How many interceptions has Donovan McNabb, star quarterback for the Philadelphia Eagles, thrown so far this year? When sports junkie Jeff Kingston, 24, wanted to know the answer, he skipped the Web and opted to use his America Online instant messenger (IM) program instead. Kingston opened the IM window and began corresponding with a â€œbuddyâ€? known as â€œTheSportingNews.â€? In seconds, he learned that McNabb had thrown only three interceptions. An accurate answer to the question, but one that didn't come from his sports-obsessed friends. Instead, it came from a robot.
Kingston is one of 60 million Americans â€” about half of all Americans online â€” who use IM services provided by industry leaders AOL, MSN and Yahoo! or other smaller players. Kingston, who works in the front office of the San Diego Padres, has been using IM since college, and now relies on it to keep in touch with friends. â€œIM is a great place for us to come together,â€? he says. Recently, a new member entered Kingston's conversations: a robot automated by software and an underlying database that can answer football questions on demand, acting much like a human sports savant.
Conventially known as a â€œbuddy bot,â€? â€œTheSportingNewsâ€? is the invention of ActiveBuddy, a New York City-based company that's trying to find commercial uses for IM services. So far, buddy bots are emerging as the most promising and least intrusive way marketers have found to tap in to the widely popular IM world, which despite its large user base, has yet to succeed as a viable advertising medium. These bots have been used to raise awareness of certain brands or products: They have promoted albums and movies, acted as customer service reps and offered sponsored services such as interactive databases. â€œBots are the most interesting thing going on, commercially, in the Instant Messaging world,â€? says Marissa Gluck, advertising analyst at Jupiter Media Metrix.
Two companies, ActiveBuddy and Foster City, Calif.-based FaceTime, are the biggest players in this new field of IM-based consumer communication. Their innovative use of â€œbotsâ€? is helping these companies receive wide attention in the IM marketing world. ActiveBuddy first released a bot to the public last April, called GooglyMinotaur, a funny name perhaps, but one that resonated with teenage fans of the band Radiohead because it's their animal mascot. Fans could type â€œGooglyMinotaurâ€? into an AOL, Yahoo! or Microsoft IM buddy list and then get information about concert tickets, song samples and band member trivia â€” or even play Radiohead hangman.
Capitol Records hired ActiveBuddy to develop a robot to create advance buzz for the band's newest album, â€œAmnesiac,â€? which was released in June. Peter Levitan, ActiveBuddy's CEO, says he doesn't know how many album sales can be attributed to GooglyMinotaur because direct sales conversion is difficult when â€œonly 1 percent of all record sales take place online.â€? However, according to ActiveBuddy spokesperson Emily Lenzner, GooglyMinotaur received 10.5 million messages from an undisclosed number of users during its first seven weeks of existence.
Despite the lack of sales creation data, another record company, Warner Brothers, has followed suit by commissioning â€œLindsayBuddy,â€? to promote the debut album of singer Lindsay Pagano. â€œInstant messaging is the fastest growing segment of the Internet, and we want to offer Lindsay content to her demographic, which has a very high user rate of instant messaging,â€? says Robin Bechtel, head of new media at Warner Brothers Records.
More recently, ActiveBuddy has developed an all-purpose IM buddy called â€œSmarterChildâ€? that runs on AOL and does not limit itself to spitting out specific information related to one artist. SmarterChild users can get local weather, movie times, headlines, stock quotes and horoscopes. It's much like an Internet portal, in the way that it connects a user with desired information. (See screen shot, page 30.) But it can also be tailored to specific promotions and be used to create brand awareness. Sprint, for example, ran a baseball pennant race promotion that included a buddy bot called â€œAgentBaseball,â€? which, like TheSportingNews, provided player stats and other trivia. If IM users like a particular bot, they can direct their friends to it with a quick â€œadd this buddy to your listâ€? message.
FaceTime, the other bot company, has been playing the IM space a little bit differently, though many of the guiding principles are the same. Instead of engineering fully automated buddies that sit waiting for an inquisitive IM user, FaceTime builds customer service bots. These connect the user with a customer service representative â€” one who is often able to handle multiple conversations at the same time and thereby speed up what would have been a slow phone queue. The company has built such bots for Chicago-based Bank One and Lincoln, R.I.-based Amica Insurance. Craig Phelps, who oversaw the rollout of a customer service bot for Amica's 500,000 policy-holders says the bot â€œworks for those who want to get questions answered quickly.â€? FaceTime CEO Glen Vondrick sees this trend turning into a common commercial use of the medium. Customers in any industry could bounce questions off these bots, receive alerts about shipping, monitor inventory and order products.
But before marketers jump on buddies like they once jumped on banner ads, they should reflect on the reasons that IM, despite its popularity, and despite the introduction of the bots, has largely failed as a marketing channel. At first glance, this is a puzzling situation because IM demographics seem so desirable: young, affluent, well-educated and online for long periods of time. For instance, of the 18 million teens who are online, 74 percent or 13 million are IM users, according to Pew. (See chart, above.)
So why hasn't IM gone the way of radio, TV and the Internet by aggressively advertising to its audience? One reason is fear that marketing may interfere with signing up new users and retaining old ones. The fierceness of the competition over registering new users consigns even the least ambitious marketing goals to the back burner. Though AOL spokewoman Jane Lennon declined to confirm this information, Glen Vondrick says that the company employs a sales force dedicated to encouraging people to adopt its free service. If IM carriers start interrupting IM conversations with too many marketing messages, there could be mass migration to another Internet company, such as Yahoo!, Vondrick says. â€œPop-up ads would cause a customer revolt,â€? agrees Jupiter's Marissa Gluck.
Fear that they will lose users by incorporating ads into the IM system, or by â€œmonetizingâ€? the user base â€” to use Internet jargon â€” may be what keeps the carriers from converting it into a business, at least in the short term. AOL's CEO Steve Case testified to a congressional committee last September that he views IM purely as a bonus feature. â€œIt's not really a revenue-generating business for us,â€? he said. On AOL's IM system, the only ad present is usually one for the company's ISP service. This suggests that the service functions best as a branding vehicle for its parent company, or even as a loss leader.
The self-advertising (which Yahoo! does as well) points to the other historical factor behind IM's advertising idleness: no banner ad strategy has panned out so far. â€œIt's not premium ad space by any stretch,â€? says Gluck. MSN's rate card provides evidence of this. (MSN includes all of Microsoft's Web content, chat sites and messaging applications.)
The space on the MSN Messenger window is just one of 900 placement options throughout the portal, according to marketing manager Mike Siegenthaler. MSN charges $15 CPM (cost for 1,000 ad impressions) for the messaging window space. Meanwhile, their small business, personal finance and car site each charge $45 CPM. And banner ads, no matter what the price, have not succeeded in attracting many big-money advertisers. Gary Miller, director of the e-Marketing strategy practice for IBM, pointed out during a recent advertising panel that â€œthe Global 1,000 has not embraced digital advertising â€” only three: Kmart, Disney and Microsoft spend more than 1 percent of their ad budgets online.â€?
Carriers, which also sell banner ads for their related portals, seem similarly uninterested in prioritizing messaging. An AOL spokesperson says the company has nothing new to unfurl. Jane Lennon simply says, â€œwe're always experimenting.â€?
In July, Yahoo! announced a new marketing program: the portal began using the messenger to sell Logitech brand Webcams that can be used to add video images to messaging. The banner ads click to Yahoo! Shopping. â€œThis kind of advertising makes the most sense,â€? says Yahoo! Messaging Group head Lisa Pollock. However, television ads don't just market television components.
At some point, the medium may have to market something other than itself. Buddy bots aim to break out of that mold. Although Microsoft's Siegenthaler admits that when it comes to IM, â€œwe have more questions than answers,â€? there are some marketers, like those at Capitol Records, who have at least found one answer. Just send an instant message to Jeff Kingston, and ask him.
Of the 60 million instant messaging users, 47 million are adults.
DEMOGRAPHICS OF ADULT IM USERS:
|Less than high school||6%|
|$30,000 or less||18%|
|More than $75,000||24%|
|Note: Percentages do not all sum to 100 percent due to rounding.|
|Source: Pew Internet and American Life Project, March 2001|
BARRIERS TO THE GABFEST
The incompatibility of various instant message carriers has long frustrated users who can't chat with their friends who happen to use different carriers. It's a problem that the carriers themselves â€” except for AOL â€” are interested in resolving to enable the medium to evolve. This goal of achieving compatibility among carriers, known by techies as interoperability, is a push toward standardization that many technologies â€” from long-distance carriers to Internet service providers â€” have already addressed. For example, even if you and your friends use different local or long-distance carriers, your telephone can connect with their telephone. But the same is not true for would-be instant messenger buddies who use different carriers. AOL subscribers can't chat with their Yahoo!-using friends, essentially because AOL, the leader of the pack, refuses to open up its network to other companies. An AOL spokesperson said that the company supports the idea in theory, but has â€œsecurity concernsâ€? that prevent AOL from conducting interoperability testing with other consumer IM carriers. Meanwhile, the No. 2 and 3 players, MSN and Yahoo!, have joined smaller industry players to form a group called IMUnified that advocates standardization. It's one of these smaller fish, Odigo, that has been the first to take action. While Yahoo! and MSN have amicable working arrangements that allow Odigo users to communicate with their users, AOL does not. Odigo engineers try to facilitate communication between their customers and AOL users by breaking into the AOL network, when they can. â€œAOL has tried to block us in the past,â€? says Alex Diamantis, Odigo's vice president for sales and marketing. Until instant message users can freely communicate among all carriers, marketers say their efforts will be limited. According to the IMUnified group's Web site, â€œThe sooner we achieve interoperability, the sooner we can develop the next step in personal communications.â€?