Market Overview

GM Ad Leaves Ford Seething, Plotting Revenge


A General Motors (NYSE: GM) ad is bothering Ford (NYSE: F) ... a lot!

Ford took in potshots from GM positing, tongue-in-cheek, the F150 would not fare as well as Silverado on an apocalyptic event. But this is not what's bothering the Blue Oval automaker. Cheeky mine-beats-yours bragging should not bother Ford any more than if the message had any factual relevance whatsoever.

Ford's marketing chief Jim Farley wishes, in hindsight, that Ford had not put itself on the advertising sidelines during the Superbowl. "My biggest regret is we didn't create a long-form Super Bowl-like ad and promote it," he said to reporters at the National Automobile Dealers Association convention. The automaker had taken the fiscally responsible route in not partaking in the enormously expensive Superbowl time slots.

In a YouTube and Twitter era, where advertising has come to be entertainment itself, it is difficult to understand why Ford, who spends fully 25 percent of its marketing budget on social media, was caught with the proverbial pants down its ankles. Try to watch last night's Silverado commercial anywhere on the web today. You will likely wait on a separate, totally unrelated ad as your feature presentation queues up. That is unprecedented goodwill on the part of potential buyers toward any product.

In the mean time, Ford took to disputing, through its lawyers, the veracity of GM's “disparaging” claims. The dubious errand of countering a truck's frog-rain proofing merits notwithstanding, Ford's cease-and-desist hasn't achieved much other than upping the hype surrounding its rival's ad, and by association, the product.

To a lesser but unquestionable extent, the controversy points to a much happier fact. US automakers today usurp headlines for wholly different reasons than they did not too long ago. Gone are the days of bankruptcy and dismal sales. Increasingly, criticism toward government's bailout of the automakers is also becoming extinct.

GM, the one in our pair to receive help from US taxpayers at the height of its troubles, is far from its own debt-ridden and bankrupt iteration of 2009. It is now on track to report a net income of about $8 billion for 2011 and intends to boost that indicator to $10 billion before long. Ford looks none too shabby nowadays either, having earned $13.62 billion in the fourth quarter alone, albeit driven by accounting changes. Extraordinary items or not, it was Ford's 11th straight quarterly profit.

With numbers like these, it isn't hard to see the upside of this advertising-fueled feud continuing for any of the two companies. For now, it is Ford's move. We have a feeling a retaliation has been already called in from the Dearborn HQ.

Posted-In: Earnings News Psychology Topics Crowdsourcing Events Intraday Update General Best of Benzinga


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