• by Gavin O'Malley  @mp_gavin, April 17, 2007

Lured by the swelling popularity of video-sharing communities, WPP has made a strategic investment in online video technology company VideoEgg.

Working with VideoEgg, WPP plans to explore various types of video ad-serving methods developed by the technology startup. Founded in 2005, VideoEgg manages an online video ad network--the "Eggnetwork"--along with offering clients opt-in ad technology, which stands in contrast to unpopular pre-roll video advertising.

"Our clients want to understand how to use online communities to build brands and communicate with consumers, particularly younger consumers, who are spending time in these communities," explained Mark Read, CEO of WPP Digital.

According to Rob Norman, CEO GroupM Interaction, WPP's investment arm, working with VideoEgg "provides a more focused way for our clients to participate in the growing world of social networks and user-generated content."

The Eggnetwork includes roughly 60 social networks with more than 15 million monthly unique users and as many as 20 million streams each day. Better-known clients include AOL and social network Bebo.

This is not the first time VideoEgg has worked with the agency world. Last year, Omnicom Group subsidiary Organic used VideoEgg's technology to promote Fox's "The O.C." The promotion ran on VideoEgg's ad network and destination sites including AOL, MTV and MySpace.

WPP has already shown its willingness to explore new media opportunities through investment. Earlier this year, for example, it took a 2.5% stake in mobile search and advertising firm JumpTap. Through the investment, WPP has joined with JumpTap to develop new techniques for targeting mobile users, as well as case studies for brands that are planning mobile campaigns.

Other agency investments in emerging media include WPP's backing of Spot Runner, which has created a Web-based system for planning and buying TV advertising.

Video networks seem like a logical next step for WPP. Indeed, U.S. online video ad expenditures are expected to total $775 million in 2007--up 89% from last year, according to market research firm eMarketer. To be fair, however, that number still only represents about 4% of the projected U.S. online ad spend of $19.5 billion.

Late last year, VideoEgg raised $12 million to expand the company's recently launched video ad network. The series C venture financing came from a group of investors led by Maveron. Previous investors August Capital and First Round Capital also participated in the round.