GM's Doing it Wrong: Facebook Marketing Lessons

GM made a huge stink last week when they pulled their $10 million Facebook advertising budget.

They’re doing it wrong. And you can learn some valuable lessons from their mistake:

The Register pointed out that Facebook ads average a .05% click-through rate. Click-through rate is the total number of clicks on an ad, divided by the number of ad views, or impressions. That’s very low, compared to .4% on Google’s Display Network.

But you can purchase ads on both networks on a cost-per-click basis: You only pay if someone actually clicks on the ad. If a GM ad shows up on my Facebook page, and I glance at it but move on, GM doesn’t pay a thing. But I still saw GM’s ad. It’s free display advertising!

There’s no way to pin a value on that glance, but there is a value. If nothing else, GM just occupied attention otherwise available for Toyota.

Managed correctly, Facebook advertising is an unbeatable display ad bargain. GM’s losing a huge branding opportunity.

Social media is earned media. Selling in earned media is a two-step process:

Attract and build an audience over time.Then you sell to that audience.

Facebook ads boost step 1.

GM claims Facebook ads aren’t delivering results. But they’re measuring the wrong results, I’ll bet: They’re looking at clicks, sales and web site traffic. They should be looking at new followers, share of voice, and the quality of the following they build.

You can grow your brand without paid Facebook ads, by posting to your Facebook page. In our tests, 2-4 great posts per day is the minimum effective pace for a major brand. Post less often and your brand shrinks. General Motors posts every 1-2 days, at best. With that pace, and without ads, they can’t grow their brand.

Don’t repeat their mistake: Understand earned media. Your Facebook following is a long-term asset. It’s a community that’s primed for your marketing message. Neglect it and you’ll fail. GM has to either maintain their ad spend (clearly they won’t) or step up their other efforts (hopefully they will). As it stands now, when GM stops their ad campaign, their Facebook page will stagnate.

You can measure the return from earned media on Facebook. Run Facebook-specific offers. GM could run a regional campaign with participating dealers and offer cash back, or free oil changes for 3 years, or similar. See how many people participate. Use the performance of those campaigns over time to track the value of your average Facebook follower.

That’s only part of the value generated, but it’s a start. It lets you sketch out a comparison of ‘good’ versus ‘bad’ ads, content and offers.

Learn to measure earned media performance.

$10 million is a huge Facebook spend. Chances are, GM can optimize it and improve performance, or reduce waste by removing non-performing ads and segments. Instead, they’re chucking the entire budget baby out with the bathwater. If GM applied the budgeting technique to print and television, they’d shut down those campaigns, too.

If you manage a Facebook campaign, you’ll hit a point where you want to turn it off. Don’t. Instead, test, refine and improve. Use Facebook’s amazing segmenting tools to create precisely-targeted ads.

Don’t hack off a limb because of a hangnail. That’s what GM is doing.

Facebook ads represent .5% of GM’s total marketing budget. To be worthwhile, Facebook ads would need to generate 45,000 cars sold. Staggering numbers for you and I, but for a company that sold 9 million cars last year, that’s a totally achievable goal.

My last advice: Don’t shut down an ad spend that’s less than 1% of your budget unless you’re 100% certain it’s a failure. When the stakes are low and the potential high, keep perspective. Bottom line, that’s what GM forgot to do, and it’s going to hurt them a lot more than Facebook in the long run.

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Why the Marketing World Needs More Correlation Research

Do more tweets of a URL lead to higher search rankings on Google? Do longer articles get more shares on Facebook? Do emails that contain images have lower open rates?

These, and hundreds of other questions marketers are constantly asking, can be answered mathematically through correlation data. Yet, it seems there's an unfortunate bias against correlations, specifically in the SEO community. Part of this has to do with the well-known maxim "correlation is not causation." This is eminently true.

However, I LOVE to know correlation, even when it's wholly disconnected from causation, and I'm surprised more marketers rail against the acquisition of this knowledge. After all, we constantly use correlation-based observations in our everyday lives, scientists use it frequently to discover potential hypotheses and put forward experiments to test them. 

For example, I personally care less about what Google actually uses as ranking elements in their massive algorithm than on what kinds of sites and pages tend to perform well. To my mind, it's much more fascinating to learn, that, for example, stories that appear in the Google News results are much more likely to have images originally sourced by the news publisher than it would be to find out that the algorithm uses an exponential decay factor on freshness based on inputs from a certain set of trusted account usage. The former is actionable; the latter much less so.

We can apply this to email outreach, public relations, talks at conferences, conversion rate optimization (a practice based almost entirely on correlation), and virtually any other quantifiable practice in our work.

Here are just a few examples of great work in the field of marketing that leverage correlation data:

I fail to understand why this work is criticized as being "just correlation; doesn't mean anything" rather than embraced as "awesome; new correlation data on which to form testable hypotheses." Yes - correlation does not imply causation. But it does show a relationship, and those relationships can form the basis of guesses and tests. I find it challenging to argue why this work should not be done and shared, yet the bias is clearly out there.

Of course, there's always the danger of presenting correlation research which is then misinterpreted or misused, as the folks from PHDComics brilliantly illustrated below:

But, I'd rather risk some misunderstanding and have the data available than not investigate the connections between things in the marketing world out of fear. 

Here's just a few ideas for correlation-based research that I'd love to see someone put together:

Correlation between a topic/phrase/brand trending on Twitter and search volume spiking on GoogleCorrelation between Facebook shares, Tweets and Google+ shares for URLs across various industries (where are some networks potentially stronger/weaker, what are the outliers, etc)Correlation between amount of funding and revenue/growth/success across industries (think this would be fascinating to entrepreneurs)Correlation between types of share buttons used on a website and quantity of shares receivedCorrelation between # of email subscribers to an RSS feed and the rankings / social shares of that feed's contentCorrelation between search rankings and RSS feed inclusion overall (do URLs that are included in feeds tend to perform better than those that aren't?)Correlation between sentiment (positive, negative, neutral) of content on various sites and their success in social mediaCorrelation between social shares and trafficCorrelation between Klout score and traffic driven to URLs shared (to see if Klout lines up with how much traffic that person's tweets/shares drive)

If you or your team feel confident, capable, and excited about potentially doing this work but need some funding or publishing support, we'd love to talk. Just drop me an email (rand followed by the @ and seomoz dot org).

p.s. Check out Dr. Pete's excellent "Mathographic" on correlation vs. causation to learn more about the difference and the nuances.

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