Talk about bad timing. Right before Wall Street set up to open the curtain on Facebook's $100bn IPO, General Motors (GM), which spends $40m on its Facebook presence, announced that it's pulling the plug on Facebook advertising. The reason? Advertising on Facebook apparently hasn't worked. My question: how would GM possibly know …
And your point is???
GM have said they will maintain their FB pages and presence, they have only pulled out from advertising...
Re: And your point is???
Exactly. And it's fairly disingenuous of the author to assume they know better than GM what works and doesn't work for GM.
Re: And your point is???
I think the author also misses the point that if GM doesn't know whether it's advertising was working or not that maybe Facebook was charging too much for too little in return or doesn't have the tools to demonstrate that the advertising was good value. If GM didn't think they were getting value for money they were perfectly within their rights to pull the advertising.
Re: And your point is???
yep, looks like Mr Asay has already put a bit of his cash into Facebook shares and is desperately trying to convince people that 'its all ok' , hoping the share price doesnt nose dive.
my advice, dump them early.
Facebook, JC penny etc are all copping on to the fact that FB is a Social area, not a sales or reasearch area.
And tv works, because when the ads come on you cannot still see the program on any other part of the screen. On websites, you can ignore the advert becuase what you are reading is still there, so you dont have to switch your attention.
Oh, and to your question of how would GM know if the campaign worked, thats kind of the whole point of analysing a campaign. As in "We spent X here and sales and interest went up y%, but we spent Z here and sales/interest didnt budge" . If GM cant tell you that, No-One can. Centainly not you or FB. Maybe thats too much to understand for this Birdy News Site?
Re: And your point is???
Yep. And GM can't decide to spend its money eslewhere because why? This twit Assay says so?
No...writing an article like this = amateur move.
One thing that I pick up on these days, is reviews of what I want to buy, especially when I'm making a major purchase. Reviews are what I go for, so if GM instead puts this money behind loaning reviews cars and encouraging them to get social, I'd prefer that rather than direct ads which, to me, carry no substance. But to each their own.
Facebook advertising at the moment is like throwing confeti into the air and hopeing a bit will stick to someone on the way to a wedding.
Why would the mojority of people be interested in a car advert ?
If FB can direct adverts to targeted users then there is a good reason to spend the money, at the moment you would get a lot more from using Google to do your ads for you.
As to all the extra revinue streams people keep on about then I beleive they are pie in the sky as well, whos going to pay to play farmville on Fb for example when they can get a free app to play something similar if not the same......
FB have a big problem in that they need to get cash out of users who basically don't want to give them any.....
Almost everyone I talk to seems to hate facebook now. Many people are only using it because everyone else is. The seemingly relentless drive for profit and advertising is turning a lot of people off, but largely people are getting sick of the format. "walls" and "status updates". I can't see it surviving if that continues because eventually somehow there will be a way out to a different platform and then a stampede, what happened to myspace a few years back will happen to facebook.
There's just not enough "wow this is great" feelings I can see coming from the user base. It's not like Apple which clearly have a lot of potential in a lot of different hardware areas and a lot of fanboys. Then again I only see a small part of the user base, the younger kids I have no idea about, so I might be wrong.
And yet they still flock to use it. Perhaps "hate" is a piece of hyperbole used to cover a complex field of wants?
I only say this (and I don't use Facebook at all) as the "hate" comment mirrors similar comments from people trying to promote Linux a few years ago. People "hated" Microsoft and yet they felt no great desire to switch to a different O/S despite undeniable technical benefits of doing so.
Facebook has a central idea that people want, and are ready to put up with the stupid horseshirt that goes with it in order to get some. When something better comes along, they'll flee in droves.
Just like they did with AOL, MySpace etc.
But it will have to *be* better, not just different. And to get that, you need to understand what Facebook provides that is so compelling, and working from the "hate" baseline won't get you there.
When you do, call me because I'll invest in your startup.
"it will have to *be* better, not just different."
Not at all - that was really the point with FaceBook v. MySpace in the first place - general public opinion was that it was better, thanks to clever marketing on one side, and idiocy on the other...
Better spent elsewhere
Maybe they think (with some justification) that people visiting Facebook aren't in the mood for buying cars at that moment. They just want to play farmville or check out what their friends are up to.
GM would spend their cash more wisely advertising in places where people are showing an interest in cars e.g advertising on a car comparison or review site, in car magazines, or as a sponsored result on a Google search.
I don't buy the whole Facebook advertising pitch. It's about as convincing someone to try to sell watches to people walking into a pizza takeaway. You might get lucky and sell a few, but your time is going to be better spent getting your watches to be sold in jewelers shops.
Also you have to wonder how clever the advert targetting is on Facebook. Presumably you'd show a GM advert to someone who mentions new cars, but that could occur in a number of situations that have nothing to do with the user's desire to get a new car e.g. "my friend just bought a new car and it's a load of rubbish". It's a far cry from someone doing a google search for "medium sized car".
The best arguments are made in a Forbes article: FB is a SOCIAL site, not one where people actually look for products.
I think the above article says it very well - nothing needs adding..
..and exactly what I've been thinking. You can't compare Google Ads to Facebook Ads - which is what everyone seems to be doing. "If Facebook can do what Google did with revenues after their IPO, then they're not over-valued at all".....
People are *looking* for something when they go to Google, they're not looking for something when they're on Facebook.
Facebook Ads are much more similar to TV ads; you're not looking for something when you watch TV, and you're not looking for something when you are on Facebook - Ads just get chucked at you.
The difference, is that TV is a far richer medium - ads generate "feeling"; they make you laugh, they make you envious - even print ads have more effect. Facebook Ads are just crappy little images with a snippet of text - there's not a great deal you can do with that....
Like TV advertising where you can tie up broadcast times with web traffic, and Google ads where you have lots of data to correlate, Farcebork also provides some metrics, presumably.
So presumably the metrics GM are getting are nil/insignificant or maybe adverse data based on what their marketing conversion bods are working out vs cash spent.
There, you could have asked me (or pretty much anyone else) and saved all that time writing an article.
Re: Well presumably...
If the advertising metrics are as broken and meaningless as the application stats we her as developers then I'd be surprised if anyone could draw any conclusions from them.
There are ads on Facebook?
Don't be so ridiculous. I've never seen one yet.
Really? GM doesn't undertand the nuances of Facebook advertising? I think the author gives both Facebook and its users too much credit. Nuanced and deep-thinking they are not. You're either reaching pimply-faced teens posting mindless drivel or curious adults who are as confused as GM as to what Facebook is all about, wondering why they are reconnecting with people they've been successfully avoiding for years. A rich pastiche of interraction overflowing wih yet-to-be-appreciated soial dimensions it is not.
Facebook has devalued the currency of social interaction and GM's decision reflects that, whether GM knows it or Facebook will admit it, or not.
How would they possibly know
Oh - I don't know - maybe they did something innovative like research with their customers.
Oh noes - I said the R word. I'm really not getting the hang of this interwebs journalism thing.
Dear el Reg - can you please stop now with the FB fluffing.
In all the time i've been on facebook i've never once clicked on any ad or even taken notice of them. GM should spend their money somewhere it might possibly make a difference.
My question: how would GM possibly know?
If there is no way to know if it works why would you spend money on it?
Maybe they should give money to a witch doctor, how would they possibly know it didn't work?
Re: My question: how would GM possibly know?
They spend 25% of their advertising budget on
witch doctors TV already and how has that worked out? They got more bang for their buck from the TARP bailout than they will ever get from TV.
"If you were to leave FB social advertising with its proven top and mid funnel results, where would you go? Banners and pre rolls?"
Errmm since when has anything facebook related been proven to work? Is it in the same report that says facebook is worth one millliiioon dollars^H^H^H I mean one hundread biiilliioonnn dollars?
What a pile of bull
Why would GM need FB to build a long term brand? They already have a fecking huge brand that is probably better known than FB around the world and has been around for a lot longer term than FB. But of course some OSStard would know better than GM.
So the next time GM gives out bonuses they will claim the money came from their advertising budget rather than the government bailout money.
With nearly a billion 'active' users globally, but being a good 4 or 5 years behind Google in the maturity of their advertising offering, I don't rate their chances. Their user acquisition rate can only slow, especially where countries like Brazil and China have well established bases with sites like Renren and even Orkut.
If they want to grow their audience more, they're going to have to tap into developing markets - exactly the sort of places with lower internet and smartphone uptake. Facebook on a Nokia S40 phone anyone? The less developed the market, the less revenue opportunity for FB. They don't even have ads on their smartphone apps. The day they do, they'll lose more users.
All the while, apathy will only grow amongst the existing 'active' base and these users will become less and less active. I wonder how they define 'active' to their shareholders...
I hope their investors are playing the long, long, long game, although that doesn't seem to be the way in the Valley these days where VCs will talk up a money pit like Instagram, cash in their chips, buy a yacht and find the next kid in a hoodie to big up.
This is my personal campaign to make FB advertising pointless. For every ad that appears:
- Click on the X to hide it
- If the option is there, click "Hide all from <company>"
- If asked "What didn't you like about this ad?", click "Sexually explicit"
I reckon that, if enough people do this, all of the ads will eventually disappear...
After all, Paris doesn't need to advertise.
My local weekly free newspaper has resurfaced recently. It's mostly adverts, most of which are from car dealers. And there's a new car "review" every week too. It seems far more likely that money spent advertising there will be good for the GM empire than money spent on FB, especially in the bits of the "funnel" where people either are barely interested yet, or at the opposite end where they have money ready and are about to buy.
I'm sure the FB business model will be just fine without GM's revenue, so long as no one notices that GM pulled out.
"I'm sure the FB business model will be just fine without GM's revenue" --
-- I don't think they even know what their business model is just yet! At over $100 per user, they've got a lot of ads to sell if they're gonna impress the shareholders. A lot of those will be using ad-free mobile/tablet apps most of the time and a large proportion probably only login once a week or less (but still qualify as active no doubt).
"At over $100 per user, "
It's people like you that have got the UK telcos in such trouble with the amounts they bid for their 3G licences.
You can do 'rithmetic and logic.
They apparently couldn't, otherwise they'd have worked out that
realistic_ARPU * realistic_number_of_3G_users * realistic_payback_period_in_years
defines the absolute maximum a 3G licence was worth.
An author missing his own point...
"But by opting not to experiment with a comparative pittance of $10m"
But that is exactly the point isn't it? GM HAVE experimented with millions of dollars in the past, and I can only assume that that multi-million dollar advertising program had attached to it (A) an approved strategy, (B) a set of baseline expected results, and (C) a set of measurable returns on investment - and one can only assume that even at best 2 out of 3 of these have not been met by investing it in Facebook.
Whilst it does seem that $10m is a small sum in terms of their overall advertising budget, I'd still be highly surprised considering their recent economic problems that they simply handed over that cash in brown envelopes and "hoped for the best".
I would seriously question the authors journalistic bias on this piece.
Sorry El Reg - not impressed.
As stated in the article, Facebook is about demand generation, not direct sales. Demand is generated through your friends/family, not adverts. Facebook screwed themselves by letting businesses have pages for free. Should have charged for them...
It's GM's money ...
... and they made the call. Screw the doubters.
Martin Sorrel, head of world's biggest ad agency WPP, (who spend HUGE sums of money with Google), said he doesn't think facebook is the kind of experience where ads will be welcome:
I don't use FB often but if a thread or conversation was "invaded" by some uncalled for ad selected on some pimply programmer's evaluation of what would be interesting to me or the other people in the "conversation", I think I would be annoyed.
FB is a gaming and dating platform. Period.
Firstly, if GM cant tell whether or not the advertising is working, it's not working.
Secondly, GM is still in the hole to the US taxpayer and cannot afford to be seen to be wasting monies more properly destined for repayments or long-overdue overhauls of its out-of-date product lines.
I can't speak to the motives of the author of this piece, but Facebook advertising is a current topic of hot debate in the media and *no one* knows how to figure out whether there is any measurable benefit from it.
Hell, no-one can say how the IPO evaluation was arrived at.
American Sales Execs are pretty inept, then
Or is it the author? GM has been placing ads in everything from newspapers to bubble gum for decades - I think that they know how to measure an ROI in a campaign of any type, be it brand marketing or discount offer sales drives.
If there is one thing Americans shine at, its selling. I think that most people can agree on that.
Given the persistent success of GM and other manufacturers to convince people to buy new cars when then don't really need a new one, I would expect that they have a decent handle on determining which advertisements lead to sales.
Facebook has advertisements?
I can't remember ever seeing any advertisements on facebook. Then again, I already strive to ignore most of the "content" on facebook anyway.
Car advertising strikes me as a real waste of money - the sums of money being spent are just obscene - and it's all being spent on something other than making better/cheaper cars. How many people are so stupid that they buy cars based on commercials?
Ads on Facebook?
Does anyone not use ad blockers when surfing? I, like others here, have not seen an ad in ages. But maybe they're craftily hidden away somewhere...
Mmmmm! Marketing speak
Give me more! Shut up, brain! Mmmmm, give me more!
ah.... th 1990s
It seems that just like house price bubbles, we're now to experience dotcom bubbles every 15-20 years, as the collective lessons of the last bust are lost on the new generation of morons.
"It's the new paradigm" (the standard retort on how company value was defined by footfall, and not hard profits)
I recall how AOL, Yahoo and Friends Reunited were all rock solid, because apparently they were 'sticky' and it was very hard for customers to move on to alternatives. Oh well.
Google has a far better business, because that is where people go when they want to buy something. Who cares how much time people waste, er... spend on FB? I'd take 10 seconds with someone who wants to buy what I am selling over 10 hours with someone who doesn't any day.
Re: ah.... th 1990s
I feel very much the same. I have made some pennies over time buying stock in companies like AMD (just as the k7 came out), ntl, intel and a few others, then selling before they crashed in the dot com wake up call.
I think FB is a good company with a solid medium term future, I see them being important over 10-20 years but not 50. It is likely that Intel, Ford, Google etc will be here and important in 50-100 years time. Will Facebook? That is my logic behind believing them to be overvalued.
Consider this, Ford, which made record losses and had to remortgage everything and anything it had during the boom years managed to get its act together. Check out the numbers involved in 2010 and 2011
(google for 2011 results, link is very long)
Whilst I am not a huge fan of their product (ford, ford, 4 wheels on a board, guaranteed to go if you push it etc) I do respect their ability to turn themselves around whilst refusing most of the governments help that others took. During one of the largest financial crisis of our generation, they managed to not only turn a huge loss into a profit, they managed to pay off huge amounts of debt. Their profits were not tokens, $6-8bn USD and roughly the same amounts paid off debt piles. Now look at FB, how far it will have to go to match it, then consider longevity, I can't see FB being worth as much as Ford, yet on market cap FB is worth 2.5 times what Ford is? Yes FB hasn't reached its potential, and Amazon and Google are great success stories that I personally believe will have a strong future, but really? I would take 2.5 Fords over one FB.
Perhaps because many of those making these bet's are using our money and not their own?
especially for El Reg standards. If a company spend $4 billion on advertising, I'd presume they know what works for then and what does not.
Does Asay own FB shares?
If he did not disclosing that would be highly unprofessional. it would be very interesting to find out if he did indeed own shares in FB, directly or indirectly.
The initial tone of the article is rather disappointing, verging on childish insults which belies an underlying bias. Google provided a great advertising platform for my business (photography), I got a lot of feedback, the CPC model was great etc, it worked very well, was pretty cheap compared to alternatives when viewed on an exposure basis. I ended up spending a lot on adverts with them and it brought in business. Then as en experiment (around the time FB started getting bigger & offering their product) I switched to try it out. It made no difference to leads and sales. So, again just for an experiment, I stopped FB and didn't restart google ads. My business level didn't drop. Further experiments with FB, despite its advantages, didn't lead to any appreciable benefit, it certainly didn't warrant the amounts I was spending. Perhaps I will try google again in the future but probably not FB ads. However, I am not dumb or arrogant enough to assume my experience would apply to everyone.
FB certainly works for some businesses, having an account itself is a useful tool. Far more useful than the advertising was, event spending thousands a month.
I think it is rather pretentious to assume you know better than GM how it is best spending their money (or rather the tax payers money as it is these days). They may go back to it in the future. One thing I do know is that it will not be an uninformed decision, whilst big companies often do dumb things, I know the amount of effort that goes into analysing the effectiveness of advertising. Exec's are judged on how well they use money, how much 'mindshare' they get etc. It isn't directly about how many people bought a gm car directly after clicking on an advert, its about how well the message were transferred and to how many people. They tried FB adverts, they decided that wasn't for them (likely on the back of quite a bit of analysis and discussion), but they would continue using FB in other ways. I don't see how that is either dumb or counter productive.
The moment my friends names appear next to a product like in facebook they lose so much respect. I think what a gullible fool. How many of my friends seem to like some diet plan or muscle bulk products I know none of them use amazes me.
You can't build a brand on Facebook. The best you could do is drop coupons in my invoice.
There are some worries FB investors, what with this and the bullshit "news" about G+
Has El-Reg suddenly become the place to ensure everyone's stock remains profitable via bullshit posting.
Whatever happened to journalistic integrity?
What's the difference between web and billboard?
Billboard ads generally look quite nice and liven up an otherwise dull commute when your driving pretty much on auto-pilot.
Web ads on FB are irritating: too small to show everything they want to, distracting and taking up valuable screen space when you're trying to do something else. They also lose credibility when put next to "lose 200lbs belly fat with this amazing secret that doctors don't want you to know about."
Google ads are more of a prompting when you've already shown interest. Also slightly annoying and creepy, but somewhat relevant.
TV has a greater capacity to convey a message and probably holds greater respectability.
All ads are not equal.
I thought I'd need more popcorn to view FB's crash and burn, but I think the one cup will be enough.
How would Matt Asay possibly know?
"Ford... reports great success with Facebook advertising". Matt tells us, though, that GM also reports that "Advertising on Facebook apparently hasn't worked. My question: how would GM possibly know?"
Just a little arrogant? Ford is smart enough to know that it's advertising has worked, and GM isn't smart enough to know that it's advertising hasn't worked? How would *you* possibly know?
Here's an idea for an interesting article. Tell us how many Facebook shares you bought, how much they cost you, how you can write an article like this without declaring an interest, and how many people are going to be wiped out when Facebook disappears down the plughole.
Could any one tell me..
..Whether thay have bought a product after seeing it advertised on FB? it'd be interesting to see what it is people may be buying after seeing on FB. things like a car..well, most rational people would do a lot of research and base their purchases against their wants and needs (unless they were rolling in it i would assume). FB is no help here.
What is the value of Facebook
I never have and never will purchase anything as a result of facebook.
I have used commercial pages on facebook to communicate my displeasure with those companies.
In particular, I have posted pictures of my local KFC (Kentucky Fried Chicken) polluting our local environment with stinking overflowing bins outside their shop.
Clearly there is no value in this advertising for KFC....
I am personally unable to appreciate the value put on facebook by the purchasers of the shares, but I suspect the people purchasing the shares are 'expert stockbrokers' who are spending other peoples money.