David Mitchel, Marketing Manager

The Facebook IPO was one of the most dominant stories of the business news cycle this past week. It produced a divergent range of opinions. However, it was not the only big news story related to the business of Facebook. General Motors decided to cease its advertising relationship with the leading social media site. This made a stir because GM is the company with the third highest advertising budget in the US, trailing only AT&T and Procter & Gamble. GM made this decision because they do not believe that Facebook advertising is a driver of purchase for car buyers. Some reaction to the news of GM’s decision to pull back from Facebook advertising was to condemn Facebook as an ineffective advertising platform. This line of thinking is incorrect and short sighted analysis.

There’s a famous saying that beauty is in the eye of the beholder. That statement can be adapted to the advertising world by saying that the beauty of any advertising medium is in the eye of beholder. Any advertising medium, including Facebook, must be aligned with the goals of the brand for it to be perceived as beautiful by the brand. It should be paramount for any brand to advertise in mediums that produce the greatest results for that brand.

In GM’s role as the beholder, I see two factors at play: 1) Misaligned goals for the medium and 2) A corporate wide re-evaluation of all media buys, which is a more unique factor to them than to brand advertising at large.

With regard to the factor of misaligned goals, it is clear that they were not seeing the results that they wanted from Facebook. The Wall Street Journal article referenced in the first paragraph shows how purchase was the important metric to them. Contrast this with other automakers who affirmed their commitment to advertising on Facebook, such as Ford and Subaru. Marketing executives from those two brands made the following statements about Facebook advertising this week.

“We’ve found that Facebook ads are very effective, and they’re most effective when we strategically combine them with great content and innovative forms of storytelling rather than a straight media buy.” Scott Monty, Ford Head of Social Media.

“It cost-effectively generates a fan base, generates awareness for the brand and generates traffic for our websites.” Dan Evans, Chief Marketing Officer, Subaru of America

Pay close attention to the words that Monty and Evans use to describe how their brands use Facebook as an ad medium. Monty talks about integration with other promotion tactics to create a desirable effect for Ford, while Evans focuses on achieving softer metrics for Subaru than just evaluating Facebook advertising as a means of revenue enhancement. Both of these approaches carve out a niche for Facebook advertising in the grand scheme of a brand advertising strategy. I think both of these brands have the proper perspective on what Facebook advertising can and cannot do for a brand.

With the second factor to consider in GM’s role as beholder, it is becoming more evident that GM is changing the way that they approach product promotion. Just days after GM announced the end of their relationship with Facebook, GM then announced that they would not be airing any ads during the next Super Bowl. GM cited cost issues, as the cost of a 30 second Super Bowl ad for Super Bowl XLVII in February 2013 will be $4 million. Keep in mind that the $4 million figure only covers paying the network covering the game for the air time. To produce a quality, meaningful ad, a brand would have to figure in roughly another $1-2 million for production costs. Considering that the next Super Bowl is nearly 9 months away, this indicates to me that GM feels quite dissatisfied with recent ad expenditures during the big game. Typically, most companies that are potential Super Bowl advertisers don’t announce their initial Super Bowl advertising plans until the September-October time period before the game in February. I may see GM’s point of view on Super Bowl ads based on their past performance. After all, it was in this blog space after Super Bowl XLV in February 2011 that I gave an unfavorable review to the advertising efforts of the Chevrolet brand. The overall way that GM is approaching ad spending in light of recent news is curious.

The idea of what Facebook advertising can and cannot do is vital to understanding how to execute successful ad campaigns in the medium. The most important understanding is to realize how people use Facebook. The typical user of Facebook uses the social network to share information and photos of themselves to their friends, family and passing acquaintances. Likewise, the typical user is also following what their friends, family and passing acquaintances are doing in their lives, and viewing their photos. In the process of information sharing, they may choose to “like” a brand’s Facebook page. For example, I discovered today that 11 of my friends like Starbucks and 6 of my friends like Dos Equis. It is up to Starbucks and Dos Equis to produce compelling content on their fan pages to keep them in relevant in the News Feeds of my friends and reinforce top of mind brand awareness. However, brand status updates alone aren’t going to induce purchases from my friends (or any other person). It is up to the brand to use other tactics from their product promotion strategy in conjunction with other elements of the marketing mix to supplement their Facebook fan page. Additionally, advertising on Facebook alone isn’t going to cut it, when the primary purpose of Facebook is to socialize with others, not be receptive to the latest brand advertising pitch.

A recent survey shows how Facebook users are not particularly prone to seeking out brand advertisements. This alone is not a cause for alarm. A widely known fact about market research is that what people say isn’t always what people do. There’s still room for brands to effectively navigate the waters of Facebook advertising. Targeting the correct keywords, choosing an appropriate CPC/CPM, devoting enough money to the campaign and having exceptional ad copy are the ways to make advertising on Facebook worthwhile. This is far easier said than done. Additionally, I must re-iterate how understanding how user psychology in Facebook differs from other advertising and setting the right goals for ad campaigns is crucial for a brand to perceive Facebook as worthwhile.

User psychology is where Google Adwords has a big advantage over Facebook’s advertising platform. When someone goes to Google, they are actively seeking something. This is a much different frame of mind than just going to see someone’s photos, the latest news in someone’s life and interesting news articles from sites like TMZ.com. With search advertising, the advertiser knows the target audience is open to information about what they are seeking and that makes them more apt to examine an advertisement. If the advertisement is compelling, which is a challenge, that factor can induce purchase. If the only metric that matters is revenue enhancement, Google Adwords is a better platform for driving sales.

Facebook advertising works best in conjunction with a Facebook fan page that produces compelling content and engages an audience. Facebook has the potential to be a great top of mind brand awareness driver. It can also stimulate offline brand conversations and facilitate the process of an advertising message going viral. It is a tool in the advertising toolbox. Every tool has its purpose. A hammer and a wrench do different things. Facebook ads have a different purpose than advertising in other mediums and to expect the same results from Facebook ads as Google Adwords, a television commercial or a radio spot is advertising folly.