Bloomberg News

GM Said to Be in Talks With Facebook About Resuming Ads

July 03, 2012

General Motors Co. (GM:US), which said it would stop advertising on Facebook Inc. (FB:US) on the eve of the social network’s initial public offering in May, is talking with the site about resuming the ads, two people familiar with the talks said.

Those efforts have included Facebook Chief Operating Officer Sheryl Sandberg talking with GM Chief Executive Officer Dan Akerson, said one of those people who asked not to be named because the discussions are private.

GM said in May it decided to stop advertising on Facebook mid-year after a regular spending review. The Detroit-based automaker spent $10 million on paid ads on Facebook last year, a person familiar with the spending has said. That’s a fraction of the about $1.8 billion GM spent in 2011 on advertising in the U.S., according to Kantar Media.

The automaker is willing to reconsider Facebook if it concludes there’s a proper return on the investment, a person familiar with the discussions said.

GM also decided not to advertise during the National Football League’s Super Bowl championship game next year on CBS. Joel Ewanick, GM chief marketing officer, said the automaker couldn’t justify the expense. GM wants to revamp marketing and save $2 billion over five years. Some of the changes have also included spending in new areas, such as sponsoring the Manchester United Ltd. soccer club.

Carolyn Everson, vice president of global marketing solutions at Facebook, also has met with Ewanick, according to the person familiar with the talks.

Tom Henderson, a GM spokesman, couldn’t immediately be reached for comment after business hours in Detroit. Annie Ta, a spokeswoman for Facebook, declined to comment. The talks were reported earlier by the Wall Street Journal.

Investor Concern

GM’s move to end Facebook advertising highlighted investor concern about the social network.

Facebook, which has fallen 19 percent (FB:US) since its May 18 IPO through yesterday, makes more than 80 percent of its revenue from advertising targeted to members who access the site on computers. In a filing ahead of its IPO, the company said advertising sales growth wasn’t keeping pace with user growth as more people access the site from mobile devices. Facebook didn’t introduce a mobile ad service until this year.

GM rose 5.6 percent, the most since Feb. 16, to $20.67 at the close in New York. Facebook gained 1.4 percent to $31.20.

To contact the reporters on this story: Tim Higgins in Southfield, Michigan at thiggins21@bloomberg.net; Brian Womack in San Francisco at bwomack1@bloomberg.net

To contact the editors responsible for this story: Bill Koenig at wkoenig@bloomberg.net; Tom Giles at tgiles5@bloomberg.net


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Companies Mentioned

  • GM
    (General Motors Co)
    • $35.07 USD
    • -0.67
    • -1.91%
  • FB
    (Facebook Inc)
    • $75.19 USD
    • 0.21
    • 0.28%
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