Will General Motors Pulling Out From Facebook Advertising Change Much?

  • Sumo

With over 900 million active members, facebook is definitely the home of socializing. Any sound business entrepreneur knows the impact that social sites can have on business growth especially when it comes to promoting products and services.

It is obvious that wherever there are people gathered there is money exchanging hands. This is why both big and small companies have invested millions of dollars on facebook advertising.

As we all know, on 18th May 2012 facebook made its first initial public offer (IPO). According to stock traders this has been the most heavily traded stock ever. Investors believe this has been due to the continuous growth of facebook in terms of subscriber base among other factors.

The same week the IPO was to go live, two major events took place. The first was the release of a shocking study that revealed that Google advertising was doing better than Facebook in terms of ad targeting and revenue.

Just after that, General Motors (GM) announced that they had pulled out over $10 million of their advertising on facebook stating lack of ROI.

These two announcements could not have come at a worse time, social media was on a high and this IPO was to be the pinnacle of social media business.

As much as facebook would not want people to withdraw from marketing on facebook, it is important to note that facebook main agenda has always been to offer a platform for users to socialize.

Before you decide to use facebook for marketing, there is need to know how to manage your social advertising campaign. Do not assume that with 900 million people congregating at one place automatically means you will make sales.

GM was expecting too much from advertising on facebook due to the numbers but in the process forgot the reason people are on facebook. The best approach to social media advertising is finding a way to tactfully create adverts that have captivating content and also include an element of innovation.

Notwithstanding, the pronouncements that were made last week together with other market factors did contribute a great deal in the drop of price to below $38 of the initial Facebook IPO offer.

Questions still linger on with the timing of the announcement with many people saying they were intentional while others think it was coincidental.

What next for Facebook?

The grip that facebook has on the internet is in terms of numbers and business promotion is not to be matched. Looking at the increase in subscriber base, facebook is set to hit 1 billion users by the end of the year.

By all standards, this is not a small feat. Recently, facebook has been updating their site, the latest been timeline. With timeline business people are able to increase their Click Through Rate thus engage their audience even more.

This is a clear indication that the future of facebook advertisement is very bright. The site still has a chance to update their site to better take care of the needs of facebook advertisers and in the process attract other high profile companies.

Larry Kim of WorldStream, the company that released the report showing that facebook was trailing behind Google in terms of advertising said, “Advertising on facebook is not the best way to sell online”. The reason for Kim to say this is because from the start facebook has not been keen on advertising.

It would take major structural and change of tact for facebook to move their focus to advertising. The reason that users have become addicted to facebook is the lack of intrusion which most sites do by concentrating more on advertising.

Going by the words of Mark Zuckerberg; money made from advertising has definitely helped facebook to grow, but he was not going to seat back and see advertisement ruin what people have come to know facebook for which is to provide a conducive ground for socialize.

facebook IPO

Whether you agree with him or not it depends on which side of the fence you are seated on. If you are an advertiser, Mark’s accouchements will leave a bitter taste in your mouth the same way General Motors felt.

As for the 900 million users this comes as a great relieve. No one wants to be bombarded with ads when he or she is trying to bond with friends and relatives. If companies cannot come up with effective marketing campaigns to advertise on facebook then the writing is on the wall, users first and advertisements a distant second.

A look at how facebook has been operating for the last ten years shows that their focus has never been on advertisement. I believe that is what has made facebook become a powerhouse on the internet behind google.

Kim also noted how facebook has been improving their features (e.g timeline) to help boost user experience and nothing in regards to providing a fertile ground for advertisers. In fact, if you look at facebook advertising you will note they are more than 5 years behind in terms of innovation.

It goes without say that it was just a matter of time and advertisers like GM would withdraw from advertising on facebook. Anyway, why budget on marketing at a site that does not care about improving their advertising platform.

But one fact still remains undeniable; you simply cannot ignore a site that is set to hit 1 billion users before the end of 2012. These number means that facebook has in its possession huge data of what people are looking for on the web.

It is this ability to reach many people that will make facebook a force to reckon with even when it comes to advertising. You can bet that as you are reading this article, a company is busy researching on how best to market their business on facebook. In fact, someone right now is entering his/her credit card details in order to advertise his or her products of facebook.

Therefore, the issue is not whether people will advertise on facebook or not, rather the focus will be how to effectively use facebook to promote your products and services. That is want GM needed to consider rather than saying facebook advertising does not work.

ROI is critical when it gets to business thus the reason why marketers need to strategize first before making any move. Wishing away facebook is like leaving money on the table considering the information they have with regards to people needs.

Advertisement is more about reach and knowing people’s preferences which without a doubt facebook has. You just never know, in the future facebook may decide to improve on advertising effectiveness but that I’m sure will not be done at the expense of their users.

So far, users are a happy lot going by the statistics and this by any measure is the reason of facebook success. Messing this up in the name of pleasing advertisers would be a big gaffe.

How does the future look after the facebook IPO:

Though the stock dropped after the IPO does not mean facebook is going down. This was bound to happen with the current market volatility in recent years.

By the look of things the drop in price is just but a small hiccup. Though many traders say that for a stock to drop below its IPO offer price is deemed as a disappointment, I think facebook stock is going to improve.

If you don’t believe it then watch this space.

Summary: The reason that facebook was able to overtake once big sites like MySpace was because they considered the needs of users first. I don’t expect the pulling out of GM to really affect the momentum of facebook growth.

Users’ on facebook first priority is to connect with friends and family. Clicking on advertisements is far from their mind, anyway who wants to be sold to when he is trying to build relationships?

Whatever facebook has been doing seems to be working for them and they should not be deterred by any company or report for that matter. As for their stock, it will be a matter of time before you see it hitting the roof and those who are dismissing facebook at this juncture are making a big mistake.

Keep doing what you know best Mark; you have over 900 million people right behind you.

Would you like facebook to improve their advertising? Post your opinions in the comment section appearing below for the world to know your views.

Feel free to share this post with other facebook users by clicking on the share button displaying on the left.

For more updates from this home based business blog enter your email address below or press this link to subscribe to my RSS feed.

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.