General Motors’ decision this week to pull its Facebook advertising is inconsequential in the overall scheme of its mammoth advertising/marketing budget. It has been reported that GM’s Facebook budget is $10 million of its nearly $2 billion spend in 2011.
However, coming in the same week as the Facebook IPO, it is certainly grabbing people’s attention. Even more important than what the event says about Facebook’s future earning power or profitability, and what that might mean for its record setting IPO, is the comment GM made about doubling down on the social aspects of its Facebook engagement. Even though the company no longer plans to pay for Facebook advertising, it does fully intend to maintain an active presence on the social network and to continue to engage with its 378,000 customers.
This reinforces a theme that PulsePoint Group has lived by since our inception. Namely: you just can’t buy social engagement. If General Motors wants to maintain an active relationship with customers through social media, it will need to demonstrate an excellent ability to listen, but more importantly, it must deliver value in its engagement with customers to attract and retain them. According to our latest research (The Economics of the Socially Engaged Enterprise), that would include asking them for their ideas on how to improve products and services.
This is not the end of Facebook advertising. Many believe this is just the beginning, and we do find that there is a place for social advertising combined with active social engagement. Neither can ride solo and scale to the levels that megabrands, like GM, need to justify their investment.