Despite Challenges, LiveWorld Remains a Leader in Social Media for Major Brands

LiveWorld (OTC Pink Sheets: LVWD.PK) is the only publicly traded company on our watch list. So far, 2009 has been mixed for the San Jose-based business. At $2.6 million, its Q1 2009 revenue was down about 13 percent compared to that of the previous year. Q2 2009 revenue was only on the order of $2.2 million. But the company reports being cash-flow positive even amidst these declining revenues, no doubt due in part to last year’s reduction in force (only about 2 percent) and salary reductions. And, during 1H 2009, LiveWorld added five new accounts to its customer base of name brands, released an incremental version of its Community Center platform, and maintained organizational stability after navigating last year’s challenges.

LiveWorld's average deal size, which is at the top of the range of the companies we cover, has pretty much remained constant. We had expected it would have difficulty holding those numbers in this economy, but its clients are apparently finding good value in LiveWorld's platform and service. Partnering with interactive agencies, one of LiveWorld’s strengths, has continued to pay off, as it gives the company a seat at the strategy table and provides an effective channel for acquiring new clients. A new partnership with interactive agency Crispin Porter + Bogusky attests to the attention LiveWorld gives these partnership efforts.

LiveWorld’s attention to its product line has continued as well, with the release of Community Center 2.2 for both Pro and Enterprise Editions. In sync with today’s social media trends, Community Center 2.2 includes integrations for both Facebook Connect and Twitter. We very much like LiveWorld’s LiveBar application (Version 2.0 soon to be released), which cleanly overlays community content on top of any Web page. It’s a conceptual winner, as it keeps business content—say, a newspaper article—and user content in the same place; readers aren’t forced to another part of the site to have a conversation around that content. But LiveBar adoption to date has been disappointing. As the product has so far been in more of a pilot stage of development, we’ll look to see if traction increases with the coming of new releases.

The company has remained focused on its core competency, providing social media and community strategy and services to leading consumer and business brands. Unlike some of its competitors, it (wisely, in our estimation) isn’t changing its marketing approach or adapting its product line to appeal, for example, to internal employee communities. The competition in LiveWorld’s sweet spot is getting tougher, as other companies improve their platforms and build agency partnerships of their own. But with its executive leadership, domain experience, and deep line of products and services, LiveWorld remains a leader in the online community and social media space.

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This post a modified excerpt from our PSGroup report Online Community Platform Company and Product Update 1H-2009. For more on this report, see this blog post.

Comments

[Peter Friedman, Chairman & CEO, LiveWorld]

Thanks for the review, Matthew. Thought I would comment on some industry trends. Ironically it seems that the recession has causes a point of separation in media strategy. Specifically the pressure for major cut s in marketing budgets has lead to cutting the only things that have major budgets, traditional media. This has broken the inertia of traditional media that has held for the last few years even in the face of obvious reasons to move more towards social. Brands tell us that as the economy recovers and with that marketing budgets recover, dollars will shift more in the direction of social than ever before.

[Matthew Lees]

Thanks for chiming in, Peter. I'm agreed that cuts in traditional media will continue...owing not only, as you point out, to the economic climate and the need to save $$$, but also to the positive impact and results that social media is generating. Brand budgets wouldn't go to social media if some sort of quantifiable and attributable ROI weren't there. The emphasis that LiveWorld (and many of your competitors) are putting toward business analytics is a key driver in getting -- and keeping afer year 1 -- those increasing social media spends.