IPG Nears Deal With Facebook
IPG also is in negotiations to purchase a minimum of $10 million of ad inventory on the site, according to a Facebook spokesperson. News of the deal was first reported Monday by Adweek.
If the deals go through, IPG intends to work with Facebook to develop the network as an ad platform, as well as use it as a research tool to understand social networking, said an IPG source.
In addition to helping create ad formats and determine viable ad methodologies, the deal will likely include some degree of exclusivity for IPG's clients. Likely candidates for Facebook campaigns include consumer packaged goods brands like Coca-Cola and consumer electronics including Sony and Apple, as well as cell phone service providers.
Executives from IPG's GM R*Works, an event-planning partner that serves General Motors exclusively, are also thought to have a hand in the planned IPG purchase--suggesting that GM might try to use it as a platform to reach target college grads contemplating a first car purchase.
Seth Alpert, managing director of AdMedia Partners, an investment banking and financial advisory firm, expressed some surprise at the deal, noting IPG's recent financial woes: "It's interesting that they would invest in what is arguably a media company rather than deploying that money in acquisitions to strengthen their core business. I'm a bit surprised because they haven't been an active party on the M&A front."
That said, Alpert agreed: "Of course everybody's interested in how user-generated media are going to become a significant advertising platform. There's a huge audience, and it's very interesting and attractive space."