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?
May 18th, 2012 at 3:11 pm
I would argue that Google has a similar project with AdWords Express (and even general AdWords) vs. Places. That is why they were making quite a few changes to the way Google Places results display on the search results page, to make them less prominent and less click-able.
May 18th, 2012 at 3:29 pm
Yes.
May 21st, 2012 at 1:14 pm
[...] or Finra, is at an early stage, the person said.Does Facebook Have a ‘Yelp Problem’? (ScreenWerk) Yelp is en effective — even critical — promotional tool for local businesses. Yet the company [...]
May 21st, 2012 at 1:54 pm
“Why buy the cow when you can get the milk for free?”
I love it.
I think it might be the corollary to
“Why buy a dog and bark yourself.”
S
May 21st, 2012 at 5:22 pm
The problem is worse that a “Yelp” problem IMO – at least with Yelp the “ads” are aligned with user intent. FB, not at all. Plus, Yelp’s ad model works on mobile. FB’s does not.
May 21st, 2012 at 7:05 pm
Malcolm:
Take a look at this and let me know if any of these ideas have merit in your mind: http://internet2go.net/news/ad-networks/how-will-facebook-monetize-mobile
May 22nd, 2012 at 2:06 am
Another possibility is that Facebook just doesn’t generate hits/sales, free or otherwise for GM. See http://www.thejournal.ie/readme/column-i-put-my-family-business-on-facebook-here’s-what-happened/ . Without GM discussing what performance they see from the ‘free’ pages, we don’t know if they are ‘getting the milk for free’, or simply not deriving benefit from being with Facebook at all.
May 22nd, 2012 at 4:10 am
Another possibility is that Facebook Pages are good for CRM and loyalty functions but not good for acquisition — period.