they saw was that ads simply didn’t help them sell cars. Facebook users view ads as intrusive and more than half of the users NEVER click on them . While Facebook pages themselves are seen as destinations where fans of a specific GM product, such as the Camaro I mentioned, can congregate.
Personally I think Facebook is the destination de jour, much like AOL, Yahoo, and dare I say MySpace have been in the past. Something will come along and replace Facebook, something that is in some way better, possibly more user-friendly, and less intrusive with regard to privacy issues.
Personally, and this is just a personal observation, I think Facebook has just about peaked in terms of its influence and that the founders have picked absolutely the best time to cash out. I will be curious to see a year from now where the stock is, which is an indirect measure of its influence. Will it have a run up like Google or will it be like the multitude of dot.com busts that have preceded it? Unless they can monetize their claimed 900 million users, it will be the latter.
There’s little to disagree with in what you say. But the root of this is really GM’s attitude that they will continue to use Facebook for social interaction whilst removing their spend.
Surely companies like GM (and any business getting free publicity on any third party site with a significant readership) owe a debt to websites which showcase their products? Are FB in business to altruistically provide a platform for businesses to showcase their products and services? No, of course not. Advertising is all that really supports any web sites that are not direct sales channels and all businesses owe a debt to the sites from which they benefit. If they want to continue to receive ‘free’ publicity, there is a price to pay. If, in GM’s case, that is a relatively paltry $10 million a year they should simply spend it and view it as the cost to interact with interested parties, rather than using some blunt measure of click-thrus or whatever to claim ‘Facebook doesn’t work’. It does, just not in the short-sighted and simplistic way they have chosen to portray it.
This is a great trans-Atlantic, near real-time dialog.
In this day and age, companies, large or small, can’t spend money on ads that don’t work. And while you make a point that GM should just spend the money and “view it as a cost to interact with interested parties,” it’s not that simple.
Facebook in an information gathering website and they are getting valuable information about those Facebook members who visit the various GM-built brand- and model-specific web pages, especially the other pages these same members visit.
As you can tell, while I’m a Facebook member, I’m not a big fan of Facebook. To me, it’s gotten too big to be useful, which is counter to what powered their still-huge IPO yesterday. But my Facebook feed has become unusable. I have my Facebook friends, some who are automotive journalists like myself, posting what they just had for breakfast. I don’t need to know this and have to sort through a multitude of messages like that to get to something that’s useful, like someone who has just posted a spy shot in the clear.
On a related note, I find your website among the most valuable that I’ve subscribed to and would love to find a way to find a meaningful way to link carsuk.net to my website, automotivetraveler.com. I’ll probably turn this exchange into a blog at some point in the future, our discussion on the relationship of GM’s announcement to the Facebook IPO.
I think you know how to get in touch with me directly.
To be fair, our main use for Facebook is the business page for Cars UK; it just has to be to cover the social bases. But even some of the younger members of our team have given up on Facebook as too unwieldy to be of real use which doesn’t auger particularly well for FB’s long-term future.
Thanks for the positive comments about Cars UK too. A quick glance at what you’re offering looks very interesting – I’ll take some time when I’m not on weekend editor duty to have a good browse!
The stock exchange just opened and guess what, Facebook is now trading at $35/share, $3 a share LESS than the IPO price. Investors are bailing even faster than I though they would. What is going to happen in 180 days when the insiders can cash out? The stock’s fundamentals simply don’t support its valuation.
Will Facebook be a Google or a MySpace? Time will tell. All I know I wish I shorted Facebook when it peaked at $42 a share.
What is so embarrassing is how the financial press, especially CNBC, who bought into the Facebook hype machine, turning their network into an advertorial for the IPO. Does the term “cheerleader” have a new meaning this morning?
The stock is now $34.25 (9:41 EDT) as it looks like the underwriting banks aren’t supporting the stock. How low will it go? Where will it end up at closing today?
Because Vauxhall doesn’t need to but Ford does to sell their crap with bull s**t spam advertising lol!
Maybe this is why ford has better buiseness accumen and gm dont, in the credit crunch gm borrowed hideus amounts of cash and ford, well didnt need it. all is said……….FORD
gm 
