Auto companies are radio’s biggest clients, spending $2 billion last year, so the business should take some satisfaction in GM’s decision to stop wasting money on social media.
Just days before Facebook’s IPO, GM pulled it $10 million Facebook budget. According to the Wall Street Journal:
GM plans to stop advertising with Facebook after deciding that paid ads on the site have little impact on consumer’s car purchases.
GM may be the only company to publicly pull its advertising, but it probably won’t be the last. In the New York Times story on the pull-out, a Forester analyst offered this:
My colleagues and I have spoken with several other advertisers who were already thinking of putting their dollars elsewhere. Now that GM has done so in such a large and public way, many fence-sitters will know that they’re not alone in their disappointment about their results.
A new AP-CNBC poll may explain their disappointment. In the poll, 83 percent of users said they “hardly ever” or “never” click on the ads Facebook serves up.
The Los Angeles Times notes:
Social media has yet to be time tested as an advertising tool and research has shown that people don’t really pay attention to the advertisements. Consumer goods companies such as automakers are intoxicated by the huge number of people on social media, but they don’t know what its real impact is for driving awareness and driving sales.
Ironically, BIA/Kelsey chose the very same day to release new upbeat social media ad growth projections. The company believes that social media advertising will grow at a 21% annual rate for the foreseeable future.
The problem is that even before the GM announcement, there were questions about Facebook’s revenue growth curve. The company’s revenues actually declined in the first quarter.
Not exactly the direction one would expect if the BIA/Kelsey projections are correct.
Despite rosy predictions for social media, GM’s decision may mark the moment that advertisers began rethinking the value of social media.
A display ad on Facebook is a lifeless emotionless waste of marketing dollars.
Not to mention, if you use Firefox with an ad blocker and script blocker, you don't even see the ads.
Posted by: Sean | May 22, 2012 at 07:53 PM