Executives with other automotive brands say they wouldn't have completely departed Facebook advertising as General Motors did this week. But some also concede that GM had a point in its decision to stop buying ads on the ubiquitous social-networking site, for a variety of reasons.
And as Facebook's $104-billion IPO loomed Friday, the opinions of auto-industry marketers matter immensely. They are among the world's biggest advertisers. Moreover, the most significant vulnerability would-be investors have been able to find in Facebook's prospects is the fact that advertising on the site is still in its infancy, that overall it has been only spottily effective, and that so many brand marketers remain hesitant to invest heavily in it.
GM's rationale for the move, global CMO Joel Ewanick originally told the Wall Street Journal, was that his company simply was finding its paid advertising on Facebook ineffective. So he whacked the $10 million a year that GM had been spending on paid ads on Facebook while retaining the company's $30-million annual investment in free "content" on the site such as pages for each of its brands and some of its nameplates.
Ford executives couldn't resist the opportunity to tweak GM for its drastic move, citing their own successes with Facebook advertising.
But as it turns out, some other auto marketers agree with part of GM's rationale: They concede that they only bet on Facebook advertising during product launches and other major events when their brands have a lot to say and then only when they also integrate the advertising with unpaid content on Facebook. Even Ford generally focuses on Facebook ads only when it's got a new product to tout.
A top Kia marketing executive earlier this month questioned the value of Facebook ads in helping sell cars, for instance. And sibling brand Hyundai generally emphasizes advertising on Facebook only to promote or amplify significant developments for the brand such as its advertisements on TV during the Super Bowl or Academy Awards, David Matathia, the brand's director of advertising, told me.
"When we have key events where we want to draw attention outside our telecast components, we've used Facebook advertising very successfully," he said. But Hyundai develops its free content on a continuous basis. "We're always looking at the non-paid side and continue to grow our community and offer content that fans interact with."
Similarly, Nissan does "very little paid advertising in the social space overall," Erich Marx, Nissan's director of social media, told me. And when it does so, Facebook advertising is only part of a broad integration with free Facebook content around vehicle launches, such as its debut of a Pathfinder SUV concept vehicle at the Detroit auto show in January and the unveiling of the 2013 Altima sedan at the New York International Auto Show in March.
Still, GM's move "seems like a little bit of a knee-jerk thing," Marx said. "To say [Facebook advertising] is no longer a viable reach medium for you seems overstated."
But Jack Hollis, vice president of the Scion brand, told me he understands why GM reassessed its paid advertising on Facebook. The Toyota-owned youth brand takes pains to develop and spread relevant free content based on Facebook.
"Most brands who advertise there advertise just one thing: 'Like us'," Hollis said. "Our ads aren't about liking us. We're putting out content. We don't see a need to be [on Facebook] in a major advertising way because it kind of gets lost among all the brands that want to be 'liked.' If you 'like' us, have a relationship with us" via content, he said.
In the day-in day-out world of selling sheet metal, some of these executives agreed that Facebook advertising isn't all that effective, given that auto purchases are huge, long-term, and not made very often. Some also noted that Facebook advertising is still relatively experimental and that CMOs can probably justify any decision about it on the grounds of some sort of return-on-investment calculus, at least from a short-term perspective.
Some industry marketers asserted that GM's decision included an element of rashness because Facebook reportedly criticized GM for having had multiple firms managing its advertising for the site. Some believed that GM executives felt disrespected by Facebook in the negotiating process. GM executives weren't available for comment.
Maybe a re-examination of its decision in the light of such factors was why GM began clawing back part of its pique at Facebook almost as soon as it was revealed. The company posted a love letter to the site on its Facebook page on Wednesday. And on Thursday, Mary Henige, GM's director of social media and digital communications, posted a blog entry on GM's Facebook page from Unmetric.com asserting that GM is not all thumbs when it comes to online engagement. The Unmetric writer calculated, for instance, that both GM and Chrysler have more than twice the number of total Facebook fans than Ford.
In any event, Subaru of America reportedly plans to boost its Facebook advertising spending this year to about $5 million -- or about half the amount GM decided to stop spending, even though Subaru obviously is a tiny concern compared with GM. And even Kia said it planned on increasing its ad spending on Facebook this year.
