On May 16th, The Wall Street Journal reported that General Motors would stop advertising on Facebook since the auto maker felt that advertising didn’t have a major impact on auto purchases. GM’s CMO Joel Ewanick said that “GM is definitely reassessing our advertising on Facebook, although the content is effective and important.”

In a meeting during the Cannes Lions International Festival of Creativity in June, Mr. Ewanick and Facebook’s Head of Sales Carolyn Everson discussed that Facebook would be willing to provide GM with better data on how its ads could be more effective at producing auto sales, but GM said that it would only return to Facebook advertising if Facebook could better prove the effectiveness of its advertising.

Ford’s Strategy

In contrast, Ford Motor Company’s Head of Social Media Scott Monty was quoted in AdAge saying “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.”

In addition, Ford’s CMO James Farley said it’s a mistake to equate interactions on Facebook with direct sales since the social site also improves Ford’s image among buyers and builds advocates for its brand. He reinforced the importance of engagement through Facebook, saying that “this interaction and engagement [on Facebook] is something that you don’t necessarily see in traditional media. That’s why we continue to accelerate our digital advertising investment to more than 25% of our media dollars.”

Industry Thoughts

Auto makers such as Subaru and Kia currently advertise on Facebook; they plan to spend more next year if they see a return. Dean Evans, Chief Marketing Officer of Subaru, said that he is happy with the return Subaru’s ads have had so far. In contrast, Nissan said that the majority of its spending on Facebook is for content, not advertising.

Rex Briggs, CEO of marketing analytics firm Marketing Evolution, Inc., works with auto manufacturers including Honda on evaluating return on investment in social media campaigns. Mr. Briggs was quoted in The Wall Street Journal saying that “auto makers can’t afford to ignore the tools that can help improve people’s feelings toward a brand.”

Facebook’s Answer

Facebook has addressed its advertising effectiveness by creating a program to work with the measurement teams of its clients to track advertising effectiveness, including metrics such as a sales result or sentiment. In addition, Facebook has aligned itself as a branding advertising tool instead of a direct response tool.

Facebook has stressed marketers should see value in the site for “resonance” with its users instead of click-through rates. Brad Smallwood, Facebook’s head of measurement and insights, said that, “TV kind of operates in the same way, and we’re trying to demonstrate that the same measures that are moving through TV are moving through online in general, but specifically on Facebook.”

Domus Mission – Provide Superior ROI

Domus’ mission is to provide clients with a superior return on their marketing investment. Domus advises clients on marketing communications strategy, including social media, and provides measurement and reporting to evaluate effectiveness.

Ed Samide is a Senior Account Manager at Domus, Inc., a marketing communications agency based in Philadelphia. For more information, visit http://www.domusinc.com. For new business inquiries, please contact CEO and founder of Domus, Inc. Betty Tuppeny at betty.tuppeny@domusinc.com or 215-772-2805.