WPP in Social Networking Venture

NEW YORK WPP Group said it has joined with online community builder LiveWorld to form a joint venture dedicated to developing social networking applications for clients.

A WPP executive will helm the joint venture, LiveWorld-WPP, which is equally owned by both companies. The unit will work to bring LiveWorld services, which include creating and moderating message boards, blogs and social networks, to WPP clients and agencies.

“You could say it’s the modern equivalent of a fan club, in a sense,” said Mark Read, WPP strategic director and CEO of WPP.com. “These communities can focus not simply on the literal translation of a brand, but on brand positioning.”

Los Gatos, Calif.-based LiveWorld has built social-networking applications for clients like BMW Mini, eBay and HBO. For Mini, LiveWorld developed “Owners’ Lounge,” which gained a 70 percent participation rate from new car buyers. Members have uploaded 60,000 photos of their cars, organized Mini rallies and participated in brand contests.

LiveWorld worked with WPP’s Ogilvy Interactive last year to build a Web community as part of the Dove “Campaign for Real Beauty.” It is currently working with other WPP agencies.

“I believe that this type of venue is the foundation of relationship marketing in the next 10 years,” said Peter Friedman, chairman and CEO of LiveWorld. “So much thinking and decision making is moving to this venue. People like to make their decisions and form their brand views based on their conversations with other people.”

The joint venture will not preclude LiveWorld from working with non-WPP agencies. Instead, it will act as an evangelist within WPP for including Web communities in client campaigns, Friedman said.

As part of the deal, WPP will receive warrants to buy 2 million shares of LiveWorld.

Social networks and online communities have loomed larger on the radar following News Corp.’s purchase of MySpace, which has subsequently grown to more than 90 million members. Interpublic Group has taken a .5 percent stake in top social network Facebook, which gives the holding company a route to researching user habits there. It has also formed a user-generated content unit that will explore ways to tap into areas like social networking and blogging for clients.

“The world is moving from a one-way model of communication to a two-way model and we have to get used to using both,” Read added.