GM talking with Facebook about advertising again: sources

A giant ''like'' icon made popular by Facebook is seen at the company's new headquarters in Menlo Park, California January 11, 2012.

Credit: Reuters/Robert Galbraith

By Ben Klayman and Gerry Shih

DETROIT/SAN FRANCISO | Tue Jul 3, 2012 4:47pm EDT

DETROIT/SAN FRANCISO (Reuters) - General Motors Co and Facebook Inc are discussing the return of the U.S. automaker as a paid advertiser almost two months after GM said it would stop running ads on the social networking website, sources close to the situation said on Tuesday.

Although the two companies remain far from reaching an agreement, Facebook executives have assiduously courted the world's largest carmaker. One source said Facebook was not pushing for GM's immediate return, but offered to provide data showing the effectiveness of the website's paid ads.

Facebook Chief Operating Officer Sheryl Sandberg sent GM Chief Executive Dan Akerson an e-mail urging the company to reconsider its decision shortly after the third-largest U.S. advertiser pulled its ads in May, a move that undermined confidence in Facebook on the eve of its highly-anticipated initial public offering, according to sources who were not permitted to speak publicly because the talks are ongoing.

At a global advertising conference in Cannes, France, last month, Facebook global sales head Carolyn Everson sought out GM's global marketing chief Joel Ewanick to continue face-to-face talks, leaving open the option of GM returning to the fold, sources said. Facebook offered the same information it provides to all of its big advertisers, but did not offer any concessions.

GM and Facebook declined comment. The news was earlier reported by the Wall Street Journal.

Three days before Facebook's May 18 IPO GM said it was dropping paid ads on the website because they had little impact on consumers.

The decision by the carmaker, which spent $10 million on Facebook in 2011, was the first highly visible crack in Facebook's strategy and underscored doubts about whether advertising on Facebook works better than traditional media.

GM emphasized at the time that it would retain its Facebook pages, for which it paid no fees, to market its cars and trucks.

People familiar with a meeting that took place before GM's announcement in May said Facebook officials failed to convince GM's top marketing executives of the value of Facebook's paid ads.

GM, which ranks behind Procter & Gamble Co and AT&T Inc in advertising spending, spent $1.1 billion on U.S. ads last year, according to ad-tracking firm Kantar Media. Overall, GM's spending on advertising rose 5.2 percent last year to $4.48 billion, according to the automaker's annual report.

It spent about $271 million on online display and search ads excluding Facebook advertising, Kantar said.

GM previously said it spends about $40 million on its Facebook presence, but only about $10 million of that was paid to Facebook for advertising. The remaining budget covers the creation of content and the advertising and media agencies involved, the newspaper said.

GM also announced in May it would not advertise in next year's Super Bowl because it was too expensive. Ewanick has led a consolidation of GM's ad agencies globally that is expected to save the Detroit company $2 billion over five years.

(Reporting By Ben Klayman in Detroit and Gerry Shih in San Francisco; Editing by Alden Bentley)

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Exclusive: Microsoft tie-up, network sale among RIM options: sources

A woman uses her mobile phone at the Blackberry World Event in Orlando in this May 1, 2012 file photo.

Credit: Reuters/David Manning/Files

By Nadia Damouni

NEW YORK | Thu Jun 28, 2012 10:42pm EDT

NEW YORK (Reuters) - Research In Motion Ltd's board is under mounting pressure to consider unpalatable options such as selling its network business or forming an alliance with Microsoft Corp after the Blackberry maker again delayed the release of its next-generation smartphones, said three sources familiar with the situation.

Shares in the Canadian company, which announced a steeper-than-expected quarterly operating loss on Thursday, plunged 18 percent in extended trading, slashing its market value to $4.1 billion. The stock has fallen about 70 percent in the past year.

RIM said the launch of BlackBerry 10 mobile devices has been postponed to early 2013 - more than a year later than initially promised - because the development of its new operating system had "proven to be more time-consuming than anticipated."

The latest setback has increased pressure on RIM's board to more seriously explore other options, including measures that would amount to an admission that it cannot survive by sticking to its current strategy, said the sources, who declined to be identified because the information was confidential.

One of these options is for RIM to abandon its own operating system and adopt Microsoft's upcoming Windows 8. Microsoft CEO Steve Ballmer had approached RIM in recent months, looking to strike a partnership similar to the one the software giant has with Nokia Oyj, the sources said. Under that partnership, Nokia will use Microsoft's latest Windows operating system on its smartphones.

In such a scenario, RIM could also look for Microsoft to buy a stake in the company and fund marketing and other expenses, the sources said. However, this option is not attractive to RIM because it would mean the end of the Waterloo, Ontario-based company's technology independence, they said.

The RIM board prefers to see through the efforts to develop the new BlackBerry 10 operating system, according to the sources.

Microsoft could also be interested in RIM's wireless patents, the sources said.

RIM and Microsoft declined to comment.

Another option for RIM would be to sell its proprietary network to a private equity firm or a technology company. The buyer could then open up RIM's network operating centers to other smartphone providers, allowing them to also provide highly secured emails and other services to companies and government agencies, the sources said.

In that scenario, however, RIM's device business is seen to have no future, they said, adding that private equity firms have been considering how to separate the hardware business from the network business.

RIM has in the past considered opening up its network to rivals, under a plan led by former co-CEO Jim Balsillie. That could offer RIM a way forward as demand for its BlackBerry phones faces fierce competition from Apple Inc's iPhone and Google Inc's Android phones.

The idea would be to clearly define the network as an asset that could exist without BlackBerry handsets - an operational precursor that could have led to a possible legal split if the handset business ultimately proved untenable.

RIM is "going to have to be much more open minded to the idea that Jim Balsillie was working on before he was ousted of opening their network to third parties," said Eric Jackson, a hedge fund manager at Ironfire Capital in Toronto.

(Reporting by Nadia Damouni; Additional reporting by Alastair Sharp in Toronto; Editing by Ryan Woo)

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