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Facebook ad spending continues despite big exits

Some companies are moving away from paid ads, but most look to Facebook’s youthful audience to close their accounts.

General Motors made headlines this spring when it announced it would stop paying for ads on Facebook. The news fueled discussion in mainstream media and blogs: Were companies ready to abandon the popular social media network?

American Apparel, the largest garment manufacturer in North America, also reduced its Facebook ad spending. But it was a gradual decline over 18 months rather than the immediate exit made by General Motors. Ryan Holiday, director of marketing for the Los Angeles-based company, said he had slowly cut ad spending from $1 million a year to a few thousand dollars each month.

Holiday cited several factors in the decision to spend less on Facebook advertising. The most notable reason was drastically smaller advertisements on Facebook, which limited how creative companies could be pitching their brands and threatened return on investment.

The real attraction: Facebook’s youthful users

While some companies are reducing their Facebook ad spending, they are still investing heavily in the social networking site as a communication platform. For instance, despite a drastic scaleback in Facebook paid advertising, American Apparel still invests energy and time to have a social presence on the site and communicate with more than 900,000 fans.

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The main draw to Facebook is its users’ age demographic. American Apparel’s clothing line, for example, is popular with tweens and metropolitan adults (ages 30 to 39) and these target customers are highly engaged in social media. Holiday said there is no better platform than Facebook to communicate a message to customers.

Generations Federal Credit Union, a midsize credit union in San Antonio, uses Facebook for engagement, brand awareness and to provide financial education to young people.

Wendy Bryant-Beswick, Generations' vice president of marketing and business development, said Facebook is an excellent platform on which to target and engage young people and customers in the 30-to-39-year-old age bracket.

“We feel that Facebook is a great forum to educate our audience, not just existing members but hopefully new members that are part of our community. What we like most about Facebook is that our existing members can actively engage with us,” she said.

Justin Flitter, co-founder of FLITTER, a studio for social Web based in New Zealand, considers the businesses moving away from Facebook as those that have failed to harness advertising and connect with customers on the site.

“[Facebook advertising] remains -- and will do for some time -- the most significant opportunity for brands to engage customers and fans who spend time on Facebook,” he said.

Aiming for a Facebook social ad strategy

The best approach, according to companies that have had success on Facebook, is to engage customers on the site itself rather than have them leave and do business on another site.

Kate Eidam, account manager for Airfoil Public Relations in Southfield, Mich., works on the agency’s own social strategy, and helps clients manage their social presence. She believes success on Facebook comes from participation. Her favorite strategy is to provide Facebook fans with content that can be shared -- such as videos and images -- because it is the social experience customers expect.

“When you look at your own Facebook timeline, what pops up is the sharable content. Companies need to leverage this social expectation of sharable content around the brand,” Eidam said.

Holiday agreed that Facebook users prefer images, videos and updates over outbound links, and said American Apparel has seen success with this strategy.

Earlier this year, the retailer sent a sweatshirt to Boo -- a dog with a Facebook page and eight million fans. A picture of Boo wearing the garment was posted on Facebook and made social waves, resulting in more than 30,000 “likes.”

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