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What does GM's decision mean for Facebook advertisers?

General Motors Facebook Advertising DecisionEveryone is talking about GM’s decision yesterday to stop paid advertising on Facebook. It was indeed one of the very first questions asked to our CEO Clara Shih this morning during her appearance on CBNC Squawk.
While many were quick to interpret this as a sign of Facebook’s limitations, it actually highlights the need to treat Facebook as a very different marketing channel than traditional online strategies like SEO or SEM.
With half the US population on Facebook, advertisers cannot ignore the opportunity to connect and engage with customers on this network. It’s not about whether or not to advertise on Facebook, but how to do it effectively. Here’s what every Facebook advertiser needs to consider before following in GM’s footsteps.
Facebook ads fuel brand awareness
Facebook ads are really “top-of-funnel” brand ads, but their performance is often compared to “bottom-of-funnel” search advertising, such as Google AdWords. Marketers can target ads based on specific keywords and phrases a user searches on. The fact that the user is searching on these words generally indicates intent to purchase.
In contrast, Facebook ads are more on par with awareness-generating brand advertising such as TV, print, and display ads. But Facebook is able to go further than traditional brand advertising because of the hyper-targeting capabilities it offers advertisers. For example, marketers can run CPC or CPM campaigns based on very narrow audience profiles, such as 25-28 year-old females who have “liked” BMW. This is what allows Facebook ads to have any conversion at all, something that traditional brand advertising generally cannot do.
But Facebook doesn’t always have to be about brand and awareness building. The future of Facebook’s advertising platform will likely expand into the lower part of the marketing funnel, such as with social search ads or even at the point of transaction with social e-commerce.
As our CEO Clara Shih points out in her recent article in the Huffington Post, “Facebook could also partner or compete head-on with traditional offline channels such as TV, digital dashboards in automobiles, and smart billboards enabled with near field communication that tailor their displays to whomever may be nearby.”
Brand ads drive valuable engagement
In a study of Facebook Pages with over 100,000 fans, Audi was determined to be the most engaging brand on Facebook (an unexpected victory over Justin Bieber and Lady Gaga). Cars are a part of our cultural DNA. Automotive brands have a high social currency, and people love to share information about their cars during their everyday lives.  It’s no wonder customers want to take that passion and enthusiasm online to Facebook and readily share it with their friends.
An effective way to use Facebook to capitalize on the social nature of the automotive business is to use Facebook Sponsored Stories and Reach Generator. Typically, only about 16% of any brand’s fans will see a post, photo, or video posted from their corporate page. Sponsored Stories allow brands to pay to ensure the ad is seen by at least 75% of fans who have already “liked” the page.  One study showed an increase in click-through-rates (CTR) by 46% for advertisers using Sponsored Stories.
Pave the way to success
Brands need to engage with their customers on Facebook, but doing this well isn’t easy. Hypertargeting for awareness generation, message amplification through Sponsored Stories, and relationship building at the local level will help ensure Facebook continues to drive results for advertisers.
To learn more about advertising on Facebook and what the Facebook IPO means for marketers, watch Clara’s interview on CNBC below:

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