GM Was Wrong About Facebook Ads

Remember when General Motors said that Facebook ads don’t pay off and pulled all its ads off of the social media site?  Well, it seems most companies would disagree with their philosophy.  According to a survey conducted by AdAge last month, about 74% of the 1,200 respondents said their Facebook budgets now include outlays on Facebook ads, up from 62% in January 2012.

The reason for the increase?  Facebook ads work.  According to the survey, which was done in conjunction with RBC Capital Markets in August, 43% of respondents reported that their ROI on Facebook had “dramatically” or “somewhat” improved during the last six months and ranked Facebook a close second to Google in order of importance among online advertising sites.

You can’t fault GM for pulling the plug on Facebook ads.  After all, Wall Street also had little faith in the company’s ability to make money from advertising, driving the stock below its IPO price on the second day of trading.  But since its IPO 15 months ago, Facebook stock has recovered, thanks mostly to its mobile ad offerings.

When the company went public in June 2012, Facebook had only just rolled out an advertising service for wireless devices.  But now, mobile is the main driver of Facebook’s revenue growth with 41 percent of ad revenue coming from ads on its mobile news feeds in the second quarter.   Last month, the stock topped the IPO price of $38 and earlier this month surpassed its all-time high.

But don’t say goodbye to Facebook’s desktop ads.  Interestingly, the AdAge survey showed that companies are still seeing strength in desktop ads, with 38% of respondents reporting that ROI of Facebook’s mobile and desktop ads were “about the same.”  The future for Facebook ads look good as well.  In fact,  56% of respondents said that they expected their Facebook ad budgets to increase over the next year.

By the way, GM did return to advertising on Facebook, testing mobile ads for the Chevy Sonic in April, which appear to be working.  Last month, the Chevy Sonic overtook the Nissan Versa and Ford Fiesta in sales, surpassing the 10,000 mark.  Ok, so maybe its not directly related to Facebook ads, but still, you can’t argue with the numbers!