www.businessinsider.com - 1 year ago

It's Not Just GM That Thinks Facebook Ads Don't Work--Others Say Facebook Is "Getting Worse, Not Better"

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On the eve of the Facebook IP), the country's third-biggest advertiser, GM, announced that it was pulling its entire $10 million ad campaign from Facebook because the ads don't work.

This was obviously bad news for a company that many people still think will one day be bigger than Google.

GM's competitor, Ford, quickly responded by blaming GM, saying that its own Facebook ads work perfectly well.

But other huge companies also appear to be having serious doubts about the value of the Facebook platform.

Forrester analyst Nate Elliott has this to say:

One global consumer goods company told us recently that Facebook was getting worse, rather than better, at helping marketers succeed. And companies in industries from consumer electronics to financial services tell us they’re no longer sure Facebook is the best place to dedicate their social marketing budget – a shocking fact given the site’s dominance among users.

Elliott attributes this disappointment to Facebook's lack of innovation on the marketing side as opposed to the user side.

As Facebook CEO Mark Zuckerberg has made crystal clear, he cares about the company's social mission more than the company's business. This means that the company's paying clients will always play second fiddle. And, according to GM and the marketers that Forrester is talking to, this also appears to mean that interest in Facebook as an advertising platform may begin to wane.

Elliott also makes another disturbing point: That Facebook's big new ad product rollout of a couple of months ago hasn't made much of an impact:

But as good as Facebook has been at evolving to serve consumers, that’s how bad it’s been at serving marketers. In the past five years Facebook has lurched from one advertising model to another. Remember when the site charged marketers to host branded pages? Or when every page featured banners from MSN’s ad network? (You may choose forget Facebook Beacon; Mark Zuckerberg would certainly prefer you did.)

Somehow Facebook still hasn’t stumbled upon a model that’s proven consistently successful for marketers, or that brings in the massive revenues to match the site’s massive user base. (The company made less than $4 in ad revenue per active user in 2011.) And its latest ‘big marketing announcement’ in February turned out to be mostly a tiny evolution of its existing ad model. At the same time, Facebook often stands directly in the way of marketers’ efforts to measure the performance of their programs.

Meanwhile, BI's advertising editor Jim Edwards has laid out a "nightmare scenario" in which other big advertisers begin to yank their budgets from Facebook, choosing instead to use the company's free tools to interact with their customers. (This is what GM is doing).

All in, quite discouraging for a company that will go public with a valuation of more than $100 billion.

SEE ALSO: Ford Says GM's Facebook Ads Don't Work Because GM Sucks--Ford's Work Fine

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