updated 06:17 pm EDT, Tue July 3, 2012
No agreement, but Facebook hopes to prove effectiveness
General Motors and Facebook are in talks to try to work out the possible return of the automaker as a paid advertising client for the social network. Such a return would mark a reversal for GM, as the company abandoned its paid Facebook advertising efforts ahead of the social network's initial public offering. As Reuters reports, the talks are nowhere near completed, and Facebook is still trying to convince GM of the efficacy of its paid advertising model.
Sources indicate that Facebook has been pushing for GM to reconsider its decision to drop its paid ad efforts. Facebook's outreach is said to include multiple email contacts between Facebook executives and GM managers, as well as face-to-face talks wherein Facebook has sought to bring GM back.
In May, reports indicated that GM had ceased its paid Facebook advertising operations due to an unconvincing pitch on the part of Facebook representatives aiming to secure a big ad buy-in from the automaker. The company had spent $10 million on Facebook advertising in 2011 but was apparently dissatisfied with the returns on those ads. GM dropped its paid ads, but it has maintained product pages and a fan site, both of which Facebook offers for free.
GM's decision to drop its paid ads proved something of an ill omen for the social network. Following a record-setting IPO, shares of the company dropped significantly on concerns that the company's platform was ineffective for advertisers: the same reason GM had left the fold. Soon after, a number of lawsuits emerged, charging impropriety in the dissemination of earnings information, and shares in the company continued to drop over fears that it was ill-prepared to effectively push ads through mobile technologies.
Recently, Facebook has rolled out a number of new features aimed at improving the visibility of its ads. Shares in the company have also improved recently, and the stock price has nearly returned to its debut value.