11 ms·

GM Says Facebook Ads Don't Work, Pulls $10 Million Account

308 points by gscott 14y ago

scribblemacher 14y ago
Am I the only one that thinks there's a really big advertising/personal data mining bubble that's ripe for popping?
- ashray 14y ago
  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)
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rio517 14y ago
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.
- GFischer 14y ago
  Facebook is very good for non-profits, I've seen a non-profit animal conservation become the largest in my country thanks to it (Animales Sin Hogar here in Uruguay). I guess it's because of the demographics (as someone said, facebook moms with free time - and a soft heart). Anecdotal evidence, but I've heard it's very good for small shops targeted for women, and my girlfriend did buy from a facebook ad.
- hkmurakami 14y ago
  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.
- deleted 14y ago
  [deleted]
- fennecfoxen 14y ago
  Yeah, if you're not GM, and not like GM, and not approaching Facebook like GM, then it's not clear you'll have GM's problems reaching out to people on Facebook. Problems like Republicans attempting to take advantage of your presence to poke fun of you as "government motors". :)
jonknee 14y ago
> 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 14y ago
  $30 million sounds like a lot for promoting a brand for free on one platform.
  - jonknee 14y ago
    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 14y ago
      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 14y ago
        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.
        joelhaasnoot 14y ago
        I assume the figure is for all their brands, not just the GM page?
ntkachov 14y ago
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.
- jonknee 14y ago
  Most people are on Facebook, so there are a large number of people looking for new cars. Facebook's big pitch to advertisers is that it can target better than anyone else. Why can't they find people who are looking for a new car?
- noodle 14y ago
  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 14y ago
    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.
  - Wilya 14y ago
    You can't track the conversion rate from a TV ad either. That doesn't mean you can't notice a positive/negative effect related to the presence/absence of the ad. Especially at the scale of GM.
- ssclafani 14y ago
  Your impression of Facebook's user base is about five years out of date. Facebook is closing in on having ~1,000,000,000 members. I would suspect millions of those members are looking for a new car right this second. Facebook needs to find better a way, like Google did, of matching those members with advertisers.
  - 14y ago
dneb7 14y ago
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 14y ago
  Any thoughts on better choices for advertising B2B offerings? Has anybody here tried LinkedIn for that, for example?
  - rmc 14y ago
    Google AdWords?
    - mindcrime 14y ago
      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.
  - alain94040 14y ago
    I tried all 3 (Google, Facebook and LinkedIn). For my circumstances, Facebook won by a mile. Google did ok. LinkedIn was a complete disaster. http://blog.foundrs.com/2011/04/01/sell-your-google-stock-like-right-now-adwords-data/ http://blog.foundrs.com/2011/04/01/sell-your-google-stock-li... (the blog post shows early numbers, the real numbers, after longer experimentation, show the exact same results)
- joering2 14y ago
  I agree with you. Me and anyone that I know that uses Facebook already got used to ignoring the right column by default. Slowly but surely it gets to the point that it doesnt really matter what you advertise. I challenge you, if facebook approves it, to put and add "giving money for free" with landing page and see a click rate. It will be similar to advertising anything else, because users are getting smarter (thats good) nowadays and "sounds too good" offers will steer them away. edit: for that reason, I think Facebook advertising does not work. Or at least, does not work for the _most_ of advertisers. Its just that Facebook is still new and here and there I hear my friends being exciting about "advertising to millions of customers" and they do give it a shoot with a poor results at the end. The point is you have so many people that havent tried that yet that they still bringing cash to FB. But unless FB does something for the ads to work (change its core product?), the $ numbers will only fall.
TY 14y ago
Timing of this announcement is indeed somewhat awkward ...
- ajross 14y ago
  Which is, no doubt, not a mistake. Clearly there's a deeper story here.
- recursive 14y ago
  How so?
  - Kylekramer 14y ago
    Facebook has a imminent IPO.
jasondc 14y ago
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.
jacquesm 14y ago
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'.
- CamperBob2 14y ago
  Or "Give us some stock at the opening price, or else." There is no way for GM to pull this kind of maneuver at this time without looking suspicious.
  - alan_cx 14y ago
    They have, and it does?
    - CamperBob2 14y ago
      I don't follow you. Are you agreeing or disagreeing that this move looks like the outcome of a failed behind-the-scenes negotiation or even an extortion attempt on GM's part?
- bradgessler 14y ago
  ... or Facebook ads don't work.
  - bgilroy26 14y ago
    Not with timing like this, which would create such bad blood. This news item has an ulterior motive. Not that that precludes the possibility that Facebook ads don't work.
    - dkrich 14y ago
      Well if Facebook ads DO work (at least for GM) I don't believe they would have pulled their campaign no matter what ulterior motives they may have. Sales are sales.
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alain94040 14y ago
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.
- Splines 14y ago
  > 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. I think they have the data, but maybe not the means to mine it. I'm guessing that people are interested in buying a new car at important life milestones and when replacing an older vehicle. It's pretty easy to find those milestones ("here's pictures of our new baby", "Grad 2015, whooooo", "Just started at my new job"). Signals for replacing an older vehicle could be looking up vehicle review pages on facebook (does edmunds.com have a facebook page?), like you mentioned. So I don't think it's impossible (but definitely non-trivial). I have no idea if it's possible to target ads against the sorts of things people post to their wall/photo albums.
  - 286c8cb04bda 14y ago
    Your description reminds me of the Target/pregnancy story from a February[1]. The evidence there proves it's possible. The question then: Is Facebook's data as good as Target's? For Facebook, certainly. Can they get away with exposing that information to advertisers? I'm not sure. [1]: https://news.ycombinator.com/item?id=3601354 https://news.ycombinator.com/item?id=3601354
- dalore 14y ago
  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.
jvanderwal 14y ago
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-ctr-are-half-industry-average/ http://www.kikabink.com/news/facebook-ad-click-through-rates...
- ry0ohki 14y ago
  Comparing click-through rate on a passive site like Facebook (I'm there to socialize and I might happen to see something interesting ad-wise) to an active site Google (I'm there to find a product) seems like a bad comparison. It seems like Facebook ad engagement should be measured my metrics closer to billboards.
- kposehn 14y ago
  0.051% is actually pretty good. Don't compare with Facebook, compare with other DSP and ad networks for banners - FB and Google are complete opposites.
- mpeg 14y ago
  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 14y ago
    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.
PedroCandeias 14y ago
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 14y ago
  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 14y ago
    GM isn't a mom and pop. They engage marketing agencies who certainly know what they're doing.
    - raverbashing 14y ago
      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)
snambi 14y ago
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.
- waterlesscloud 14y ago
  I click on Facebook ads FAR more often than I click on Google ads. Actually, I don't remember the last time I clicked on a Google ad. Whereas Facebook shows me things I'm interested in all the time. Anecdotal, but that seems to be what we're doing in this thread.
- ppod 14y ago
  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 14y ago
    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.
- natrius 14y ago
  Most of my ads are software companies like Asana advertising jobs. Seems well-targeted to me.
  - mpeg 14y ago
    I work in facebook advertising and I'm still often surprised at the quality of some ads: recruiter ads targeted explicitly at my job title, ads from brands that want to drive engagement using facebook questions, etc.
TommyDANGerous 14y ago
I hardly notice Facebook ads. However, I think the smaller your company, the larger Facebook ads may have an impact.
10098 14y ago
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 14y ago
  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.
- andreyf 14y ago
  https://en.wikipedia.org/wiki/Banner_blindness https://en.wikipedia.org/wiki/Banner_blindness
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mmukhin 14y ago
Maybe nobody is interested in GM cars...
- excuse-me 14y ago
  Perhaps Facebook is populated by more intelligent discerning users than I had imagined!
- HeyLaughingBoy 14y ago
  That would be very odd considering the large number of brand new GM cars and trucks I keep seeing...
EternalFury 14y ago
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.
davidw 14y ago
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.
waterlesscloud 14y ago
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 14y ago
  Excel is a bit kind, Facebook is still trying to figure out advertising well enough to justify it's current valuation.
patrickgzill 14y ago
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 14y ago
  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.
micahgoulart 14y ago
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?
- mrtron 14y ago
  Risk is why not. Theres a huge risk that would fail.
- beedogs 14y ago
  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.
mmaunder 14y ago
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.
- fragsworth 14y ago
  I wouldn't say Facebook has a huge problem here - users spend much more time on Facebook than on Google (by design) and even if they don't intend to do anything other than "use Facebook", the ads are effective as a result of their high exposure. That said, however, a very large group of users are there to play social games. With social game companies competing for ad space (for these often highly-profitable users), they're driving up the price of ads and making it less economical for other industries to advertise on Facebook.
- wvenable 14y ago
  When watching TV the intent is to watch TV, not purchase soap, a car, or a soft drink. It might be that Facebook's ads are simply the wrong type/style for the kind of interaction people use it for. It does seem like Facebook ads feel like Google search ads.
  - franciscoapinto 14y ago
    > When watching TV the intent is to watch TV, not purchase soap, a car, or a soft drink. The difference being that facebook doesn't make you watch a 10 second ad between each one of Dave's party photos.
    - matthewcford 14y ago
      Clearly this is where they're failing.. should also inject pre/post roll ads on all videos
MartinCron 14y ago
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 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 14y ago
  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...
goodbyehello 14y ago
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".
devs1010 14y ago
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.
calbear81 14y ago
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.
kposehn 14y ago
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 14y ago
  "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 14y ago
    It worked, but people still panned it. FB is the same way :-/
    - drumdance 14y ago
      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.
    - anon808 14y ago
      I haven't heard anyone with volume saying fb ads work.
philmcc 14y ago
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.
elorant 14y ago
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.
pg 14y ago
Interesting side point: the WSJ article was on HN first (http://news.ycombinator.com/item?id=3978537 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 14y ago
  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-target-figured-out-a-teen-girl-was-pregnant-before-her-father-did/ http://www.forbes.com/sites/kashmirhill/2012/02/16/how-targe...
- dexen 14y ago
  However you slice it, paywall is bothersome -- one more click to go through, with no added benefit. Let's hope the `netizens' will vote with their feet more often.
cletus 14y ago
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).
- untog 14y ago
  "There is nothing preventing Facebook from being the next Myspace when something newer, cooler and hipper comes along and the users move on." I would argue that things like the massive photo collections people have made provide a large level of lock-in. I also suspect that Timeline is the first play in a "all your history, here" move that would make moving to another service very difficult.
Pressenter 14y ago
The only reason I would buy facebook stock is to sell it to fools at a profit. Enron is a better long term investment.
drumdance 14y ago
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.
salimmadjd 14y ago
Maybe the problem is with GM and their cars and not Facebook
- patrickgzill 14y ago
  Bingo.
savories 14y ago
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.
badclient 14y ago
All this will be moot when Facebook launches its search engine in couple years.
- hackinthebochs 14y ago
  Exactly. Its amazing to see so many people avoid making this connection in their heads. It's so painfully obvious. I just wish they had IPO'd a few years earlier...
- AznHisoka 14y ago
  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 14y ago
    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 14y ago
      yep, and they failed.
      - badclient 14y ago
        Eventually every company fails.
tferris 14y ago
+1
overworkedasian 14y ago
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 14y ago
  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.
coffeemug 14y ago
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 14y ago
  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.
raheemm 14y ago
I'm tempted to wonder why this announcement is made two days before Facebook goes public.
- drstrangevibes 14y ago
  dump and pump
djt 14y ago
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.
tomrod 14y ago
Most people I know block ads on Facebook. It's hard to sell a product (eyeballs) when the eyeballs circumvent the tech!
b3b0p 14y ago
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.
throwaway63-90 14y ago
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?
kingkawn 14y ago
If $10mil of the total is on ads, what is the breakdown of the other $30mil in spending on facebook marketing?
mzuvella 14y ago
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 14y ago
You wouldn't download a car?
deleted 14y ago
[deleted]
its_so_on 14y ago
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 http://www.thefreedictionary.com/sociable, definition 2
drstrangevibes 14y ago
Facebook is far to useful to the Government to go anywhere. I bet GM knows this, I suspect a case of "dump and pump"
- deleted 14y ago
  [deleted]
akrymski 14y ago
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.
BoxFullOCat 14y ago
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.
brudgers 14y ago
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_berkshire_buys.html http://www.mlive.com/auto/index.ssf/2012/05/warren_buffetts_...
BaseBandLabs 14y ago
GM Says Facebook Ads Don't Work, For A Car Company....

308 points by gscott 14y ago

scribblemacher 14y ago

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

ashray 14y ago
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)

deleted 14y ago

[deleted]

rio517 14y ago

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.

GFischer 14y ago
Facebook is very good for non-profits, I've seen a non-profit animal conservation become the largest in my country thanks to it (Animales Sin Hogar here in Uruguay). I guess it's because of the demographics (as someone said, facebook moms with free time - and a soft heart). Anecdotal evidence, but I've heard it's very good for small shops targeted for women, and my girlfriend did buy from a facebook ad.
hkmurakami 14y ago
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.
deleted 14y ago
[deleted]
fennecfoxen 14y ago
Yeah, if you're not GM, and not like GM, and not approaching Facebook like GM, then it's not clear you'll have GM's problems reaching out to people on Facebook. Problems like Republicans attempting to take advantage of your presence to poke fun of you as "government motors". :)

jonknee 14y ago

> 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 14y ago
$30 million sounds like a lot for promoting a brand for free on one platform.
- jonknee 14y ago
  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 14y ago
    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 14y ago
      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.
      - joelhaasnoot 14y ago
        I assume the figure is for all their brands, not just the GM page?

ntkachov 14y ago

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.

jonknee 14y ago
Most people are on Facebook, so there are a large number of people looking for new cars. Facebook's big pitch to advertisers is that it can target better than anyone else. Why can't they find people who are looking for a new car?
noodle 14y ago
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 14y ago
  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.
- Wilya 14y ago
  You can't track the conversion rate from a TV ad either. That doesn't mean you can't notice a positive/negative effect related to the presence/absence of the ad. Especially at the scale of GM.
ssclafani 14y ago
Your impression of Facebook's user base is about five years out of date. Facebook is closing in on having ~1,000,000,000 members. I would suspect millions of those members are looking for a new car right this second. Facebook needs to find better a way, like Google did, of matching those members with advertisers.
- 14y ago

dneb7 14y ago

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 14y ago
Any thoughts on better choices for advertising B2B offerings? Has anybody here tried LinkedIn for that, for example?
- rmc 14y ago
  Google AdWords?
  - mindcrime 14y ago
    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.
- alain94040 14y ago
  I tried all 3 (Google, Facebook and LinkedIn). For my circumstances, Facebook won by a mile. Google did ok. LinkedIn was a complete disaster. http://blog.foundrs.com/2011/04/01/sell-your-google-stock-like-right-now-adwords-data/ http://blog.foundrs.com/2011/04/01/sell-your-google-stock-li... (the blog post shows early numbers, the real numbers, after longer experimentation, show the exact same results)
joering2 14y ago
I agree with you. Me and anyone that I know that uses Facebook already got used to ignoring the right column by default. Slowly but surely it gets to the point that it doesnt really matter what you advertise. I challenge you, if facebook approves it, to put and add "giving money for free" with landing page and see a click rate. It will be similar to advertising anything else, because users are getting smarter (thats good) nowadays and "sounds too good" offers will steer them away. edit: for that reason, I think Facebook advertising does not work. Or at least, does not work for the _most_ of advertisers. Its just that Facebook is still new and here and there I hear my friends being exciting about "advertising to millions of customers" and they do give it a shoot with a poor results at the end. The point is you have so many people that havent tried that yet that they still bringing cash to FB. But unless FB does something for the ads to work (change its core product?), the $ numbers will only fall.

TY 14y ago

Timing of this announcement is indeed somewhat awkward ...

ajross 14y ago
Which is, no doubt, not a mistake. Clearly there's a deeper story here.
recursive 14y ago
How so?
- Kylekramer 14y ago
  Facebook has a imminent IPO.

jasondc 14y ago

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.

jacquesm 14y ago

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'.

CamperBob2 14y ago
Or "Give us some stock at the opening price, or else." There is no way for GM to pull this kind of maneuver at this time without looking suspicious.
- alan_cx 14y ago
  They have, and it does?
  - CamperBob2 14y ago
    I don't follow you. Are you agreeing or disagreeing that this move looks like the outcome of a failed behind-the-scenes negotiation or even an extortion attempt on GM's part?
bradgessler 14y ago
... or Facebook ads don't work.
- bgilroy26 14y ago
  Not with timing like this, which would create such bad blood. This news item has an ulterior motive. Not that that precludes the possibility that Facebook ads don't work.
  - dkrich 14y ago
    Well if Facebook ads DO work (at least for GM) I don't believe they would have pulled their campaign no matter what ulterior motives they may have. Sales are sales.

deleted 14y ago

[deleted]

alain94040 14y ago

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.

Splines 14y ago
> 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. I think they have the data, but maybe not the means to mine it. I'm guessing that people are interested in buying a new car at important life milestones and when replacing an older vehicle. It's pretty easy to find those milestones ("here's pictures of our new baby", "Grad 2015, whooooo", "Just started at my new job"). Signals for replacing an older vehicle could be looking up vehicle review pages on facebook (does edmunds.com have a facebook page?), like you mentioned. So I don't think it's impossible (but definitely non-trivial). I have no idea if it's possible to target ads against the sorts of things people post to their wall/photo albums.
- 286c8cb04bda 14y ago
  Your description reminds me of the Target/pregnancy story from a February[1]. The evidence there proves it's possible. The question then: Is Facebook's data as good as Target's? For Facebook, certainly. Can they get away with exposing that information to advertisers? I'm not sure. [1]: https://news.ycombinator.com/item?id=3601354 https://news.ycombinator.com/item?id=3601354
dalore 14y ago
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.

jvanderwal 14y ago

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-ctr-are-half-industry-average/ http://www.kikabink.com/news/facebook-ad-click-through-rates...

ry0ohki 14y ago
Comparing click-through rate on a passive site like Facebook (I'm there to socialize and I might happen to see something interesting ad-wise) to an active site Google (I'm there to find a product) seems like a bad comparison. It seems like Facebook ad engagement should be measured my metrics closer to billboards.
kposehn 14y ago
0.051% is actually pretty good. Don't compare with Facebook, compare with other DSP and ad networks for banners - FB and Google are complete opposites.
mpeg 14y ago
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 14y ago
  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.

PedroCandeias 14y ago

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 14y ago
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 14y ago
  GM isn't a mom and pop. They engage marketing agencies who certainly know what they're doing.
  - raverbashing 14y ago
    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)

snambi 14y ago

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.

waterlesscloud 14y ago
I click on Facebook ads FAR more often than I click on Google ads. Actually, I don't remember the last time I clicked on a Google ad. Whereas Facebook shows me things I'm interested in all the time. Anecdotal, but that seems to be what we're doing in this thread.
ppod 14y ago
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 14y ago
  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.
natrius 14y ago
Most of my ads are software companies like Asana advertising jobs. Seems well-targeted to me.
- mpeg 14y ago
  I work in facebook advertising and I'm still often surprised at the quality of some ads: recruiter ads targeted explicitly at my job title, ads from brands that want to drive engagement using facebook questions, etc.

TommyDANGerous 14y ago

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

10098 14y ago

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 14y ago
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.
andreyf 14y ago
https://en.wikipedia.org/wiki/Banner_blindness https://en.wikipedia.org/wiki/Banner_blindness

deleted 14y ago

[deleted]

mmukhin 14y ago

Maybe nobody is interested in GM cars...

excuse-me 14y ago
Perhaps Facebook is populated by more intelligent discerning users than I had imagined!
HeyLaughingBoy 14y ago
That would be very odd considering the large number of brand new GM cars and trucks I keep seeing...

EternalFury 14y ago

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.

davidw 14y ago

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.

waterlesscloud 14y ago

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 14y ago
Excel is a bit kind, Facebook is still trying to figure out advertising well enough to justify it's current valuation.

patrickgzill 14y ago

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 14y ago
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.

micahgoulart 14y ago

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?

mrtron 14y ago
Risk is why not. Theres a huge risk that would fail.
beedogs 14y ago
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.

mmaunder 14y ago

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.

fragsworth 14y ago
I wouldn't say Facebook has a huge problem here - users spend much more time on Facebook than on Google (by design) and even if they don't intend to do anything other than "use Facebook", the ads are effective as a result of their high exposure. That said, however, a very large group of users are there to play social games. With social game companies competing for ad space (for these often highly-profitable users), they're driving up the price of ads and making it less economical for other industries to advertise on Facebook.
wvenable 14y ago
When watching TV the intent is to watch TV, not purchase soap, a car, or a soft drink. It might be that Facebook's ads are simply the wrong type/style for the kind of interaction people use it for. It does seem like Facebook ads feel like Google search ads.
- franciscoapinto 14y ago
  > When watching TV the intent is to watch TV, not purchase soap, a car, or a soft drink. The difference being that facebook doesn't make you watch a 10 second ad between each one of Dave's party photos.
  - matthewcford 14y ago
    Clearly this is where they're failing.. should also inject pre/post roll ads on all videos

MartinCron 14y ago

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 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 14y ago
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...

goodbyehello 14y ago

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".

devs1010 14y ago

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.

calbear81 14y ago

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.

kposehn 14y ago

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 14y ago
"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 14y ago
  It worked, but people still panned it. FB is the same way :-/
  - drumdance 14y ago
    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.
  - anon808 14y ago
    I haven't heard anyone with volume saying fb ads work.

philmcc 14y ago

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.

elorant 14y ago

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.

pg 14y ago

Interesting side point: the WSJ article was on HN first (http://news.ycombinator.com/item?id=3978537 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 14y ago
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-target-figured-out-a-teen-girl-was-pregnant-before-her-father-did/ http://www.forbes.com/sites/kashmirhill/2012/02/16/how-targe...
dexen 14y ago
However you slice it, paywall is bothersome -- one more click to go through, with no added benefit. Let's hope the `netizens' will vote with their feet more often.

cletus 14y ago

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).

untog 14y ago
"There is nothing preventing Facebook from being the next Myspace when something newer, cooler and hipper comes along and the users move on." I would argue that things like the massive photo collections people have made provide a large level of lock-in. I also suspect that Timeline is the first play in a "all your history, here" move that would make moving to another service very difficult.

Pressenter 14y ago

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

drumdance 14y ago

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.

salimmadjd 14y ago

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

patrickgzill 14y ago
Bingo.

savories 14y ago

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.

badclient 14y ago

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

hackinthebochs 14y ago
Exactly. Its amazing to see so many people avoid making this connection in their heads. It's so painfully obvious. I just wish they had IPO'd a few years earlier...
AznHisoka 14y ago
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 14y ago
  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 14y ago
    yep, and they failed.
    - badclient 14y ago
      Eventually every company fails.

tferris 14y ago

overworkedasian 14y ago

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 14y ago
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.

coffeemug 14y ago

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 14y ago
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.

raheemm 14y ago

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

drstrangevibes 14y ago
dump and pump

djt 14y ago

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.

tomrod 14y ago

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

b3b0p 14y ago

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.

throwaway63-90 14y ago

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?

kingkawn 14y ago

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

mzuvella 14y ago

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 14y ago

You wouldn't download a car?

deleted 14y ago

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its_so_on 14y ago

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 http://www.thefreedictionary.com/sociable, definition 2

drstrangevibes 14y ago

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

deleted 14y ago
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akrymski 14y ago

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.

BoxFullOCat 14y ago

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.

brudgers 14y ago

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_berkshire_buys.html http://www.mlive.com/auto/index.ssf/2012/05/warren_buffetts_...

BaseBandLabs 14y ago

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