Faith in Facebook?
As Facebook evaluates last Friday’s IPO this week, a shadow looms over the proceedings. Last Tuesday, General Motors announced that it plans to stop all paid advertising on Facebook, saying that paid ads on the site have little impact on consumers’ car purchases.
While GM’s $10 million annual Facebook budget is just a drop in the bucket compared to Facebook’s overall ad revenue, this decision could signal big changes. If this move is the beginning of a trend that leads to more advertisers leaving Facebook, the site could see a significant decrease in revenue.
Is this a herald of doom for Facebook? Will advertisers leave the site in droves, fearing a lack of ROI? No, probably not. But the decision does highlight recent troubles Facebook is facing regarding advertising revenue, with revenue declining from last year.
The bottom line is that Facebook is about engagement, which can be achieved in many other ways aside from paid advertising. GM will of course continue marketing on Facebook, engaging with its fans and customers in more organic ways through GM’s individual brand pages. While Facebook ads are a good choice for driving traffic to your website and increasing leads for certain products, other products may not be suited for such a medium. Buying a new car is not the same as buying a video game or a pair of shoes, it requires a much more involved purchasing process. By engaging consumers and fans with honest, targeted social communication, GM will foster purchase consideration until customers are ready to buy a new car. The concept of this “decision-making continuum” involves the process of multiple touch points through various social channels both on and offline. Increasing this organic, targeted engagement with fans and potential buyers will be the key to GM’s future success on Facebook.