GM is being Naive

GM recently pulled its $12M advertising campaign from Facebook because it was not effective.
LINK

My question — effective at what?

Let’s give the multi-billion dollar company (GM, not Facebook) the benefit of the doubt and say that they may be pulling back the reigns in order to reassess the situation and goals of their campaigns, despite public reports to the contrary.

And then let’s look at the reason why they were misinformed to begin with. Branding vs. Advertising and their respective goals.

My definitions – (may not be textbook)

Branding – this involves “getting your name out there” so when you are in the mind of the consumer when they make a purchase. Examples of this are billboards, events, charity and FACEBOOK.

Advertising – this involves the actual end result of a purchase that is attached to a particular effort

Branding takes a long time to build-up and a short time to fall. That’s why it’s easier for an existing brand to launch a new product and a new brand, even with a better product has a steeper climb to the same point.

Each level of branding has a different impact and results should be measured differently as well.

A recent discussion about a business that was paying over $5000/month for billboards and swore by that business model, took down the billboards for a test — and their sales did not drop. The following month, they put that money towards direct advertising and saw an increase in sales — actual ROI.

Over time, the assumption is that the branding from the billboards does impact business, especially in a crowded market with a lot of advertisers. But the goals should be different. ROI should not be counted when it comes to branding.

Advertising on the other hand has a direct impact on sales. Send out x number of emails, postcards, etc. and expect a certain response and a certain dollar return. It’s tangible, quantitative and often times repeatable.

Advertising has a cause and effect that is on a much shorter time-frame. Send out a coupon, people use it within 45 days or never will.

So where did GM go wrong (assuming they did)?

They wanted to Facebook advertising to lead to car sales. For a brand as big as GM, the goal should have been BRANDING of their models, features, pricing, etc. and leaving it up to the local dealers to spend their money and determine their tangible ROI which would be much higher based on hyper-local advertising and call to actions that Facebook advertising could create.

While the $12M advertising spend is a minimal amount to GM, the negative impact on Facebook leading up to their IPO has been large with people raising lots of questions about their long-term prospects as an advertising medium. But that’s another story. (LINK)

When considering your overall marketing, a certain amount of money must be spent in both Branding and Advertising — and your goals must be relative to the expectations and definitions of each.

Got questions? Ask away… it’s not all about ROI.

UPDATE: GM says that it spends $30M on Marketing and $10M on Advertising on Facebook. It is pulling the $10M but says it is re-evaluating and believes in social marketing.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s