
GM Says Facebook Ads Don't Work, Pulls $10 Million Account - gscott
http://www.forbes.com/sites/joannmuller/2012/05/15/gm-says-facebook-ads-dont-work-pulls-10-billion-account/
======
cletus
I've said this repeatedly: Facebook is a high-risk proposition, particularly
as an investment (disclaimer: I work for Google). "Intent" as other commenters
have noted is a big part of the story but it's not the only story.

Search can broadly be broken up into at least two categories:

1\. Navigational eg typing "b and h" into the browser; and

2\. Informational eg "cheap flights to jamaica".

I don't know what the make up is of (1) vs (2) but I expect for normal users
(1) is pretty huge. I would guess that ads are have lower clickthroughs for
(1) than (2).

(2) is where you have the intent. The user obviously wants something. They may
find it with an ad. They may find it with organic search results. Either way,
the goal with search is to get the user the best result.

With Facebook you tend to be just looking at friends' updates, posting your
own updates, posting photos and the like. You don't go to Facebook to find
things. So it doesn't really matter how much targeting information Facebook
has if you don't have that intent.

Many will say "but what if you do start going to Facebook to find things".
That's a _massive_ "what if". What if the Sun expands tomorrow and swallows
the Earth?

Facebook has (IMHO) a number of strategic problems:

1\. It has no control over mobile. Both Google and Apple have mobile OSs;

2\. It has no search engine (which is how it could monetize its user
information); and

3\. Users of community-driven sites are notoriously fickle. There is _nothing_
preventing Facebook from being the next Myspace when something newer, cooler
and hipper comes along and the users move on.

Early founders, employees and investors have obviously done _spectacularly_
well and there's a lot that Facebook has done right (all the more surprising
considering the length of time and the age of Zuckerberg). It's also created
an engineering environment that attracts and maintains top talent (although
we'll see if that last once the stock plateaus, which is simply a matter of
time). But would I be buying in the IPO? Not a chance in hell.

This isn't about predicting imminent doom. Facebook will be around for years
to come. It's about the upside reward vs the downside risk. Facebook somehow
is still considered a "growth" company and values as such (with extraordinary
P/Es). This will at some point change (as it did for Google some ~5 years
ago).

~~~
webwright
"I've said this repeatedly: Facebook is a high-risk proposition, particularly
as an investment (disclaimer: I work for Google). "Intent" as other commenters
have noted is a big part of the story but it's not the only story."

As a Google employee, what do you think of Google as an investment? If you
look forward 5+ years, everyone is doing much of their internetting via their
phone (certainly some or all of that will be web vs. apps-- who knows?).
Google gains some extra data with searches, like location. So "pizza" searches
get a LOT more targeted. But many searches do not.

The rub is that Google has near-zero ad inventory on mobile. You can't show 6
adwords ads, you can show 1. Additionally, consumer's bar for tapping an ad is
MUCH higher (given the relative speeds of mobile browsing). As searching moves
mobile, how does Google's revenue shake out?

~~~
jrockway
I don't think that any Google employee is going to reply to your comment with
advice. "As a Google employee, I say invest!" is not going to get you on the
good side of the lawyercats.

What I think is interesting about Google is how much voting power the founders
retain. Things like a campus of solar panels, space elevators, and self
driving cars (not to mention Chrome and Android) make a lot more sense when
you realize it's not "the shareholders" that want those, it's the founders
that want those. Google is a company where two successful guys and several
thousand of their closest friends (we like to think) can do whatever they
want. Is that a good investment? I'll let you decide.

(Disclaimer: Google employee. And if anyone takes that quote at the top out of
context... well, let's just say laywercat suggests that I don't put it in
writing.)

~~~
larrys
"is not going to get you on the good side of the lawyercats."

I don't know of anything in particular that would prevent an employee of a
company from posting a comment here or in a blog reply anywhere simply saying
they thought it was a good idea to buy the stock that would warrant any
action.

But lets say (since I don't have time to fully research this I'm basing my
answer on many years in business and dealing with the Federal Government,
lawyers etc.) that there is some law that makes this "illegal". The chance of
the federal government, SEC or anybody caring about a comment like this is
nil.

~~~
tomkarlo
As an employee, it's not the federal government you'd worry about. It's your
own company's lawyers, etc. You're much more likely to get in trouble
internally for violating the company's policies about making statements
related to the stock valuation than any outside entity.

Employees at Google (and many other tech companies) are often privy to what
would be considered "inside information" about the company's future plans and
performance. Making statements about the stock price's relative valuation can
be seen as a form of making tips based on that material non-public
information. It's not a good idea to go around making statements (positive or
negative) about the current valuation.

~~~
larrys
"You're much more likely to get in trouble internally for violating the
company's policies"

So is there a specific policy in writing regarding what you can and can't say?
The issue certainly isn't revealing non-public information of a specific
nature which is fairly obvious to keep under wraps.

I believe what matters is the amount of specificity. For example you can't say
"Our earnings will be up this quarter so buy the stock". But you could say "I
think we are doing well so I am buying the stock". Salesman, selling a product
for a company, say, airplanes for Boeing are definitely able to make general
sales like statements that could or could not be interpreted as a stock buying
signal.

~~~
tomkarlo
It's hard to make any kind of statement about the value of a stock without
making an implied statement about future performance, given that most of the
value is based on expected future outcomes.

Generally, the employee handbook of any public company will explicitly forbid
employees from making statements that connect to either future performance or
other major non-public info such as products or hiring. (If for no other
reason than to protect the company itself from accusations that it's letting
its people "pump" it's stock.)

------
mmaunder
Facebook's root problem is intent. Users who are googling something and seeing
AdWords ads are looking for something and often the thing they're looking for
shows up as an ad so they - suprise! - click the ad and often become a
conversion once on the site.

With Facebook there is zero helpful intent. The only intent when you're on
Facebook is to use Facebook. And if you do click an ad, you're less likely to
become a conversion because your intent is still to get back to Facebook as
soon as possible and see the rest of Dave's party photos or whatever.

~~~
malandrew
Intent is huge. I've never been one to click on Google Ads except in real rare
instances. Only once I observed my mom using Google did I realize the full
value of intent and google ads while searching.

She wanted to watch an episode of The Good Wife that she had missed so she
searched in the Safari omnibar for "watch The Good Wife" and the first div
under the search bar is an ad to some site that was not CBS that had the Good
Wife available to watch via streaming video. To you and I, it's obvious that
this "first result" is ad and we would skip over it to the first result. But
to my mom, she thinks it's a search result and clicks on it. When she arrives
on the site she thinks she's on the CBS site because they naively assumes like
many consumers that the site showing the content would be CBS. She doesn't
even think twice about the identity. When you are used to TV, you blindly
trust that the site/channel showing the content is the correct one.

The only reason I discovered this was because she asked me to pull up The Good
Wife to watch on CBS. I, being a savvier internet user, just navigated
straight to cbs.com to search there. I got to their Good Wife site and lo and
behold, there is no streaming video available on CBS, only teasers and behind
the scenes content. I told my mom that "No, CBS doesn't have it on their site"
and she was like "Yeah they do. I watch it all the time". I then asked her to
show me exactly how she found it on CBS and that was when she showed me that
she in fact was clicking on the ad in Google Search between the search box and
the search results thinking it was in fact the first result. That's the power
of intent and Facebook doesn't have that.

~~~
pmorici
"That's the power of intent and Facebook doesn't have that."

Sure they do...

Status Update from malandrew's mom: "OMG I can't wait to watch the new episode
of The Good Wife tonight!"

Facebook ads: "Click here to watch The latest Episode of the Good Wife"

Facebook could has something better than Google intent in that they should be
able to predict what you intend to search for before you go looking for it.

~~~
molmalo
Let me ask you something:

When you want to search something, do you first go to your facebook account
and tell your friends "hey, I want to learn more about x!" and then go to your
favorite search engine, and actually do your search?

I bet you don't.

In your example, if the mom is saying "tonight", it probably means that she
wants to see it "tonight" (maybe she doesn't have the time right now). so,
they should try to make the ad really visible that very night, so the user
(this mum) will see it before she even goes to look for it anywhere else. But
that would feel very creepy. She would think "how did they knew I wanted
that?". It would feel like if someone is spying her. I think the average
people is ok to have ads displayed while searching (maybe they will not even
notice that some "results" are ads). But when the ads start having a very
direct relation to what people posts, they start to worry about their privacy.

What I mean is... sure, facebook could infer the user intention, but in
comparison, a search engine has it almost served.

~~~
Drbble
Look up "retargeting". Creepily chasing people around the web is successful
for advertisers.

~~~
notatoad
It is a successful tool for ad networks to provide because advertisers pay
more for it, I've yet to be convinced that it actually increases conversions.
If I keep seeing an ad over and over again, I just get annoyed.

~~~
tomkarlo
I've seen the number, it converts far, far better than average ads. On the
order of 10X, for the campaigns I've seen. That's partially because
clickthrough rates overall keep dropping, but still, they're really effective.

Yes, it's annoying if you're in the 95% of customers who won't actually
convert. But it only has to be effective about 1 out of 20 times to be a huge
improvement (and that 1 might even be you, but you're mostly annoyed by the
other 19 times.)

------
pg
Interesting side point: the WSJ article was on HN first
(<http://news.ycombinator.com/item?id=3978537>) but Forbes's rewrite of it got
all the upvotes because the WSJ article is behind a paywall.

~~~
zackzackzack
Probably part of the business plan for Forbes. "Watch WSJ, anytime they have a
hidden gem, rewrite it and send it out." Forbes did it with the target
targeting parents to be article with the New York Times:
[http://www.forbes.com/sites/kashmirhill/2012/02/16/how-
targe...](http://www.forbes.com/sites/kashmirhill/2012/02/16/how-target-
figured-out-a-teen-girl-was-pregnant-before-her-father-did/)

------
jacquesm
When you're close to an IPO you are very vulnerable to hard-ball negotiation
tactics. This could easily be the endgame of 'reduce our rates or else'.

~~~
bradgessler
... or Facebook ads don't work.

~~~
dlytle
Probably Facebook ads not working.

Two of my friends run a wedding planning business. They gave up on targeted
Facebook ads because they got MUCH better results using Adwords.

The ads were targeted to a nice big radius that included Lincoln, NE (a
college town) and Omaha, NE (a big city, for NE). They targeted women in a
specific age range, and if I remember correctly only women with a status of
Engaged or In A Relationship. I think they may have aimed for relevant
keywords as well. (I personally don't know the exact details of their ads, so
I'm sticking to what I know for sure.)

I can't think of a more ideal targeted advertising scenario, and they got less
traction on Facebook than they did via AdWords. That's either a REALLY bad
reflection on Facebook's ad platform, or a really good one for AdWords, or
both.

(Their business is doing really well, for the record.)

~~~
kposehn
Your friends probably tried to do the same thing that they were doing on
AdWords, but targeting people instead of keywords. (I am assuming here, so
please correct me if I'm wrong)

This doesn't work because they have to approach the people differently; for
wedding planning, I would instead do something along the lines of "read these
10 tips to keep your wedding amazing" or "use our free wedding plan tracker"

With an approach based on interest, your friends can educate people and get
them thinking in order to follow up for more information. Instead of a hard
sell, hit them with a soft one that helps them feel like your friends know
what they need.

------
rio517
I don't think that's the case for everyone.

I work at a online advertising firm in DC specializing in political and non-
profit work - mostly email list building, soliciting volunteers, awareness,
etc campaign activities. We work with AOL, Yahoo, Google and Facebook, among
many others.

I'm not a fan of FB's policies in general, but... We've found FB to be very
effective - on a cost per acquisition basis, much more so than search
advertising and on par with other vehicles.

Obviously, test to see what's effective for your needs, but I wouldn't rule
out Facebook based on GM's experience. Cars are an unusually high involvement
purchase, unlike most things people would be advertising.

~~~
hkmurakami
Perhaps your firm has found Facebook effective because of its altruistic
nature. People want to share great things that they are involved in: nonprofit
work, political activism, etc. Advocacy for such issues and causes are
something FB users probably want to share with their friends.

Meanwhile, I imagine that people don't really share things like "I really like
the new model of the Cadillac XYZ!". Maybe they think that their friends will
view it as shallow gloating; maybe you don't want to reveal the fact that you
bought a new car.

Facebook revolves around "Sharing of information". Brands that have values
that users want to share with their friends will do well. Those that can make
users think twice about sharing (even if they really _do_ like the brand) may
fare worse.

------
jonknee
> GM spends about $40 million a year on Facebook marketing, according to the
> Wall Street Journal, about $10 million of which is for paid advertisements.
> It will continue to post relevant content about the company and its brands
> on GM’s Facebook pages.

The best marketing on Facebook doesn't make Facebook any money.

~~~
ticks
$30 million sounds like a lot for promoting a brand for free on one platform.

~~~
jonknee
Direct follow up with people is expensive. From the WSJ:

> GM spends about $40 million on its Facebook presence. About $10 million of
> that is paid to Facebook for advertising, the rest covers content created
> for the site, agencies that manage the content and daily maintenance of GM's
> pages, people familiar with the figures said.

~~~
javert
That is insane. Only a bloated bohemoth could manage to spend $30 million on
its Facebook-focused HR people.

I admit I've never worked at GM, so if someone can tell me why I'm wrong,
please do.

~~~
nostromo
Their page has (roughly) 300k followers. That's $100 per reachable user per
year, which is insane.

If they were using that additional $10mm to get the 300k followers to begin
with, that's an even worse indictment of FB advertising for traditional
brands.

~~~
lambda
Remember that they don't have just one brand on Facebook. For example, they
have 1.3 million followers on their Chevrolet page. They have 1.1 million for
Cadillac. 400k for Buick. 660k for GMC. 525k for OnStar. 350k for their
"TeamChevy" Chevrolet racing page. Now, there's sure to be some overlap there;
but that's still easily 2 or 3 million followers.

That's a factor of 10 more than you were estimating; and that's just based on
a quick poll of brands that I took a look at.

------
alain94040
It really depends on what you are trying to sell. It's pretty obvious that car
ads would work better on Google: when you are in the market for a new car,
you'll definitely google review sites. A perfect hint to start showing car
ads.

I don't think Facebook has the data yet to detect that you are about to buy a
car. If you start liking car reviews, maybe, but that's not a typical
behavior.

For other products (especially the ones you didn't know you needed), Facebook
beats Google hands down. So don't pass judgment one way or another too
quickly.

~~~
dalore
You're confusing branding with direct call to action advertising. Two complete
different things and priced differently. Big brands aren't going for the
people about to buy a car, they are working way before that. By making you see
the brand day after day it becomes ingrained so that when you are ready to buy
a car you think GM.

~~~
jrockway
Sure, because with traditional media, that was the best they could possibly
hope for. In today's world of online comparison shopping, though, brands can
easily close the deal for you with one click. (The fact that you can't buy a
car with one click shows how hopelessly behind the industry is.)

It is not necessary to have an image of a brand planted in your mind before a
purchase. It only matters that you're guided towards the brand when you are
ready to buy. Advertisers were happy with a "brand image" before because it
was the best they could do. But these days, it seems almost worthless.

~~~
MartinCron
_(The fact that you can't buy a car with one click shows how hopelessly behind
the industry is.)_

Cars are, for most people anyway, the kind of really large purchase that
requires a lot more effort and deliberation, not to mention financing, than
makes sense to do in one click.

~~~
alain94040
Until someone gamifies car purchasing, so that when I get 10,000 facebook
points, I can redeem for a discount at my local GM dealership. Now that would
be a great source of leads for car manufacturers.

~~~
jrockway
Whoa, "dealership"? That's the part of the equation that everyone wants gone.

~~~
thebigshane
Who buys a car without sitting in it first?

~~~
MartinCron
I would love to decouple the showroom (sitting in the car, test drive,
whatever) from the dealership. If a car manufacturer were to create a space
were I could spend some quality time with the car without any threat of
encountering a commissioned dealer, I would love it.

Then, I can choose where and how I buy the car later. The manufacturer would
benefit from this no matter how I buy the car. Keeping these "shark-free-
showrooms" stocked with demo cars, coffee, pastries, and branded swag would
just be a general marketing expense.

------
dneb7
I certainly didn't have a $10MM spend, but I also had dismal results for my
B2B campaign. My takeaway is FB is purely a social place where people unwind
and don't want to do any 'work' -- whether that is considering a product for
their job, or the effort involved in considering a large purchase as rio517
mentions.

~~~
mindcrime
Any thoughts on better choices for advertising B2B offerings? Has anybody here
tried LinkedIn for that, for example?

~~~
rmc
Google AdWords?

~~~
mindcrime
Sure, that seems to be the default for most things, but I guess what I really
meant to ask was more about specific sites that do their own ads, outside of
Adwords. I'm guessing industry vertical sites are good for B2B, but I'd love
to hear about other folk's experience in that regard.

------
philmcc
I wasn't under the impression that advertising (for a company like GM) was
supposed to "work" in any easily measurable way. Especially not $10million of
a budget which, though undefined, is clearly large if they are trying to cut
$2 billion from it.

I think that to measure the efficacy of a GM ad based on the same measurable
activity that you'd measure an ad for (say) a T shirt company is probably a
bit misinformed. No one is checking to see if anyone clicked on GM and
subsequently bought a Cadillac.

A lot of the comments on the original article seem similarly misguided. ("I
NEVER CLICK ON THE ADS I HARDLY EVER NOTICE THEM.") The McDonalds logo on the
back fence of a baseball field isn't to convince you to walk over to it and do
something. It's so that later when you drive by McDonalds you "decide" to
stop.

------
devs1010
The thing I don't understand is how can they say facebook ads don't work and
even be sure of this, given that, as others have pointed out, they aren't
going for a "conversion" as the purpose of the ads is branding, so that people
think of their brand and eventually may buy a car made by them. They do other
forms of advertising for branding, including TV ads, radio, billboards, etc so
I don't know how its possible to pinpoint one channel of advertising
(facebook) and say its not helping them with branding.

My guess is that they have an expectation of having more user feedback and
involvement from this form of branding (people clicking the ad, filling out
some bullshit form so they can bombard them with marketing material, etc),
however the nature of the product may preclude itself from this sort of
consumer behavior because people don't buy cars very often they may not feel
compelled to engage with the brand, however seeing the ads on facebook could
potentially have the same "branding" effectiveness as TV ads yet they really
have no way of measuring this.

------
scribblemacher
Am I the only one that thinks there's a really big advertising/personal data
mining bubble that's ripe for popping?

~~~
ashray
No, I sort of agree with you. There seems to be a lot of excitement about how
valuable targeted advertising is (once more.. this happened back in the 90s as
well..). Social media "managers" popping up in every company, and being paid
rather well. (while this should just get filed under PR)

------
MartinCron
I've actually been interested in a handful of things I've seen as Facebook
ads. They are generally things that I didn't know existed, wasn't actively
shopping for, and sure as heck wasn't searching for. Example:
<http://www.mushroomnetworks.com>

If anyone is going to get any sort of value out of the wealth of information
I've given away about myself, it's going to be the person who opens my eyes to
something new and awesome that speaks to my... unique tastes.

GM can't really be new or awesome anymore, and that's OK.

~~~
brk
I agree, and I think that the Facebook ads with the highest potential are for
products that fall in the disposable income/non-considered purchase/splurge
categories.

I'm not likely to see an ad for a GM product and immediately run out and buy
one (and I'm guessing this is true for 99% of Facebook users). But I have seen
ads, and posts by friends, for random products in the $10-$500 range related
to things I didn't necessarily need (or know existed), that HAVE influenced my
purchasing decisions.

Facebook is a new and different advertising channel, much like Google and
Internet ads were before it, and companies and agencies need to adapt
accordingly to this.

If you've been around long enough, you might remember stories from the late
90's from companies that both swore by, and swore off, Internet advertising...

------
kposehn
That's a $10m account of money wasted by unimaginative people.

You can go nuts with FB ads, you just simply have to get past the notion that
it works the same way as every other medium. Unlike AdWords, where you bid on
someone searching for "Cadillac SRX" in San Jose, FB is all about inception of
interest.

The goal is to create intent in people through innovative ways; the people
that spend the millions and keep doing so are the ones who actually, you know,
_come up with something new_.

This is the same story as Google AdWords back in the day.

~~~
anon808
"This is the same story as Google AdWords back in the day."

Not really, adwords pretty much worked from day one, bid for placement was
inspired by the goto.com paid search engine model which was minting money back
in the 00s if I remember correctly.

~~~
kposehn
It worked, but people still panned it. FB is the same way :-/

~~~
drumdance
I don't remember anybody panning it. I'm probably an outlier[1], but do
remember a friend of mine going from broke to making a good living off it
through affiliate marketing within 3 months.

[1]Early on he quickly became one of Google's biggest customers, even working
alone. He was invited to the first Google Zeitgest. These days he spends in
the multiple tens of millions per year on Google.

------
TY
Timing of this announcement is indeed somewhat _awkward_ ...

~~~
recursive
How so?

~~~
Kylekramer
Facebook has a imminent IPO.

------
davidw
My limited experience is that Facebook ads, for whatever reason, don't end up
costing that much, whereas it's easy to piss tons of money away with Adsense.
So I'm happier with the former.

------
jasondc
The real value of Facebook will be when they release their ad network to
compete with Adsense/Adwords. Facebook is more valuable as a vehicle for
collecting user data than displaying ads.

------
savories
Either they're doing it wrong. (likely)

Or their customer is difficult to target on FB.

We (a quickly growing clothing company) see an amazing ROI from FB ads. We
also have around 350k Likes. We advertise to friends of friends, and target
similar companies, fashion companies etc.

I am betting they simply haven't found the best tactic.

------
goodbyehello
This is huge.

Why?

Because the auto industry was one of the earliest and remains one of the
heaviest users on online advertising.

If any industry knows a thing or two about online advertising, and has been
willing to experiment, it's the auto industry.

Facebook is in big trouble, as a "business".

------
calbear81
There is no such thing as a surefire ad so saying Facebook ads don't work as a
broad statement is misleading. Facebook ads don't work for GM the way they
thought it would to accomplish their goals but they certainly work for many
other companies. The problem GM has as well as most marketers is that they are
comparing it to their traditional marketing channels and using those metrics
to judge Facebook ads.

You also shouldn't use the number of followers as the addressable audience for
the brand, the whole point of social is that messages are amplified through
the network effect out towards a much larger reach of users. One user who
likes one of your posts or comments on it may mean hundreds of friends seeing
it show up in their subsequent feeds like "YCombinator reader just liked GM's
Blah Blah".

Everyone's right below that if you're using it as a direct marketing channel,
you'll most likely see failure because people want to stay on Facebook. Think
of it as a way to stay engaged with your audience and as a one time investment
for the ability to message to them again and again in the future. Facebook ads
also work much better when you tie them to your Facebook presence vs. trying
to send someone off Facebook to your site. GM should have thought of more
creative ways to leverage the Facebook app platform to promote on-Facebook
activities that drive brand value and help promote their new cars/trucks. For
example, how about a contest on Facebook using an interactive car designer to
design a GM that also allows you to upload custom patterns for the paint job.
If it's two things people like on Facebook it's self-expression and contests.

------
waterlesscloud
Facebook excels at advertising things people don't search for (and thus for
brand advertising as well).

Google excels at advertising things people do search for.

~~~
jonknee
Excel is a bit kind, Facebook is still trying to figure out advertising well
enough to justify it's current valuation.

------
TommyDANGerous
I hardly notice Facebook ads. However, I think the smaller your company, the
larger Facebook ads may have an impact.

------
10098
The thing is, they don't. They really don't. I hardly even notice them, like
there's some kind of mental block that prevents the brain from perceiving the
ads. Same thing applies to Google ads, I completely ignore them. Has anyone
else noticed such behavior in themselves?

~~~
talmand
Me too, for the most part I'm almost totally oblivious to them. I don't even
bother with an ad blocker. I suppose it's the result of being bombarded with
ads all my life, I'm immune to their charms.

------
throwaway63-90
Imagine you have somethng to sell, I have the ability to place ads in people's
homes via their electronic devices and I give you the choice of placing an ad
for your product in one of two places.

You can place the ad into everyone's photo albums so that when they are
flipping through photos they will see your ad.

Or you can place your ad in everyone's telephone book so when they are looking
up the contact information for some source of some product, they will see your
ad.

Which one would you choose?

Of course, in the real world, advertisers can choose both. They will advertise
both on Google and Facebook.

And sure, it matters what the product is.

But overall which do you think is more valuable?

------
jvanderwal
With a click-through rate of about 0.051% on Facebook ads [1], I'm not too
surprised by this. They also made some changes over the past month to their ad
payments, in particular removing the option to manually set your CPM (which is
the only option to pay to promote your fan page - it's CPC for an external
site). So put together a poor CTR and losing some control over how much you're
spending, and this is what happens.

[1] [http://www.kikabink.com/news/facebook-ad-click-through-
rates...](http://www.kikabink.com/news/facebook-ad-click-through-rates-ctr-
are-half-industry-average/)

~~~
mpeg
Hey,

That's not true, you can do either CPC or CPM for any kind of facebook ad;
what they did do is replace the CPM functionality (which btw, is still
available if you use a third party ad tool with facebook) with an "optimized
CPM" which auto-bids for you according to what results you want to get.

You can still set a manual max bid though :)

~~~
jvanderwal
Thanks, I'll have to look into the third-party tool option. Mostly I've been
running ads with external links and it would only let me do CPC, but I did do
it all thru fb's dashboard.

------
elorant
I'm surprised as to why Facebook isn't looking in other sources of income
instead of ads. Like e-commerce for example. Providing a platform for the
gazillions of small to medium companies that already have an account would be
IMHO a more wise decision. Or build an analytics platform and combine it with
real time demographics and blow the competition away. I'm sure there are
dozens of ideas as to what they could build and still we don't see anything
innovating.

But then again perhaps their problem is intense scaling. With 800M users even
the simplest idea becomes cumbersome in developing.

------
BoxFullOCat
I can't help but recall all these Anti-Baldness treatment ads I get on my
facebook all the time - I truly believe the only thing that triggers them is
my being a 31-yo male (note - I will probably never need these treatments, ).

My suspicion is that either the GM advertisers are complete muppets, or
Facebook's offering in self-service targeted advertising simply isn't
sufficiently good at catering to this specific market's needs.

------
b3b0p
I think everyone I know uses, checks, updates, posts to Facebook using their
mobile phone or iPad/Android tablet. Almost no one I know actually visits the
website.

It's been a while, but last I checked the clients for these devices don't even
have ads in them. If this is the case, I would wager that no one is seeing
these advertisements even if it is one of the largest most visited sites in
the world.

------
snambi
Its obvious that Facebook ads don't work. How often you see a relevant Ad in
Facebook? Almost never. So, advertisers show interesting images, but when you
click on that image, it is some non-sense website. Facebook has some private
information about the user, other than that FB has no clue what is my mood or
what I am looking for. Its no wonder GM pulled out of Facebook.

~~~
ppod
This is really not my experience. My facebook ads are so relevant that they
almost seem like a useful service at times. It knows a few of the things I'm
interested in thanks to who I'm friends with or pages i've liked or whatever -
so I see ads for RC planes, chess software, local restaurants... the ads seem
both more relevant and less spammy than my google ads.

~~~
snambi
This is interesting. I only "liked" friend posts or pictures. May if I "like"
more direct things like restaurants, brands, facebook may be able to provide
me a better "ad" experience. But, its good to know that it works for some
people.

------
brudgers
One day later, Berkshire Hathaway announced that it has been buying 10 million
shares of GM stock over several months.

[http://www.mlive.com/auto/index.ssf/2012/05/warren_buffetts_...](http://www.mlive.com/auto/index.ssf/2012/05/warren_buffetts_berkshire_buys.html)

------
PedroCandeias
Banner ads are a relic of the 90s. I fully expect facebook to discontinue them
eventually.

Because who cares if ads don't work? GM just endorsed sponsored content (to
the tune of $30M, no less), a form of advertisement facebook can easily serve
to their ever growing mobile user base.

~~~
raverbashing
Also, I'm not sure GM's marketing dept. is experienced in advertisement for
online media

Sure, it's easy to advertise on FB (or Google Ads). It's a whole different
story to make it effective.

Take Google AdWords. If you don't optimize your strategy you'll have a high
CPC (cost per click), will probably pay for ineffective words. Also, there are
changes you can do to your content (being advertised) that affect your CPC.

~~~
huggyface
GM isn't a mom and pop. They engage marketing agencies who certainly know what
they're doing.

~~~
raverbashing
They certainly aren't mom and pop but it doesn't mean they are up to date

They may keep an old agency just for the sake of it, who may not be
specialized in modern medias

And they can hire the best people for internet marketing just to end with
their campaigns not approved by GMs marketing department, having to get
something conservative (hence, ineffective)

------
coffeemug
This might have much more to do with GM than it does with Facebook. It doesn't
matter how much money you plunge into ads, which ad platforms you use, and how
targeted the ads are if nobody wants your product.

~~~
tmuir
General Motors was the number one selling auto company in the world in 2011
with 9.025 million units sold, outselling second place by a full million.

I know plenty of people that will never buy a GM, regardless of their
advertising. However, advertising is crucially important to GM success.

------
salimmadjd
Maybe the problem is with GM and their cars and not Facebook

~~~
patrickgzill
Bingo.

------
EternalFury
LOL, and rain is wet. The day a start-up comes with a reliable way to measure
the true efficacy of online ads, no one will want to invest a penny in them.

------
djt
The timing might not be significant. Would anyone have cared that GM saved 10
million months ago? Probably not. But its a good story around IPO time.

------
drumdance
I think the more relevant data point is that they spend $30 million on their
Facebook presence. Facebook appears to have reinvented the AOL keyword.

------
micahgoulart
Who is to say that GM didn't pull ads from Facebook so they could short sell
the Facebook stock and earn their $10 million back? Why not?

~~~
beedogs
That would be absurd. Anyone who would propose something like this at a GM
board meeting would be marched out with all their personal belongings in a
cardboard box.

------
tomrod
Most people I know block ads on Facebook. It's hard to sell a product
(eyeballs) when the eyeballs circumvent the tech!

------
Pressenter
The only reason I would buy facebook stock is to sell it to fools at a profit.
Enron is a better long term investment.

------
overworkedasian
what did GM hope it would accomplish by advertising on facebook? Unless they
are offering a discount coupon for 50% off their next GM car, facebook users
wouldnt care. did they hope facebook users would be more inclined to buy GM vs
a foreign car? if that is the case...i have bridge i would like to sell you.

~~~
huggyface
_did they hope facebook users would be more inclined to buy GM vs a foreign
car?_

Is there something particularly unique about Facebook users? Is it some niche
group?

Of course not. It's a cross-section of demographics.

And among normal people, yeah most _do_ choose to buy a GM car. I have a nice
GM SUV -- fantastic vehicle. I see a lot of people are cludging out the dated
"durr GM bad" nonsense from the 90s.

------
kingkawn
If $10mil of the total is on ads, what is the breakdown of the other $30mil in
spending on facebook marketing?

------
raheemm
I'm tempted to wonder why this announcement is made two days before Facebook
goes public.

~~~
drstrangevibes
dump and pump

------
badclient
All this will be moot when Facebook launches its search engine in couple
years.

~~~
AznHisoka
It takes time to actually build a search engine - you just can't get up and
say you're gonna build one. Even if you somehow bring in a partner like Bing.
Google has been fighting spammers, scrapers, black-hatters, and thinking about
all kinds of search problems for over a decade.

~~~
badclient
_Google has been fighting spammers, scrapers, black-hatters, and thinking
about all kinds of search problems for over a decade._

Same could have been said of Yahoo and other search engines before Google.

~~~
AznHisoka
yep, and they failed.

~~~
badclient
Eventually every company fails.

------
akrymski
Saying Facebook advertising doesn't work is like saying display ads don't
work. Sure, the closer you are to the transaction the more value you provide:

\- Facebook: CPM - bill boards : consumer in the position to buy, but not
given it much thought

\- Google: CPC - yellow pages : consumer in the position to buy and is
actively looking

\- Groupon: CPA - re-seller : consumer has decided what to buy and is
purchasing

But whilst Groupon can provide more value, the pool of potential consumers it
can reach is smaller. Same with Google (informational queries only). Facebook
reaches the consumer in the very early stages of the purchase-funnel, before
there is clear "intent". Same as bill-boards, display ads will always have
value - after all advertising is about making us want something we haven't
already planned to buy, otherwise its wasted cash (think groupon vouchers sold
to existing customers). And whilst the conversation rate (clicks) on Facebook
ads will naturally be lower, there are many more customers at the pre-intent
stage (everyone in the world).

Sure a display ad for a Ford may not have great immediate conversion rate
(clicks). What about a bill-board or a magazine ad? Yet do they have no value?
If I would be considering purchasing a car within the next year, but not
actively searching for one, then an image of some appealing product would
actually get stuck in my head, and when I come to search for a car on some
price comparison site - it just might be a Ford I saw a few weeks ago.

Each of these models have issues though:

\- Groupon - a large number of buyers are already existing customers. GroupOn
is only necessary because there isn't a platform for merchants to issue their
own vouchers. If there was, they could advertise those vouchers on
Facebook/Google and not pay groupon their brokering fee.

\- Google - provide a free yellow-pages service. Instead of an alphabetical
listing they aim to provide the "best" results first, so the only way to make
money is to display ads next to those results for companies that haven't made
it to the top. Why would anyone select those companies? The only reason I can
think of is if these companies offer temporary aggressive discounts like on
Groupon. If G displayed "sponsored ads" as banner ads so people wouldn't get
fooled into thinking it's a result - would anyone still click on them?

\- Facebook - unlike a magazine which has associated readership with a
particular set of interests (eg car enthusiasts) - everyone is on Facebook. A
niche social network for car enthusiasts would get a better ROI for GM then
blasting their cars at everyone in the world. Need more single girls from NYC
in the age group of 20-25 to join your dating site? Facebook will probably
deliver great ROI there cause it can target ads by all these attributes.

Facebook has to expand its targeting capabilities, and that means gathering
more data: my interests, my income, estimated net worth, what car I drive,
where I live, who I have my mobile contract with, etc. If FB knows that I just
graduated and got a job that pays enough to lease a Ford, and my commute time
to work is over an hour - GM would probably get a decent ROI. If I visit
enough car-related websites with the "Like" button on there, Facebook should
know I'm interested in cars.

As Facebook builds a more detailed profile of me - it will deliver ads that
_predict_ my purchase intent, and in theory, that's a great position to be in.

In practice, I think people prefer to "pull" ads rather than having them
pushed at us. The old broadcasting model of advertising was necessary when
people couldn't poll the world for "whats the best car in my price range". As
more information becomes available, people won't need companies telling them
which products to buy. Think of Amazon - you don't purchase based on ads, but
based on reviews and ratings from other people. Humans have become much more
connected and knowledgable when making purchasing decisions, so ads matter
less and less. I don't remember the last time I bought anything because of an
ad, instead I read reviews left by other people. The advertising-intermediary
is no longer necessary, businesses simply need to create great products. And
Facebook is a great product - for sharing photos, keeping track of friends and
killing some time. I wish they'd concentrate on making that product better,
and I'd happily pay $1 per month to use it. Even at $1 per year - they would
make as much as they currently do from 1 billion people. What will make me
leave Facebook is the ads in my newsfeed, not the 1 buck a month I'd have to
pay. My time is more valuable than $1 / hour, so if I decide to waste several
hours on Facebook a week - then I can certainly afford to pay $1 / month.

------
BaseBandLabs
GM Says Facebook Ads Don't Work, For A Car Company....

------
ntkachov
GM kindof has their work cut out for them on facebook. Most of facebook isn't
looking for a new car (maybe a used one) and the facebook moms aren't exactly
stoked for GM cars.

~~~
noodle
I think a better question is how GM measures the effectiveness of their
campaigns on Facebook. Its not like you can track the conversion rate from ad
click to car buy.

~~~
brd
I'd imagine that they're doing a form of A/B testing geographically. All other
things equal, its easy enough to only do an ad campaign within a certain
radius of a dealership and measure the change in that dealership to others in
the state.

------
mzuvella
Hey GM, your FB ads don't work because no one wants to buy your cars. $45k for
an 'electric' car that goes 15 miles on electricity, nice product.

------
tkirby
You wouldn't download a car?

------
tferris
+1

------
its_so_on
I bet if GM made more sociable* cars, they would pay a lot MORE to advertise
on FB. I'm not saying they should be making sociable cars: I'm just saying GM
doesn't necessarily have much overlap with a social experience like facebook.
(Neither do loads of other necessary products, like toiletry items, apartments
and houses, insurance, etc etc etc.)

Lots of products (and services, experiences like Disneyland or baseball
tickets, a local bar, etc) are still very social by their very nature, and a
much better match for facebook advertising.

Note: I say this as someone who doesn't know anything.

* <http://www.thefreedictionary.com/sociable>, definition 2

------
drstrangevibes
Facebook is far to useful to the Government to go anywhere. I bet GM knows
this, I suspect a case of "dump and pump"

------
mmukhin
Maybe nobody is interested in GM cars...

~~~
HeyLaughingBoy
That would be very odd considering the large number of brand new GM cars and
trucks I keep seeing...

------
patrickgzill
The better educated you are, the more likely you won't consider GM to begin
with .

(purely a guess based on anecdotal evidence ... the only guy I know with a
Cadillac STS was a guy who only has high school and was a well-compensated
salesman; but even he is now driving Audis)

~~~
waterlesscloud
Wow is that ever a gross generalization.

That's based pretty heavily on your personal social circle, I suspect. It
doesn't match with mine at all.

