Why GM slammed the brakes on its $10m Facebook ads

In the week that Facebook finally went public, General Motors has axed its paid-for advertising on Mark Zuckerberg's social network. GM said today that it was still going to have a Facebook page and everything, but it wasn't going to buy any more ads because they just aren't shifting enough cars. It reportedly spent $10m on the site last year, contributing towards Facebook's $3.7bn ad revenue in 2011.

 

"We are reassessing our advertising, but we remain committed to an aggressive content strategy through all of our products and brands, as it continues to be a very effective tool for engaging with our customers," the vehicle manufacturer, one of the US' biggest advertisers, said in an emailed statement.

 

To be fair, GM had said earlier this year that it was reviewing its ad spend in a bid to save $2bn over the next five years, so something had to go - but to yank all paid-for ads off Facebook indicates the firm didn't think it was getting a good return.

 

The news came just hours after Wordstream, an internet marketing firm, published an infographic that showed Facebook was way behind the Google Display Network, which is just 20 per cent of Google's ad revenue.

 

Wordstream agrees with a Webtrends report that puts the Facebook click-through-rate (ad clicks versus impressions) at just 0.05 per cent, half the average for banner ads and ten times less than Google Display, which has a 0.4 per cent CTR.

"Facebook had pretty good marks for huge audiences and growth, where they got really killed was in two areas - ad formats and ad targeting," Larry Kim, founder and CTO of Wordstream, told The Register.

 

Read the full article on The Register's website.

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