GM’s Facebook Blunder

GM’s decision to cease advertising on Facebook has turned the spotlight on Facebook in the aftermath of the largest IPO in history. But the move really says more about GM than Facebook.

The case GM laid out against advertising on Facebook boils down to GM not understanding what it’s getting out of the ads. All marketing must be measurable, no doubt. If GM’s advanced attribution concluded that Facebook yielded significantly less value in comparison to other working media, its decision obviously makes sense. CMOs must make tough decisions in tough environments, and digital media should create a feedback loop to determine what works, and what doesn’t.

GM’s not crazy to have reservations about Facebook’s advertising, since it tends to perform best in trying to motivate behavior within, rather than outside, of Facebook. Additionally, we are also only at the end of the beginning in terms of consumers’ appetite to buy at the moment of highest emotional engagement regardless of environment. For example, if you are watching a car video, contact the dealer without leaving the video. If you like the product in your newsfeed, click and buy with the Facebook environment.

Yet GM is bucking enormous trends that can’t be denied. Consider that car buyers interact on average with 10.4 touchpoints/media prior to purchase with peak interest 4-6 months from purchase (Google ZMOT). Facebook is one of the top five most visited touchpoints in the car buyer’s path to purchase.

As this customer journey fractures, car buyers distinguish less and less between earned, owned and paid media. It all washes together in the great mix of search and newsfeeds. Yes, earned media is more valuable, because a consumer will trust a stranger’s message nine times more than a brand’s marketing. However, our attribution studies demonstrate a strong correlation between the quality of earned media and the presence of social advertising, especially on a local-market basis where car sales are transacted. The hipbone is connected to the thighbone after all.

Social behavior is greatly impacting the path to purchase because links increasingly represent word of mouth for car buyers. Consideration is now a click away. As a result, awareness is gained and lost more quickly. Brands such as GM must ensure that there are no dead ends in its marketing message across increasingly interconnected channels. Facebook is an important step in this consideration process, if synched holistically into the marketing rather than added as a media spend at the end of the creative process. It is not a marketing funnel, but a repeating loop based on advocacy.

Ignoring Facebook is a risky bet for GM’s brand health, which already trails its competitors in two of the five primary brand health indicators online. Its “resonance” (quality of response to shared topics and themes) and “perception” (feelings about the brand) hold significant room for improvement. Both indicators are lifted through closer alignment of social advertising and quality of brand experience across media.

Finally, GM is missing out on a big opportunity to further localize its advertising. All social media works better if localized. In order to localize advertising, brands must localize the actual experience of their Facebook experiences to create unique experiences, offers based on location. The advertising will only work as well as the quality of the experience in terms of consumer demand on Facebook.

There’s a lesson to be learned here, and not just for GM. Our analytics team calculates that GM’s announcement will cost Facebook up to 5% of its initial valuation today. Furthermore, GM, a company that must work hard to contemporize its brands for more savvy digital car buyers, appears out of touch. However, the real loser is the marketing mix for large brands. Just like the paper edition of the New York Times rarely breaks news, or the Big Four networks prime time line-ups hardly carry the same cultural dominance, neither can advertisers continue to thrive stuck in their traditional roles. The marketing mix is badly in need of the realization that the 30-second TV spot is diminishing in returns.

Curtis Hougland is CEO of Attention, a social marketing agency.

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