Last week the auto industry ignited a debate around the effectiveness of Facebook advertising. Days before Facebook’s IPO, General Motors announced plans that it was “reassessing” its spending on Facebook advertising, a $10 million yearly investment. Instead, it will only use Facebook Pages. Ford, on the other hand, announced its plans to not only invest in Facebook ads but also accelerate ad spending to support its Facebook engagement efforts through Pages.

Two Views, One Industry

GM’s move was sparked by its regular adjustments in ad spending. “This is a regular part of business, and it’s not unusual for us to move our spending around various media, especially considering growth of digital and social outlets,” stated GM spokesman Tom Henderson. In other words, GM evaluated the return they were seeing from Facebook ads and determined the weren’t worth the cost.

Ford feels otherwise as Scott Monty, Ford’s head of social media, stated 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.”

So what is the right answer? Should marketers invest in Facebook advertising?

The Role of Facebook Ads

Facebook ads are engagement drivers. They should not be used to drive direct response. GM wanted Facebook ads to increase car sales. That’s not a role Facebook ads can or should play, so GM was right in pulling its ads if that’s what it was looking for.

Instead, Facebook ads can be used to:

Build a network of advocates: Use Facebook ads to build a community on a Facebook Page that the brand can reengage time and time again. Facebook ads are the spark to the community, but the Page offers content to fuel the fire.
Amplify advocacy: Facebook ads can amplify the advocacy of fans when they take actions like liking a brand Page or sharing branded content. Ads allow those actions to receive higher prominence in News Feeds of friends, influencing them and contributing to community growth.
Promote Initiatives Where Users Are: With users spending more time on Facebook than any other site (53 billion minutes per month), Facebook ads offer high impact moments to increase engagement and education around key brand initiatives.

In other words, Facebook ads are best used when driving fan acquisition and driving engagement, not conversions and sales. They need to be part of a holistic Facebook presence.

A successful brand presence on Facebook is a combination of paid, owned and earned channels. Paid Facebook ads give marketers the ability to grow communities, while owned properties (Facebook Pages) offer the ability to spark engagement and generate earned impressions as user activity displays in friends of fans’ News Feeds. Success is contingent on all three areas working together, not living in individual silos.

GM plans to continue using Facebook Pages to leverage the social network, but Facebook has made this pretty difficult for brands to do successfully. On average, less than 16% of a brand’s fans actually see content from the Facebook Page when it is posted. Facebook advertising allows brands to boost the reach of those posts through a paid feature called Reach Generator. With GM only using portion of what Facebook offers, it shouldn’t expect the engagement it was seeing previously.

Facebook’s taken a stand, and it isn’t just telling brands that paid advertising is a best practice. It’s practically mandating it if a brand wants to truly unlock the full potential of a Facebook presence, and as users continue to create user profiles and prove brand value, marketers are hard pressed to go another direction.

Facebook Can’t Be Ignored

Facebook’s built an incredibly powerful platform, and for now, most marketers can’t ignore it.

Facebook fans are more likely to purchase, consider and recommend brands (Forrester) with Fans generating 2x higher sales than non-fans (comScore).
Sponsored Stories increase ad recall by 50% (Nielsen).
Facebook offers 90% narrow targeting capability vs. industry average of 35% (Nielsen)
Facebook fans are more likely to recommend a brand than non-fans as a Facebook Page provides a powerful channel to influence conversations and drive word of mouth (Forrester).

Using Facebook Ads Effectively

Every brand is different. GM is still working on its bailout comeback and is targeting $2 billion in marketing expense reductions over the next 5 years, and cutting $10 million in Facebook ads as well as announcing that it will not advertise in the 2013 Super Bowl puts it on its way. Facebook wasn’t delivering the direct sales lift GM was looking for, and that shouldn’t come as a surprise. That’s not where Facebook ads excel.

Ford is seeing the benefits because it’s focused on what Facebook ads do well, build community and develop brands by closely targeting users who are likely to connect and share Ford content. Facebook ads aren’t in a silo for Ford. They’re part of an ecosystem that leverages paid, earned and owned marketing efforts. Facebook offers categories with long purchase cycles ,like the auto industry, the ability to keep engagement going before, during and after purchase, instead of only focusing on immediate calls to action, which is where Ford sees the benefit.

Brands that want to truly leverage Facebook need to incorporate a paid, owned and earned approach. This means using paid ads to fuel community participation to drive engagement that’s then shared across the social network. Each piece builds upon the other, and neither stands on its own.

GM claimed that Facebook ads weren’t delivering results, and that’s because they were expecting the wrong things (e.g., clicks, web site traffic and sales). Ford, on the other hand, is focusing on what Facebook ads can deliver (e.g., new fans, higher engagement, etc.).

Paid, Owned and Earned Success Stories

Ben and Jerry’s:

Increased sales in a slow period for ice cream without running other programs
Saw a 4X increase in reach to 98% of all fans during a 28 day period
Experienced a 3 point increase in brand favorability
Received a 2x increase in engagement

Burberry:

Saw over 500,000 Burberry Body Samples sent out via Facebook
Experienced a 96% increase in fragrance sales
Acquired 6 million fans in 2011

Dr. Pepper:

Reached 83% of all US fans in a 28 day period
Increased People Talking About This by 140%
Increased engagement by 80%

Social media dominated all aspects of the news this week as a little start-up by the name of Facebook made it's stock market debut. Twitter also made news with an email digest. There's a lot to cover, and we hit what you need to know on the latest episode of Brave Ad World.

This week’s headlines: Twitter Launches Email Digest, The Auto Industry Raises Questions around Facebook Ads, and Facebook’s IPOs and Makes Another Acquisition.

The week’s news quick hits cover: Facebook’s Mobile News Feed Gets More Timeline Updates, Apple Working on Photo-Sharing iCloud Feature, Google Makes Significant Changes by Bringing the Knowledge Graph to Search, Facebook Tests Promoted User Posts and Twitter Joins ‘Do Not Track.’

You can find the podcast on iTunes or you can visit the podcast section to subscribe through your preferred podcast player.

However you choose to listen, let us know what you think! Leave a review, contact us on Twitter or send us an email to braveadworld [at] gmail [dot] com.

The Auto Industry: Two Views on Facebook Ads

Brave Ad World - Episode 68