Tuesday, May 15, 2012

(BN) GM Says ‘Reassessing’ Advertising on Facebook Website

Bloomberg News, sent from my iPhone.

GM Says 'Reassessing' Advertising on Facebook Website

May 15 (Bloomberg) -- General Motors Co., the world's biggest automaker, is reassessing its advertising on Facebook Inc. as the social network prepares for an initial public offering.

"We are reassessing our advertising, but 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," Pat Morrissey, a spokesman for the Detroit-based automaker, said in a telephone interview. "We have not pulled ads and no decision has been made."

Outside of Facebook, General Motors spent $1.78 billion on advertising in the U.S. in 2011, in third place after AT&T Inc. and Procter & Gamble Co., said Jon Swallen, head of research at ad tracker Kantar Media. Facebook executives have spent more than a week pitching the IPO across the country, trying to convince potential investors that the company can make money off its more than 900 million users.

"Many advertisers are grappling with how best to leverage the potential of Facebook," Swallen said. "They are weighing concerns about effectiveness and privacy issues consumers may feel."

Facebook said last week that growth in advertising sales isn't keeping pace with gains in users. Annie Ta, a spokeswoman for Facebook, declined to comment.

The Wall Street Journal reported earlier that GM would stop advertising on the social-networking site, citing people familiar with the matter.

Ford Boosts Spending

Other automakers say they're sticking with Facebook. Ford Motor Co. is increasing its ad spending on the site, Jay Cooney, a spokesman, said in an interview. The Dearborn, Michigan-based company declined to provide specific dollar amounts. Subaru of America Inc. spends more than $5 million annually on Facebook advertising and plans to continue, said Chief Marketing Officer Dean Evans.

"It cost-effectively generates a fan base, generates awareness for the brand, and generates traffic for our websites," Evans said in an interview. "All of those things we find effective today."

Facebook's first-quarter profit fell 12 percent to $205 million as sales growth slowed and marketing costs more than doubled, the Menlo Park, California-based company said in a filing last month. Revenue climbed 45 percent to $1.06 billion, a slowdown from 55 percent growth in the December period.

Facebook plans to raise as much as $12.8 billion through the IPO, the biggest ever for an Internet company. Its shares, to be offered at $34 to $38 each, are set to price May 17 and begin trading under the symbol FB on the Nasdaq Stock Market the following day.

To contact the reporters on this story: Sarah Frier in New York at sfrier1@bloomberg.net; Mark Clothier in Southfield, Michigan, at mclothier@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net

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