Yelp is en effective — even critical — promotional tool for local businesses. Yet the company must overcome the perception that a free account is sufficient and that paid advertising has distinct benefits beyond an enhanced profile on the site.
For several years Yelp has been making that tough case to SMBs, with some success. Now it appears that Facebook has a similar problem: its free Pages may be effective enough for companies to enable them to shun paid ads. (Mobile may become another matter.)
This free vs. paid tension partly explains, according to Reuters, why GM declined to renew its $10 million Facebook Ads budget:
GM’s decision followed Facebook officials’ failure to convince top marketing executives at the U.S. automaker of the benefits of Facebook’s paid ads at a meeting that took place in the past few weeks, people familiar with the meeting said on Thursday.
That was after Facebook officials focused more on touting the social networking website’s free pages, the sources said.
In other words, the paid ads on Facebook were not sufficiently more effective than free Pages to justify the continued ad spending. And Pages help with Google SEO. The same cannot be said of ads; there’s no secondary benefit.
Indeed, while GM is pulling its advertising budget from Facebook it’s not getting rid of its Pages. Why buy the cow when you can get the milk for free?