With millions of people – and not just teens – using instant messaging, why have we not seen this platform take off as a viable online advertising vehicle? Here’s what it offers.

Billions and billions served. While this might sound like a gratuitous plug for McDonald’s, it’s actually the staggering number of instant messages sent around the globe every day. For example, at last count (March 2003), 2.3 billion messages were sent each day across AOL’s instant messaging platforms (AOL, AOL Instant Messenger, ICQ).

According to the UCLA Internet Report, released in February of 2003, instant messaging was one of the top five most popular activities reported across all Internet users. Instant messaging in the workplace is also taking off, with ‘enterprise’ editions of the messenger applications weaving their way into the fabric of corporate America. Across the top three instant messaging platforms (from AOL, Yahoo! and MSN), there are more than 200 million registered users worldwide. Yet by and large, why have we not yet seen the instant messaging platform take off as a viable online advertising vehicle?

“The challenges still remain on how companies can harness their tremendous user bases and market to them effectively,” says Michael Jacobson, senior partner at Modern Consumer. “Top IM players are hesitant to aggressively market via their instant messaging platform for fears of disturbing the uninterrupted experience users have become so accustomed to over recent years. Fixed position placements in IM platforms are a tough sell for branding or DM-focused campaigns due to extremely low click-rates and user tune out.”

Adds Maggie Boyer of Avenue A: “There’s a lack of awareness of the sheer audience size. It’s a small platform, and there’s been a limited push by most publishers, except Yahoo!”

Branding, Take I

Until recently, much of the persistent ad space available on AOL’s free-standing instant messaging platform for example has been relegated to a 120x60 ad size at the top of the buddy list and the buddy icon that appears each time an instant message is sent to another person. The proliferation of dozens of sites where people can download ‘home-made’ buddy icons speaks to the increased personalization of the user experience with instant messaging. A simple look-up of ‘buddy icon’ on Google would point any brand manager to icons which may not have been given the corporate seal of approval, but are nevertheless being seen by thousands of people daily.

Brand marketers who can hook users with the creative use of small space stand to reap the benefits of the millions and millions of impressions sent daily. Given that these buddy icons are by and large stored remotely (just as a Webpage image is stored remotely on a server), an entertainment marketer who is launching a movie has the opportunity to broadcast the opening date of that movie in the buddy icon itself (for an example of this, go to the official site for The Hulk), or can even promote new trailers or features, simply by swapping out the image for another. Buddy icons are a no-cost way to extend the brand in the overall online media mix.

Bigger is Better?

In the last several months, both Yahoo! and AOL have promoted larger ad formats within the messenger products. “Yahoo! Messenger has taken a positive step to the plate with the implementation of its IMVironments, where sponsors can brand the actual IM chat window (environment) with their creative and messaging,” says Jacobson. The IMVironments act as branded mini-sites and can be as large as the instant message window itself, and also offer additional user interaction within the window. AOL has also adopted a similar approach with AIM versions 5.0 and higher, wherein users can select branded ‘Expressions’ to brand the message window and buddy list.

With newspaper publishers promoting bigger (and fewer) ad formats online, the larger formats through instant messaging applications are a natural evolution from the primordial ooze of remnant ad inventory, and so far, there are few signs of user distaste for these formats.

Better than Outdoor?

Recent ‘chatter’ in the instant messaging space has suggested that the companies that own the services are reluctant to push advertising too far within the instant messaging applications, for fear of people switching from one service to another. Yet, the UCLA Internet Report found that Internet users maintain 2.2 screen names, which suggests people maintain accounts on at least two different messaging platforms already anyway. What could be objectionable about wallpaper ads or application skins that convey a brand message subtly, without the intrusiveness of a “click here” banner ad?

Without the ‘switching’ roadblock, the big three might push to support such online advertising pleasantries as day-part targeting or geographic selectivity. McDonald’s could roadblock an entire afternoon with the golden arches in the background of every instant messaging window. Starbucks could do the same in the morning. Most platforms require a birthday entry, and so Budweiser could promote a background on Friday afternoons to age-verified adults, much the way it has on CBSMarketWatch.

With geographic selectivity, marketers could buy instant messaging brand advertising for the same reasons they might buy outdoor – to reach the at-work audience in various spot markets. Only with instant messaging, the potential audience is much greater in terms of its size.

Interactive -- It’s the Active Agent

Many of us are familiar with Hal 9000 from 2001: A Space Odyssey or KITT, the talking car from Knight Rider. They were interactive agents, machines with personalities that could respond to voice commands. A question and answer conversation with a non-human at the other end has manifested itself online as well in the form of interactive agents. ActiveBuddy, Inc. is the most prominent creator of interactive agents, having created agents for New Line Cinema, Hachette Filipacchi, Kellogg’s, 7Up, and Keebler.

“Our clients are leveraging the Instant Messaging phenomenon in their online advertising and promotional plans,” says Kathy Englar, director of product marketing for ActiveBuddy, Inc. “[The] Austin Powers interactive agent has many features built in to build the level of engagement with potential moviegoers:

User: What's my spy name?
Austin Powers: Let's 'ave your name then luvvie.
User: Chrissy
Austin Powers: Your spy name is Chrissy Intrigue.
Oh my! I have a file on you, baby. Want to see it then?
User: yes
Austin Powers: Chrissy Intrigue
Social graces are your cup of tea and no one plays a better game of Risk. You are invited to all the upper-echelon parties and know whose side to be on before all the votes are counted. Vital gear includes bribe money, an impressive gown or tuxedo and connections in the kitchen to get you out the back way.
>>> My downloads are smashing, baby. Type "downloads" to grab some groovy photos.

“[An] interactive agent deepens the customer relationship with the brand,” says Gordon Paddison of New Line Cinema, one of ActiveBuddy’s clients.

The first agent that ActiveBuddy created, SmarterChild, has talked with more than nine-million consumers in its lifetime. At the time of this writing, SmarterChild was chatting with 60,099 people simultaneously. And recently, ActiveBuddy announced that SmarterChild would become a subscription service ($9.99 / year).

“We believe the interactivity is what makes it so successful – SmarterChild doesn’t deliver mere auto-responses, it was scripted to thoughtfully respond to every user’s inquiry,” says Englar. “We have gigabytes of anecdotal evidence and unsolicited e-mail showing that people find it compelling to engage in conversation with a well-written interactive agent. Whether it’s through Web chat or IM isn’t the main issue – it’s the conversational aspect that is so effective.”

The implications for branded one-on-one communications using an interactive agent are vast. A movie studio could create a movie agent that provides movie history, quotes, and information on actors, directors, and films. A sports team could create a sports agent with current and historical statistics on players and the team history. The Wall Street Journal just launched an interactive agent to deliver news and quotes. And how about Nielsen using an interactive agent in place of a People Meter?

“Advertisers find the kind of deep brand engagement possible to be an outstanding benefit to interactive agents,” says Englar.

Full Circle

Over a century ago, most folks communicated via letter-writing, for it was the only medium available. Then along came the telegram, and the telephone revolutionized the way we communicated. Next came the Internet and e-mail, but even e-mail has been limited by its wait-and-respond delivery. Instant messaging combines the personalization of the written word with the dialogue of conversation, which is perhaps why it has grown like kudzu across the Internet audience.

“IM is the fastest growing communications channel ever,” says Englar. “It’s growing faster than telephone usage, faster than e-mail usage. People tend to associate [it] with teen users, but the evidence shows that IM is well entrenched in the enterprise as a collaboration tool and that online users of all age ranges rely on IM as a key communications tool. With all that traffic, it’s inevitable that it will play a significant media role.”

Whether we see serious ad dollars start to flow through instant messaging platforms remains to be seen; for now, the opportunity is too great not to explore. “Instant messaging will only continue to grow, and companies’ user bases are too large to ignore,” says Jacobson. “IM companies must explore new avenues for targeting their users with innovative techniques while keeping their intrusiveness to a minimum to take the platform to the next level.”