GM’s Shifting Social Media Strategy: Is Dropping Facebook Ads a Smart Move?

The news that GM has decided to stop using paid Facebook advertising has created a big buzz. If the nation’s third largest advertiser isn’t getting enough bang for their buck from Facebook ads, the conversation goes, what does that mean for the rest of us?

GM reportedly spends approximately $40 million on Facebook. 75% of that investment is devoted to monitoring and maintaining GM’s Facebook presence, through the organization’s Facebook page. The remaining 25%, $10 million dollars, was going toward paid advertising.

Coming days before Facebook’s IPO, this announcement has left many people wondering if the social networking site’s financial model has a fatal flaw. Revenue projections based on increasing revenue from advertising may not bear fruit if dominant organizations—or those organizations that look to dominant organizations as a guide to their own marketing strategies—decide that the advertising on Facebook just isn’t worth it.

Should other organizations follow GM’s lead? Should Facebook advertising be abandoned? Should organizations focus exclusive on direct engagement with users on the organization’s Facebook page? Do those efforts even pay off, or will we see GM eventually pulling back from their $30 million dollar commitment?

Customers First: Brand Modeling to Make Smart Social Media Choices

If you read Customers First (or even one of our earlier books, like The Power of Cult Branding) you’ll see that successful companies gain their dominant market position by focusing intensely and exclusively on understanding their best customers. Developing a comprehensive, holistic view of who a brand’s customers are, with a special focus on the unconscious psychological factors that motivate their decision making, makes it possible to predict, with a high degree of certainty,  a patterns of customer preferences.

Knowing these preferences makes it easier for marketers to create marketing that will really resonate with their customers. It also helps them identify the best mix of marketing vehicles for their brand.  We call the process of identifying those preferences and deriving actionable information Brand Modeling. Put the right message in the right place is the first rule of marketing.

Customers aren’t shy.  They’ll happily tell you what they think about almost anything you ask, especially if you have established a relationship where your customers feel actively engaged with your brand. That’s why we think GM is making a really smart decision with their commitment to a content-heavy, high-touch approach to Facebook engagement.

To fully realize the potential of social media, it’s essential to focus on listening as much as—even more than—you talk. One of the best ways to develop a deeper understanding of your customer base is to listen to what people say when they tell you about themselves.  To do this in the most efficient manner, it helps to be equipped with the analytical tools necessary to derive meaning from conversation.

GM used their Facebook page to survey their fans directly about their Facebook usage and preferences. The data revealed from that conversation surely played a critical role in the decision to pull the plug on Facebook advertising.

Today, it’s the company that listens closely to its best customers’ wants and needs that wins. For GM, that means dropping Facebook advertising. For another organization, it may mean a more enthusiastic embrace of Facebook advertising. Your Brand Model will help you make the right choices for your organization. That’s the power of putting Customers First.