Bloomberg News

Facebook Wins Back GM as Carmaker Reverses Ads Decision

April 10, 2013

Facebook Inc. CEO Mark Zuckerberg

The reversal shows the headway Facebook Inc. Chief Executive Officer Mark Zuckerberg is making in getting companies to tout wares to people socializing on handheld devices. Photographer: David Paul Morris/Bloomberg

Facebook Inc. (FB:US) won back General Motors Co. (GM:US) as an advertising customer a year after the automaker said it would quit running marketing messages on the world’s largest social-networking service.

The test ads, running on Facebook’s mobile applications and website, will promote the Chevrolet Sonic subcompact car, GM said yesterday in an e-mailed statement. It’s part of a broader GM mobile-marketing effort.

Facebook has been introducing new tools and services to keep users engaged longer and lure advertisers. GM’s decision to end Facebook ads in May heightened investor concerns that other large advertisers would reconsider the website. The reversal shows the headway Chief Executive Officer Mark Zuckerberg is making in getting companies to tout wares to people socializing on handheld devices.

“To Facebook’s credit, I think they also got better about understanding how to better target certain users and to get messages across in that way instead of being just a social network,” Thilo Koslowski, an auto industry analyst with Gartner Inc. based in San Jose, California, said in a telephone interview.

Facebook rose 3.7 percent to $27.57 at the close in New York, bringing the stock’s gain for 2013 to 3.6 percent. GM increased 3.1 percent to $28.37, and has declined 1.6 percent so far this year. By contrast, the Standard & Poor’s 500 Index has gained 11 percent in 2013.

Facebook had made an effort to win back GM’s business with Chief Operating Officer Sheryl Sandberg talking with GM Chief Executive Officer Dan Akerson last year about resuming ads, people familiar with the discussion said at the time.

‘Ongoing Dialogue’

“We’ve had an ongoing dialogue with GM over the last twelve months and are pleased to have them back as an advertiser on Facebook,” Adam Isserlis, a spokesman for Menlo Park, California-based Facebook, said in an e-mailed statement.

Facebook rolled out its mobile-advertising service in March 2012, trying to better monetize the growing number of users accessing the service through wireless devices. More than 60 percent of its 1.1 billion members use the service when they’re on smartphones and tablets, according to a regulatory filing.

By the fourth quarter of last year, mobile generated 23 percent of Facebook’s advertising revenue, up from 14 percent in the third quarter. Still, it lags behind Google Inc. (GOOG:US), which is projected to grab 57 percent of the U.S. market for mobile advertising in 2015, according to researcher EMarketer Inc.

“It shows one thing: Nobody can really ignore Facebook,” Koslowski said. “GM realizes there must be a value proposition for them to go to Facebook.”

Facebook Home

Mobile software introduced this month, called Facebook Home, is designed to make it easier for users to access the social network on smartphones and encourage them to spend more time with the service.

Reviews have been mostly positive, concluding that the software will appeal to users who are already Facebook fans. Walt Mossberg, the technology critic for the Wall Street Journal, called it “easy to use, elegantly designed and addictive,” while singling out the difficulty of using a camera with the software.

Bloomberg’s Rich Jaroslovsky agreed that Facebook Home will appeal to regular users of the social-networking service, though he found the software made it difficult to get to smartphone apps.

“Facebook addicts will probably love Home for the same reason that non-Facebook addicts won’t: its single-minded focus on interacting not with apps but with friends,” Jaroslovsky wrote in his review.

GM, based in Detroit, spent $10 million on paid Facebook ads in 2011, a person familiar with the spending said last year.

Undoing Ewanick

GM’s decision a year ago also raised questions over the ad strategy of then-GM Chief Marketing Officer Joel Ewanick. He was ousted as marketing chief in July over the cost of a sponsorship deal with the Manchester United soccer team, people familiar with the move said at the time.

GM in January replaced his Chevy Runs Deep tagline with Find New Roads and the company is looking at changing its advertising agency for Cadillac.

“Chevrolet is launching an industry-first ‘mobile-only’ pilot campaign for the Chevrolet Sonic that utilizes newly available targeting and measurement capabilities on Facebook,” Chris Perry, U.S. Chevrolet marketing vice president, said in yesterday’s statement.

The structure of an ad agency set up to conduct Chevy’s advertising globally last year was also changed in March when Interpublic Group of Cos.’s McCann Worldgroup gained control of the joint venture called Commonwealth.

Super Bowl

Along with ending GM’s paid advertising with Facebook, Ewanick also said the automaker wouldn’t advertise during this year’s National Football League’s Super Bowl championship game on CBS. Months after Ewanick’s departure, GM announced it would advertise during Super Bowl pre-game programming.

The automaker’s U.S. ad spending declined 9 percent to $1.17 billion during the first three quarters of 2012 compared with the same period in 2011, according to Kantar Media. GM continued to have an unpaid presence on Facebook via pages for its brands.

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: Jamie Butters at jbutters@bloomberg.net; Tom Giles at tgiles5@bloomberg.net


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Companies Mentioned

  • FB
    (Facebook Inc)
    • $77.91 USD
    • 0.91
    • 1.17%
  • GM
    (General Motors Co)
    • $33.94 USD
    • -0.09
    • -0.27%
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