• by January 29, 2001

Instant messaging is all about chat: pop-up email in real-time. There are 18 million MSN messenger users, and big brand Yahoo is running close by, but AOL still leads the pack with over 40 million users. Additionally, its ICQ product, which has over 65 million registered users and more than 100,000 new registrations daily, has been called “our favorite instant messenger” by CNET for ease of use. In total, 656 million instant messages are sent each day through AOL’s Buddy Lists, AOL Instant Messenger, and ICQ services, which makes for numerous opportunities for advertisers occupying the available space within such services.

The ad industry is embracing the new space available within messenger services, where marketers can sell their wares and be given the opportunity to target directly to users. Recent research shows that most instant messaging services now target their ads based on the user’s selected interests. For example, in Yahoo Messenger, a user chooses what type of content tabs he or she wants on his or her Messenger window, such as finance, sports, weather, and so on. Advertising opportunities begin in the messenger window: on some of the lower right hand tabs, which Yahoo can customize for an advertiser, there are banner ads at the top of each tab. When clicked on, these open a new window with the advertiser’s look and feel built right into a Yahoo Messenger page. If your client is a brokerage company, for example, those using Messenger to access finance data will be confronted by the company’s ad.

Why buy instant messaging ad space?

Most of the instant messaging services’ parent companies are using fusion marketing—that is, the pulling together of all of their branding offerings—to promote advertisers who buy space with them. Yahoo can modify the look and feel of its messenger client to look like an advertiser’s mini web page containing sponsored content which the client can control (it lives on their servers); MSN is promoting its touch point–based idea of making contact with consumers within the total media strategy. “In the scheme of a total campaign, we are able to get you in more places,” says Mike Siegenthaler, Group Marketing Manager for MSN Messenger. “We’re concentrating on delivering ad messages in unique ways. In a vertical [market], we’re able to extend our advertiser’s messages into the communication space. This extends the reach of their advertising.” AOL’s ICQ, which is more like a portal than the other services, offers advertisers impression-based opportunities on ICQ’s content channels, directory, search, and community pages.

Yahoo’s Paul Martecchini, Manager of Sales programs, seems to concur. “One of the big ideas here is to leverage the network. If you go into Yahoo news, there is a link at the bottom of the story to take you to Yahoo conversations [an area that provides one on one chats] in the messenger list.” There are opportunities to showcase your brand in both spaces. Yahoo, AOL, and MSN also offer free dial-up phone service for conversations online, which is a “very compelling value prop for the user, and the ads are a big part of that. When you are placing your call, the dialer pad window opens and stays there, with the banner ad in it,” Martecchini says. When one initiates a call, another window appears with a “trailer” ad, which one sees after closing other open windows. Yahoo says it’s seeing very high click-through rates on this, and is excited about it.

What do the ad units look like?

On any of the featured services, ads are in the form of banners or text links. Yahoo offers banners at the top of content-specific tabs, which are smaller than standard banners at 230x33. The available banners on their dial pad are traditionally sized, while their trailer banners are 240x240—and all ads can be html-based. Sales reps for Yahoo suggest adding a graphic but say that text links work just fine, too.

AOL has two ad spaces available in the messenger client window: one at the top, which is larger, and one at the bottom, which is narrower. When a user opens AOL IM, both spaces often appear to be occupied by ads for AOL itself, though AOL says the space is for rent.

On MSN’s Messenger, there are two sizes available: banners and half-banners, the former measuring 234x60. One of these will appear in the dial-up window of the Internet phoning functionality; the other appears in the main MSN Messenger window. They can be gif, animated gif, jpg, or html-based.

What’s the pricing structure?

Most of the instant messenger services’ ad rates utilize a CPM model. In order to reach a lot of messenger users, say ad reps, you buy a lot of impressions. “It depends on the media planner’s goal,” says Siegenthaler. “With a promotion, you’re trying to reach a lot of people quickly. If you’re doing branding—a long-term campaign—you take a share cross-media-wise and apply that online. Whatever threshold you are using would be analogous to what you’re using online.”

Yahoo’s pricing ranges from $17.50-26.50 CPM, though they say the cobranded page deals are negotiated on a case-by-case basis. Included in this range are ad opportunities for Yahoo’s Alerts function (for users who want to be alerted when a stock goes up, etc.), or any of their in-messenger or dial-pad banners.

MSN Messenger has three available options. One is a banner within the Messenger client, which is fixed within the frame at the bottom of the box. The second is a banner running in the “free dial-up keypad” box, which enables users of the service to dial any phone number in the U.S. for free. When one closes the window, there is also a “leave behind” ad that is the size of the screen. All three have a $15/CPM rate. (AOL’s CPM rate was unavailable at press time.)

Who’s buying?

While each of the messaging services has had advertising opportunities for different lengths of time, even those new to selling the space have been quick to appeal to buyers for large, corporate clients. MSN, which has only made the space available for sale for two months, has already done campaigns for RadioShack.com, Best Buy, Barnesandnoble.com, and First USA bank. MSN’s buyers are very high on the buys, though they admit they initially had reservations about doing a buy on an attention-driven ad unit riding on a utility (the messenger service), saying, “we didn’t think people would stop and get diverted off onto a banner or link.” However, they say MSN convinced them, and they’ve been very happy with the results, especially since there is a below-average acquisition cost. “On service, the click-through is lower than average, but we’re tracking metrics beyond this, and the conversion, surprisingly, was above average,” reports Joel Carter, VP Marketing for RadioShack.com. “Because it’s a mass buy, it’s not as targeted, perhaps, but the CPM is very efficient. We ended up with a very efficient piece of real estate that converts well to the carton.” RadioShack.com has renewed its contract on “the strength of experience” with MSN Messenger, because it was a “very good strategic fit for our types of products in particular. It’s a very targeted environment towards those interested in communicating with friends.” In spite of being with the program for only a few months, RadioShack says it has enough good numbers “under our belt” to justify the renewal.

Yahoo’s deals include Photoworks, Proctor & Gamble (Sunny Delight brand and others), Ralston Purina, Weather.com, Ameritrade, E*trade, CBS Marketwatch, and Alloy. AOL also has a long-standing relationship with Barnes and Noble.

Anne Nelson, VP Marketing and Product development for Ameritrade, says her company has also been happy with its instant messaging advertising. Ameritrade’s buyers, says Nelson, are cautious: “We measure all properties and alliances with cost per account, so we take a very disciplined approach before we commit significant dollars. [Yahoo Messenger advertising] is very cost effective [and] we get the rich media involvement with Yahoo. There will always be a role for all the various media that we use, but our objective all the time is to be more efficient.” Additionally, Ameritrade says that Yahoo Messenger ads are easy to customize and brand.

How do advertisers measure the success of instant messaging ads?

There are a couple of metrics on Yahoo. Messenger is a “persistent app” that is up all day, increasing brand awareness for any advertiser who buys space on it. Says Martecchini, “A lot of our studies show that people who are seeing branding over time are more likely to go with that brand. There is a more integrated response [from ads running in Messenger].” He does say that it’s not all about click-throughs anymore, and MSN’s marketers have the same idea.

“We try to deliver awareness to acquisition. Whatever makes an impact on [an advertiser’s] bottom line. Click-through is a flawed way to gauge success. Building awareness is most important. You want awareness to be at top of mind when a consumer is ready to purchase,” says traditionally schooled Mike Siegenthaler, who believes that branding together with click-through rates impact your bottom line more. The full-scale integration of messenger ads into their parent-company’s across-the-board portal strategy means more exposure for your client, while millions of eyeballs are viewing their ad and chatting away. Ad revenues, too, says Yahoo, have been climbing dramatically over time since the product’s 1999 launch, and advertisers are clearly coming back for more.

Whom do I call?

For Yahoo Messenger ads, it is the same as buying any other media through Yahoo. Contact 408-731-3300 to speak to a Yahoo sales rep about advertising opportunities. Or go to http://docs.yahoo!.com/info/advertising/.

For AOL, go to http://mediaspace.aol.com/ and select ICQ or contact information.

Media buyers interested in placing ads on MSN’s messenger should call the advertising department at 425-703-7777. If they want to learn more and see examples of messenger ad products, they can go to http:// mediacenter.msn.com/MSNSALES/AdProducts/ AdProducts.asp?SideNav=ViewAll, and select “Messenger” from the drop down menu. They can contact an ad rep for MSN on the left-hand side of that page. Any rep anywhere in the country can handle an inquiry by phone, and the interested buyer will get a return call on any online inquiries made through the above URL.