Through August, GM has spent $286 million in measured spending, and last year spent $400 million. As the Big Three huddle and try to figure out how to pry $25 billion from the cold hands of congress, GM is looking for every way possible to cut costs.

Pontiac, Saab and Saturn account for 20.7 Percent of GM’s total measured-media spending and 16.5 percent of its sales, according to an Ad Age analysis. According to Automotive News, Pontiac sales through October tallied about 239,000 units, down 20.9 percent from the same period in 2007. Its peak sales year was 1978, when it sold 896,980 units.

GM has already ended its long relationship with Tiger Woods. As Conan O’Brien said, “When asked why, a GM spokesman said, “Tiger Woods is successful, competitive, popular . . . and that’s just not us.’”

It’s likely to be one of the most talked-about ad deals of the year. The company they are jockeying to sign up with is attracting 200,000 new users a day. Last week it was valued at $15 billion (£7.3 billion), though it has yet to make a profit.

Facebook is a three-and-a-half year old “social network” site that offers people a way of communicating with their friends online. So far, some 50m people have signed up to it. The company says it expects to break even this year.

Last week, Microsoft beat Google to buy a small stake in the firm, valuing it at $15 billion — more than twice as much as British Airways, a company that made a profit of $602m last year.

For some, the deal indicates a return of the “irrational exuberance” that former Federal Reserve chairman Alan Greenspan identified in the mid-1990s — an exuberance that ended when the dotcom bubble burst in 2000.

Facebook is the latest in a series of ever-bigger deals for a new generation of so-called web 2.0 companies.

Once again, internet start-ups with lots of buzz — but next-to-no profits — are being snapped up for huge sums by the world’s big media and technology firms.

For others, including Microsoft, the prices are not irrational but a concrete sign of the value of online advertising.

In recent years, internet advertising has soared as advertisers have shifted more and more of their spending from television, newspapers and other traditional media to a host of websites.

Online advertising is now a $16.5 billion business in America, according to Jupiter Research. Shoppers spend 10% of their money online. Compared with mature advertising markets such as TV (worth $74 billion in America), online advertising spending remains small, but it is growing by about 14% a year, and by 2011 it will be worth $32.1 billion.

Only a small slice of this goes to “social network” sites like Facebook and its larger rival MySpace (owned by Sunday Times parent News Corporation).

This year, according to eMarketer, $900m will be spent advertising on social-networking sites in America and $335m elsewhere. The growth of these sites is phenomenal. Facebook believes with Microsoft’s help it can reach 300m users worldwide in the next few years.

“It’s anybody’s guess how big Facebook will get,” said John Delaney, an analyst with the Ovum consultancy. “But 300m doesn’t sound completely ridiculous.”

Other sites with similar features to Facebook and MySpace have failed to take off — the British site Friendsreunited and America’s Friendster have both been left behind. But the success of Facebook and MySpace shows “there is a market for people to interact on the net in a similar way to the way they interact in real life”, said Delaney.

Advertisers, too, are increasingly enamored of the sites.

Carlton Cribb, the digital buying director at Zed Media, a London ad agency, said clients now see online sites as an intrinsic part of their advertising strategy.

“In the past couple of years there has been a major change from the clients’ perspective,” he said. “Online was kept very separate from the rest of the budget. Now online is another viable medium for reaching their audience — it’s part of the media mix.” A part of the mix that is growing swiftly.

Social networks collect a lot of personal data about their users. People share their taste in music, books, films, their political views as well as their location. All this information can potentially be turned into well-targeted ads. The danger is that users may turn against the “commercialization” of the sites.

When Google bought YouTube, the video-sharing website, Delaney said there was a lot of complaining from users, many of whom warned the company to stay away from Facebook.

“We heard the same sort of stuff when News Corp bought MySpace. People moan but they still use MySpace. It’s not the first site to put ads on its website. People understand that they get a lot of cool stuff for free on the internet because it carries ads,” he said.

But the internet is a two-way street, and advertisers now have to figure out how to reach an audience that has the power to talk back in a way that was denied them with more traditional forms of ads.

“That’s the promise and also the danger of social networks,” said Delaney. He points to the success of Arctic Monkeys, the indie rockers who built a following on MySpace.

“They were selling their brand. People will engage with you on a very deep level. The problem is that you are not in control of what is out there.”

Some advertisers have stopped using social-network sites, concerned that their ads will come up alongside unsuitable material put up by the sites’ users.

Cribb said these were problems to which the sites and advertisers were now finding solutions in what are still early days for a rapidly changing medium.

When Facebook boss Mark Zuckerberg started the site it offered simple web pages for college students to list information about themselves and send messages to friends. Increasingly the site and its rivals offer an array of services, from e-mail to online photo galleries that have historically existed independently.

The aim is to make Facebook the first port of call for internet users in the way that many people now have Google as their home page.

It’s not a new strategy — AOL tried something similar and failed and Yahoo, which also courted Facebook, has a similar approach. But Facebook has the buzz and the momentum to more than rattle its rivals. As it adds new services, advertisers will be watching developments as closely as Facebook’s users, Google, MySpace and Yahoo.

Unlike the first internet boom, “big media” has in the main fought shy of paying huge prices for online firms. News Corp bought MySpace in 2005 for $649m and more than recouped its investment with an ad deal with Google worth $900m over three years.

For Microsoft the $240m investment is chump change. But it marks a significant evolution for the software giant as it increasingly moves its muscle online. Whether or not Facebook lives up to its $15 billion promise remains to be seen.

Dominic Rushe is a writer for the Times Online

Compliments of the Times Online

“We were looking for the best way to generate sales as a result of rave reviews, and Clear Channel Radio presented us with a strategy to connect with our target audience throughout the entire day — while they are on the road and on the Internet,” said Chevrolet general manager Ed Peper in a statement.

The radio ads will air in cities like Dallas, New Orleans, St. Louis and Oklahoma City. Each one will send listeners to their corresponding radio station’s web site where they’ll see Chevy Silverados driving around the home page and parking in a prominent leaderboard banner. The leaderboard shows more information about the Sliverado and links to the Chevy web site.

“With a very strong product, a patriotic, American-made message and the opportunity to communicate with truck buyers about the Silverado over the next year, we expect this targeted campaign to be very effective,” added Clear Channel Radio Sales regional president Jeff Howard.

All three shows appear free and on-demand on AOL’s Living Channel and feature 3-5 minute episodes dealing with cooking, home entertainment and home improvement. AOL is also providing supplementary content including photo galleries, podcasted audio and printable instructions.

The three programs: “Cooking with Tyler Florence,” “Home Entertaining with Michele and Gia,” and “Home Improvement with Eric Stromer,” will appear with several GMC-branded “Trade Secrets” video segments that highlight quick tips from each shows respective experts. Each show will also feature a GMC vehicle like the GMC Acadia, Sierra, or Yukon.

“Partnering with AOL provides us with the perfect opportunity to interact with our target consumer in a new way through innovative programming at an interactive level,” said Mary Kubitskey, GMC’s advertising manager in a statement. “These series enable us to showcase our GMC vehicles as the secret ingredient for cookouts and parties, as well as a handy tool for transporting home improvement supplies.”

In all, AOL has produced 78 episodes. The GMC branding will match the company’s Professional Grade campaign used in traditional media.

GM will be running a Chevrolet spot generated through an ad creation contest for students last year. More than 800 students on 400 teams submitted ad concepts. The finalists flew to Motor City where they pitched their ideas directly to GM execs. The winners saw their ad through the production process.

The NFL will be running a spot generated through its “Best NFL Super Bowl Commercial Ever” contest. Late last year, the NFL put out a call for users to pitch their Super Bowl ad ideas. The winning entry will be produced.

While GM and the NFL will be getting ideas from consumers, the commercials themselves will be produced by a professional studio. Frito-Lay, however, will be running a Doritos ad that will be entirely user-created and selected from among the top five finalists in a contest where users both created the ads and voted on the best entries.

Full Super Bowl commercials aren’t the only ad-related initiatives being touched by users. Alka-Seltzer is tying to get users to come up with a new jingle which will be shown in a spot during the Super Bowl pre-game show. And one blogger is looking for a sponsor willing to provide 15 seconds of Super Bowl ad time to let him propose to his girlfriend during the big game.

The Super Bowl will air on CBS before an estimated 90 million viewers, and each 30 second TV ad spot is reportedly worth about $2.6 million. According to the New York Times, CBS is also toying with the idea of giving sponsors the opportunity to show their Super Bowl ads on the CBS SportsLine website as well.

GM Europe, ad agency Delaney Lund Knox Warren, and MTV have been grooming the C’Mons since early October with a band website, a fake (non-editable) wiki, and a legit-looking site on MTV.co.uk called Under The Radar that features tunes and videos by and about the C’Mons.

The Yahoo takeover features several banners and shows the band members jumping around the page and driving the Corsa. Each banner links to a Vauxhall microsite that features the latest Corsa TV spots starring the C’Mons. Yahoo is also running C’Mons content on other pages. For example, Yahoo Music lists the C’Mons as one of its featured bands.

Traditional banner ads are becoming delivery systems for content and promotional material. Click-to-play video ads can turn an ad banner into a video channel. Click-to-call ads can turn an ad banner into a sales or support center by putting a person in voice communication with a sales rep or support person almost instantaneously. And there are interactive banners that serve as miniature Web applications like the ones from Chitika that turn ad space into mini online retail platforms, complete with product descriptions, reviews, search, and comparison shopping.

It’s a mistake to ignore the blurring lines. Ad creators who stick strictly with traditional banners, even if those banners are finely targeted by contextual or behavioral systems, will be left in the dust by those who innovate. I suppose it’s natural to fixate on an advertising mechanism that works in the here and now. And I suppose we’ll always have banners, but creative advertisers, publishers, and marketers won’t be able to avoid the eventual merging of what we take to be advertising with what we take to be content.

Take the new PayPerPost service. Some would consider it sleazy or spammish for advertisers to pay bloggers for editorial content, but that’s beside the point here. Are PayPerPost blog posts something you could consider content? You could, but PayPerPost content is written to specifically promote a product or service. So is it marketing? You’d think so, but you pay for a blogger to write a specific post in the same way you would hire a creative agency to create an advertisement. It’s also organized like an advertising network. So is it advertising? Maybe.

Sooner or later, someone’s going to come along with a great new idea and create a revolution that results in a new way of selling ideas and brand images online. After all, advertising isn’t about selling products. It’s about selling ideas. And while it’s great that we have new ways of tracking and targeting advertisements through click, impressions, timeshares, and whatnot, in the end, the customer doesn’t care. The customer cares about the customer. They want to know, “Will that product or service you’re hawking make my life easier/better/safer?” And if it won’t, then “You’d better not spam me again, spammer!” Customers don’t care if you’re being paid per-click, per-impression, or per-diem.

On the one hand, it’s dishonest to pass off advertising as content. Besides, website visitors are usually smart enough to tell the difference between honest content and stuff that’s been polished-up and oversold by a PR person. That’s cheesy. The blending of content and advertising I’m talking about is much more subtle. In the future, customers may visit a site for the advertising. It’s like corporate blogging. I like cars, and I occasionally read GM’s Fastlane blog. I go there for the content. But that content is about GM cars, and will invariably promote GM products.

There are two problems that the creative online ad revolutionist has to overcome. The first is the network. A unique one-shot ad campaign may make a splash, but it will never start a revolution unless it’s connected to a system that will let advertisers and publishers collaborate on similar campaigns ad infinitum. If there is a network structure in place, not only can the methodology of this (currently) fictitious future ad platform spread to many different advertisers and publishers, but it will also prove that such a platform can regularly generate income for publishers and ROI for advertisers.

The second problem is one of disclosure. One of the most distinctive things that makes advertising advertising is the fact that an ad is easily identified as such. When advertising and content are blended together, a website visitor needs to be able to tell the difference between promotional content and journalistic content. It’s all about trust.

A reader needs to know if there is a conflict of interest when they read or view something online. Usually it’s obvious, as with PR-style writing or blatant product placement. But when the smooth convergence between advertising and content happens, people will become confused if there is no way to tell one from another, and ultimately develop mistrust for all sites that use such a system.

However it happens, ad and content convergence will be something that people have never seen before. Not on TV. Not in print. It’s a shame that a lot of advertisers and publishers still refer to ads as if they were just another static object to place on a Web page. The question most advertisers and publishers need to be asking themselves is if they are prepared for when convergence comes.