GM’s Very Tiny Facebook Gesture

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The press made a great deal of noise about General Motors Co.’s (NYSE: GM) decision to test Facebook Inc. (NASDAQ: FB) as an advertising medium. When the car company walked away from the social media giant more than a year ago, it was viewed as a sign of the ineffectiveness of Facebook as a marketing tool. The decision had little meaning at all. GM’s ad commitment a year ago was $10 million, and its new test is probably for a sum much less than that.

Facebook’s revenue in 2012 was $5.1 billion. Some analysts expect that number to move about $7 billion this year. According to research by Business Insider, the largest advertisers on Facebook spend many, many times what GM spent, even when its investment was $10 million. These marketers include AT&T Inc. (NYSE: T), Procter & Gamble Co. (NYSE: PG), American Express Co. (NYSE: AXP) and Wal-Mart Stores Inc. (NYSE: WMT). Either GM is behind the curve in its adoption of social networks as an effective ad tool, or car marketing does not work as well on Facebook as marketing for consumer goods, retail and credit cards.

GM’s budget for Facebook never made any difference to the social network’s success, any more than if a large advertiser did not use newspapers, radio or television. Big corporations have reasons why they think one medium works better than another, depending on the message the want to send, the creative execution they use and their demographic targets. If GM wants to adopt Facebook as a medium, it may be as much because it has decided that, for some products, during some periods, social networks are more effective than, say, TV.

Just as marketers move from television to print, to online banner ads, to social media, an investment in Facebook as a marketing medium may have no more relevance than the fickle nature of how companies sell products and services.

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