… AOL – the graybeard of new media – are in talks that could lead to an adverstising partnership. (Getty Images)
Facebook Chief Executive Mark Zuckerberg and AOL CEO Tim Armstrong are quietly discussing a strategic alliance aimed at boosting their online ad businesses, The Post has learned.
The two companies have been talking for several months about a partnership that would allow Facebook to tap AOL’s mojo in selling online ads, according to three separate sources.
“Think of Tim Armstrong’s former role running ad sales for Google and think of where Facebook needs help,” said one source.
At the same time, AOL — an aging Web brand struggling to reinvent itself — stands to gain some much needed social-media cachet, especially after its disastrous purchase of social-networking site Bebo.
One possibility for AOL is being named a “preferred media partner” to Facebook, a source said.
“AOL brings a lot of content,” said another source. “Facebook may not need it, but it won’t hurt them to do a deal.”
An AOL spokesman said: “We don’t comment on market rumors.” Facebook also declined to comment on a potential partnership.
Facebook COO Sheryl Sandberg said recently that advertisers eager to reach the site’s 500 million users have boosted spending by at least 10-fold in the past year.
The growth surge has increased the amount of available ad inventory, or pages that can carry ads.
In February, Facebook renegotiated a deal it struck with Microsoft in 2007 to sell banner ads on Facebook’s site. Under the new terms, Microsoft’s Bing stopped selling display ads on Facebook in exchange for powering Facebook’s search capability and search advertising.
Although privately held Facebook doesn’t disclose financial figures, the site’s revenue is expected to top $1 billion this year, up from $700 million to $800 million last year, according to published estimates. A Facebook IPO is still on the horizon, although reports say the company pushed back the date to 2012 while the site focuses on ramping up users and ad revenue.
At first glance, AOL and Facebook are strange bedfellows. While Facebook is rapidly expanding its ad revenue and user base, AOL is ailing to the point that even Armstrong admitted the company was “sick.” AOL’s ad revenue fell 27 percent, to $297 million, in the second quarter.
Even so, Armstrong’s background in Internet sales makes him an attractive ally. He’s also a former colleague of Facebook COO Sandberg and David Fischer, the head of ad sales and global operations, both of whom previously worked at Google.
“Put them together, you get context, contact and content,” said Internet consultant Shelly Palmer of Advanced Media Ventures Group.