Social media may have originated as a means for friends to connect with others in a social way. But that thinking long ago evolved to the point where social media provided a method for brands to connect with customers. This thinking is certainly behind Facebook’s ad revenue which accounts for 88 percent of its $3.7 billion in total revenue. Brands want to be in social media because that’s where life discussions happen. But now at least one brand is stepping back, wondering where is the ROI. Last week General Motors generated news with its announcement that it will no longer advertise on Facebook. As it turns out, the $10 million of GM advertisement is only part of $40 million that it also spends on Facebook, and GM’s total ad budget was thought to actually be around $1.8 billion, last year. Later GM also announced that it’s pulling ads from the 2013 Superbowl as part of a larger restructuring.
There are, as usual, two schools of thought on GM’s de-friending or disliking of Facebook. On the one hand this could be the beginning of a giant domino chain where numerous brands arrive at the conclusion that social and marketing don’t necessarily go together in the most advantageous way for the brand. This would hamper Facebook’s ability to sell its digital Rolodex in the advertising marketplace. But there’s also the point of view that the GM situation is an isolated case. “Studies” show that an average of $2.10 cents of incremental sales is generated for every “share” on Facebook – which is not the same as Facebook shares, so to speak. Ben & Jerry’s, the ice cream people, are thought to receive $3 for every dollar spent on Facebook. For Ticketmaster, it’s even more. Experts believe consumers trust recommendations from “friends,” and this is what makes Facebook relevant as a marketing tool. With Facebook replacing the water cooler, the town square and possibly the morning newspaper, many brands think of it as the closest thing to word-of-mouth marketing.
- GM Ad Pull Sheds Light on Social Media Advertising (webmarketingtherapy.com)