GM stops Facebook ads: What will be the impact?

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GM took a decision to withdraw its advertising budgets from Facebook. Coming as it did, just a couple of days prior to Facebook's IPO, this caused a big stir and also posed questions on whether Facebook revenues are sustainable.

This presentation by Sanjay Mehta, Joint CEO, Social Wavelength, examines the issue.

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GM stops Facebook ads: What will be the impact?

  1. 1. GM withdraws Facebook adsUnderstanding the impact – for other advertisers,investors (into Facebook) and for all of us! - Sanjay Mehta, Joint CEO, Social Wavelength
  2. 2. The News on the “Street” General Motors pulls out its advertising spend on Facebook Used to spend $10 million a year on Facebookadvertisements; will continue to engage fans on Facebook
  3. 3. Some Questions Raised How does advertising on Facebook and Google compare?Will it impact the How willFacebook IPO? Facebook be affected, if at all? Why didGeneral Motors Is Facebook’sannounce this 2 advertising days before model really Facebook’s ineffective, as long-awaited General IPO? Motors stated?
  4. 4. First of all, the Timing…Can it be just a coincidence?! GM pullsoutFacebook Facebook’s IPO Ads
  5. 5. Speed-breaker for Facebook IPO?? Enough other brands continue to swear by Facebook GM will still have a budget of $30 mn towards Facebook, though not of advertising kind GM’s ad spend was a tiny fraction of Facebook’s total ad revenues Large pent-up demand for Facebook paper
  6. 6. Marketing Mix is the ideal way A brand would ideally distribute spends across Facebook, Google and other digital spaces As much as in fact, it would spread across traditional media, PR, and digital Yet, let’s compare the fundamental Google vsFacebook options in
  7. 7. Facebook ads vs Google ads A very fundamental difference Google is largely keyword contextual; hence has a transactional sense to it Facebook, on the other hand, is profile focused; hence more prospect centric Due to this difference, the two are relevant differently, on the basis of the point of consumer’s buying journey being targeted
  8. 8. Google Ads – a keywordapproach Keyword (As-required activity) Search results based on keyword used  Keyword contextual approach  Users presented with results that contain keywords (s)hespecified  Ads relevant to those keywords show up
  9. 9. Google Ads - Example Say, GM has a special deal running on SUVs So GM can buy Google ads around words like “SUV” etc. An interested user searches for “best deals on SUVs” or similar terms GM’s ads show up, for this interested
  10. 10. Google ads – how they showup Ads
  11. 11. FacebookAds – a Profileapproach Profile Info (One time activity) Relevant Ads based on user info  Profile contextual approach  Users presented with ads based on their interests as mentioned on their profiles
  12. 12. Facebook Ads - Example A Facebook user lists “Hybrid Cars” as one of his/her interests In addition, the user also specifies his/her other details such as age, education, location etc. in the profile details Now if GM is launching a new hybrid, and wants to showcase it to interested users, GM can choose relevant profiles and put Facebook ads for the
  13. 13. Targetting Profiles onFacebook
  14. 14. Hence, it’s all about “where” inthe buying journey, is theconsumer? to reach a Hybrid Car  If GM wanted enthusiast to make him aware of their new hybrid launch, Facebook would have been a perfect tool – all about bringing the brand into the consideration framework of the buyer On the other hand, if GM wanted to reach a buyer, close to deciding on purchase, and looking for deals, then Google would have been better – a point-of-sale kind of approach
  15. 15. So what do we understandthen? GM is still investing into content, community, engagements etc. on Facebook: foolhardy for any brand to ignore Facebook In order to get a consumer to purchase, a brand needs to get into consideration set; Facebookads work well for that purpose While search is transactional interest, one’s profile is more permanent; so to reach a target audience with a certain profile, is almost a must-have for brands - Facebook works perfectly for that In short, no panic for Facebook or for Facebook investors, due to the isolated GM decision
  16. 16. Facebook ads clarfications What was discussed so far was a simplistic use of Facebook ads – other options exist too Many brands use Facebook ads to build a community for the brand (“likes” on the Facebook brand page); once in place, the brand can keep communicating to them at no cost! Subtler ad options from Facebook, e.g. Sponsored Stories, say. Combines benefits of ads and a testimonial from known source! Facebook ad options also, to reach a brand’s own community in a more impactful manner
  17. 17. Conclusion More and more brands are investing increasing amount of time and budgets on their Facebook presence and reaping benefits, too Itwill not be surprising if General Motors comes back to advertising of Facebookbythe end of this
  18. 18. THANK YOUSanjay Mehta (Twitter: @sm63)Joint CEO, Social WavelengthMumbai, India.

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