DETROIT -

As the social media site prepares to sell shares in an initial public offering this Friday, one OEM made an interesting move and shared its plans to pull its paid ads from Facebook, noting the exposure has “little impact on consumers’ car purchases." The automaker? General Motors, which told the Wall Street Journal this week that it plans to stop all advertising with Facebook.

In light of this news, Auto Remarketing sought out to examine the role of the social-media giant at the dealership level. Though some OEMs are questioning the effectiveness of advertising on Facebook, does the social media site play an important role in the dealer-consumer relationship?

Though there are mixed views on whether advertising on the site or hosting a business page will help increase sales for a rooftop, one thing most can agree on: it is a modern reputation tool that must be recognized.

In fact, marketing company Digital Air Strike just released its 2012 Automotive Dealership Social Media and Online Reputation Study, which the company contends shows that “automotive dealerships need to increase engagement engage with car shoppers on social networks and review sites during the car buying process, as the study shows the importance placed on these networks by consumers.”

The study measured usage trends on Facebook, Twitter and Google+ while identifying the top four dealership review sites, based on consumer use and traffic, the company noted, and surveyed 275 car buyers who purchased a vehicle in the last six months.

Interestingly, it was found that the majority of car buyers utilize social media sites during the car purchase process. In fact, 69 percent of consumers said social media sites helped their vehicle purchase decision, and 68 percent of car shoppers said that dealership reviews impacted which dealership they visited when shopping for a vehicle, the study showed.

And reaffirming that the site can be utilized as a reputation tool, 50 percent of consumers said that reading reviews affirmed their original choice of dealership, and 18 percent of consumers said they either selected a dealership based on the reviews they read or changed their choice of dealership after reading reviews on multiple dealerships.

And the company’s dealership audit — which included 600 retailers across the U.S. — compared engagement levels from 300 dealerships that managed their social media marketing "in-house" and 300 dealerships that used a social media vendor to manage their social media sites and online reputation, officials explained.

And after viewings the study’s findings, the company contends dealers who handle their social media presence in-house are not “effectively leveraging” the communications channel.

For example, 90 percent of the auto dealerships that manage social media marketing in-house did not respond to negative online reviews, and 95 percent did not respond to positive reviews.

This could perhaps be detrimental, since the study also showed that the majority of consumers took stock in reviews while making their vehicle purchase decision.

Moreover, the company found that dealers using social media partners had more than double the number of followers on the top two social media sites: Dealers managing Facebook in-house averaged 350 "likers" as compared to 770 "likers" for dealers that worked with a social media partner, according to the study.

Commenting on the study, Alexi Venneri, co-founder, chief marketing officer and chief operating officer-social media of Digital Air Strike, said, "This ground-breaking study highlights the importance of social networks and review sites in the car buying process.

"Dealers who work with a social media partner can gain a significant advantage from increases in consumer engagement and related website traffic,” he added.

Keeping Sales out of Social Media

On the other hand, though social media sites like Facebook have sparked quite a buzz in the industry, with dealership business pages popping up all over the Web, this particular digital tool may not be helping dealerships as much as they think, according to a recent study by AutoTrader.com.

The site recently explained to Auto Remarketing that it conducted the survey that studied how consumers use social media to increase understanding among new- and used-car dealers.

And according to the study results, only 7 percent of used-car buyers use Facebook to shop for a car, and 14 percent of new-car buyers use the site while in the market for a vehicle.

“While Facebook benefits from a broad reach into the marketplace, the critical question is whether or not car shoppers are actually using Facebook to make decisions about what car to buy and who to buy it from," Jeff Perkins, director of customer marketing at AutoTrader.com told Auto Remarketing.

"The answer to that question is ‘few’ – with only 7 percent of used and 14 percent of new buyers online claiming to have used Facebook in any way related to their car-shopping process. So, while there are probably a lot of car shoppers on Facebook, our research shows that they are not using Facebook to shop,” he continued.

Perkins also discussed why these numbers are so low.

“So, why aren’t people using Facebook to shop? Well, that’s not what Facebook is designed for. The site is designed to help people connect with friends and relatives. It’s really not conducive to commerce. That’s why there are so few examples of companies in any industry that have had success selling products on Facebook,” Perkins further stressed.

“Our survey showed that buyers don’t think of Facebook as a place to help them shop for their next vehicle purchase. One survey respondent actually said, ‘Not sure how or why Facebook would help with a vehicle purchase,’ and there are many more verbatim responses from the survey to that effect,” he continued.

AutoTrader also stressed that Facebook posts that focus on sales can, in fact, turn a customer off to a dealership, but things like photos and conversational posts can increase dealer/customer connection.

“We believe that posts that are more focused on selling a product or service will likely be less successful (and could turn people off) than posts that try to engage fans in a conversation or that connect the dealer to the community,” said Perkins.

For more information from AutoTrader.com’s social media study, see the Auto Remarketing story here.

More on GM Move

GM’s decision is of particular interest, as the social media site it striving to convince investors that advertising on the site is worth businesses’ time and money before the IPO at the end of this week.

But GM is not completely done with Facebook. The WSJ reported that the OEM plans to continue to promote its products on Facebook through free business pages, but not through paid advertisments.

This is perhaps some unsettling news for the social media site, as GM spent about $10 million last year to advertise on Facebook, according to officials.

The automaker’s marketing chief, Joel Ewanick, was reported saying, the company "is definitely reassessing our advertising on Facebook, although the content is effective and important."

Why the change of heart? Apparently, GM started to re-evaluate its Facebook strategy earlier this year after its marketing team began to question the effectiveness of the ads, officials explained.

This discontent led to meetings between GM and Facebook earlier this year, but apparently, the OEMs concerns were not calmed.

In a statement, GM said,“We regularly review our overall media spend and make adjustments as needed. This happens as a regular course of business and it’s not unusual for us to move our spending around various media outlets — especially with the growth of multiple social and digital media outlets.

“In terms of Facebook specifically, while we currently do not plan to continue with advertising, we remain committed to an aggressive content strategy through all of our products and brands, as it continues to be a very effective tool for engaging with our customers,” the OEM concluded.