Close-Up: Live issue - Marcoms giants dabble in social networking.(IPG)(Facebook)

Following IPG's acquisition of 0.5 per cent of Facebook, John Tylee asks why the holding companies are being so cautious.

Five years ago, they barely existed. Today, social networking sites are growing at a relentless pace. And the communication supergroups are starting to take notice.

But only up to a point. The investments made recently by WPP and Interpublic in LiveWorld and Facebook respectively suggest both are 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 dollars 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 dollars 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.'