Why General Motors Now Finds Facebook Ads Effective?

Almost a year after ditching its Facebook Inc (NASDAQ:FB) advertising campaign, General Motors Company (NYSE:GM) has decided to restart its advertising campaign on the social networking site. In May 2012, the automaker pulled back its $10 million ad campaign, saying that Facebook ads don’t work for the company as users almost never clicked on the ads. That caused a commotion because GM’s decision came just a few days before Facebook Inc (NASDAQ:FB)’s initial public offering.

Why General Motors Now Finds Facebook Ads Effective?

In a major turnaround of thoughts, Ad Age reported that General Motors Company (NYSE:GM) started promoting Chevrolet Sonic on Facebook Inc (NASDAQ:FB) on Wednesday. Chevrolet’s U.S. VP of marketing, Chris Perry said that he is testing a number of mobile-ad solutions including Facebook. The ad will be displayed only on Facebook’s mobile site. The ‘Find New Roads’ campaign for Chevrolet will utilize the new measurement and targeting capabilities of Facebook Inc. Until last year, General Motors Company (NYSE:GM) was the third largest advertiser on Facebook Inc (NASDAQ:FB). Even after pulling back its campaign, General Motors Company (NYSE:GM) continued to engage with users through its free company profile page.

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So, why did General Motors Company (NYSE:GM) change its mind, and why now? The automaker was lured by the new features and capabilities on the social networking site. Since May 2012, several things have changed. Most important of them is the emergence of mobile advertising and the way ads are placed on mobile phones. That attracted General Motors Company (NYSE:GM) to some extent. According to a report by eMarketer, Facebook Inc (NASDAQ:FB) is expected to earn over $1 billion from mobile ads this year.

Another key feature is the introduction of FBX ad-exchange which inserts highly targeted promos into the users’ timeline. It increased the likelihood of users seeing and clicking more ads. One thing that remains unclear is exactly how much General Motors Company (NYSE:GM) will spend on its Facebook Inc (NASDAQ:FB) advertising campaigns. Last year, the company had a budget of $40 million for Facebook advertising, but it spent just $10 million of that sum.

A spokesperson for Facebook Inc (NASDAQ:FB) said that the social networking company continued to persuade the automaker over the last 12 months, and Facebook Inc (NASDAQ:FB) is happy to have General Motors Company (NYSE:GM) back.

Facebook Inc (NASDAQ:FB) shares were up 4.08 percent to $27.68 at 11:20 AM EDT.