Close-Up: Live issue - Marcoms giants dabble in social networking

testing the water so gingerly that they are barely getting their big
toes wet.

IPG has bought just 0.5 per cent of Facebook; while WPP is forking out a
modest $2 million to form a joint venture with LiveWorld.

Why the safety-first approach? Surely social networks represent an
unprecedented opportunity for brands to interact with that perpetually
elusive 19- to 24-year-old age group? Yet the marcoms giants are in no
hurry. Enthusiasm is tempered by memories of the "gold rush" that
preceded the dotcom collapse. "Digital literacy is poor within the major
communication groups," Rick Bendel, the Publicis Worldwide chief
operating officer, acknowledges. "The problem is that the level of
interest by clients isn't reflected by the income. We don't know how to
make money from it."

At the same time, they feel they cannot risk doing nothing. Certainly
not after Rupert Murdoch's News Corporation sent a shockwave through the
media world last summer with the $580 million purchase of
MySpace. With a predominately young worldwide audience of 40 million,
the site has already demonstrated its influence by launching the musical
careers of Arctic Monkeys and, more recently, Lily Allen.

Not that everybody in communications groups is impressed. A top Havas
executive says: "We want to be at the cutting edge, but social networks
are a small sector and we're more interested in building our core
business."

Publicis Groupe has adopted what it believes is a more flexible
approach. It has set up Denuo, a company that seeks out digital
partners, ensuring that it gets first rights on the most promising. The
latest is the US user-created ad platform ViTrue, which joined the Denuo
fold last week. "We believe social networks are a long-term trend,"
Rishad Tobaccowala, Publicis Groupe Media's chief innovation officer,
says. "What we don't know is who the long-term players will be. These
companies need us as much as we need them."

A cynical Omnicom insider suggests IPG's initiative is more an attempt
by the strife-torn group to get some positive PR. "It's like buying half
of 1 per cent of Chelsea FC. It doesn't even get you a decent seat at
the game."

Naturally, Michael Roth, the chairman of IPG, begs to differ about the
relationship with Facebook. The site is available only to high-school
and college students and is one of the ten most-visited sites in the US.
"Facebook's users represent a difficult-to-reach but very key audience
for many of our clients," he says.

IPG and WPP have similar objectives for their respective deals. IPG
wants to leverage the Facebook site as an ad platform and has committed
a $10 million adspend in exchange for access to Facebook's
consumer data.

WPP wants LiveWorld, founded ten years ago by the former Apple senior
executive Peter Friedman, to build social networking into campaigns. "If
people are talking about you online, then they are talking about you
offline," Friedman told The Wall Street Journal last week. "So you
create all this word-of-mouth buzz."

Mark Read, WPP's strategy director, refutes suggestions that what is
happening is the first tentative step in communications groups becoming
media owners.

"This is just another weapon in the armoury of creative marketing," he
explains. "Clients are very keen to find out what they can do online.
It's up to us to ensure their input is creative and that they get a
return on their investment."

Read believes the challenge will be to find ways to build audiences for
the kinds of advertisers that do not necessarily make online part of
their media schedule. One such advertiser is Campbell's Soups, which has
a section on the LiveWorld site where people can trade recipes. Nike has
also scored with its "joga bonito" World Cup campaign, which became one
of the most popular search items on the YouTube site during the recent
World Cup.

But such moves will need to be carefully thought through. George Bryant,
the head of planning at Abbott Mead Vickers BBDO, claims: "Most brands
that buy their way into social networks look about as cool as dads at
youth-club discos."

Of course, all this assumes social networking sites will not go the way
of the hula-hoop. The most positive sign of their longevity comes from
South Korea, generally regarded as five years ahead of the rest of the
world in internet development. The social network Cyworld is used by an
astonishing 90 per cent of South Korean twentysomethings.

The downside is the threat of a backlash against such sites. Some users
complain about the constant nagging to validate friends. More serious is
the threat of "identity theft" and the fear that the arrest of two men
by the FBI earlier this year on sexual assault charges allegedly
connected to the use of a social network site may not be the last.

"Such sites work because there are no rules," Graham Bednash, the
managing partner of the communications specialist Michaelides & Bednash,
points out. "No wonder WPP and IPG are not putting their houses on the
line."