According to this month's Web Price Index, the median price to install a shareware chat program on a small Web site rose 63%, to $3,500, while the cost of a password-protected chat area for a medium-size site rose 55%, to $7,750. Meanwhile, the cost to add Java-based real-time chat to a large site dropped 17%, to $41,500 from $50,000, from NetMarketing's original survey of chat prices in October 1996.
Nineteen months after our first survey, one question still remains: Do marketers actually need chat? The jury is still out.
Uniting common interests
Bryan Kerr, VP-sales and marketing for the Palace, a Beaverton, Ore., maker of chat software, sees multiple chat applications for marketers.
One of the most obvious is to build the site's brand by becoming a gathering place for what he terms "people of common interest," thus becoming a sort of online community. This model would work for certain kinds of marketers, but would probably be ineffective for others.
Perhaps a more useful and cost-effective application is as an auxiliary form of communication among the marketer's staff and between the staff and consumers.
Says Mr. Kerr, "[Chat] is useful as an additional component in that most of the infrastructure has already been established." Chat allows communication "between more than one person at a time with a less expensive pipeline between them" than phones or conference calls.
He points to one of Palace's clients, Egghead Software, which uses chat software to provide customer service and technical support in real-time at its online storefront.
As the online universe grows and the number of chat users increase, this one-to-one and one-to-many communication could become a viable tool for marketers doing business on the Internet. Web researcher Jupiter Communications, New York, projects that the number of regular to heavy chat users (defined as users who visit chat sites at least several times weekly) will grow from 10.4 million in 1998 to 23.3 million by 2002. Those numbers include both Web sties and America Online users.
Jupiter's study, released last August, concludes Web surfers tend to spend about 5% of their online time in chat rooms while AOL users spend up to 30%.
Jupiter cites an increase in the number of service-related chat sites as one factor that will spur the growth in this sector.
Some Web developers, however, don't see chat as a solution that makes sense for all marketers.
"Many smaller sites simply don't get enough visitors to make chat an interesting option," said Jack Graham, senior Web developer at Information Interclear, Chicago.
Although there are certain applications that work, such as "sites for software companies that have a loyal customer base that share tech advice," real-time chat isn't always necessary. "In most cases, threaded discussion handles that nicely," he says.
Mr. Graham also brings up one of the major problems with real-time chat for marketers of all sizes: Legal issues. "If you're a marketer, do you want to deal with the liability issues involved?"
One hidden cost in adding chat is staffing. For marketers using chat as a form of customer service, someone needs to answer the questions in a timely fashion. Legally, all marketers need to be careful about what their chat users are saying -- both about their product and each other.
However, for marketers who do decide to implement chat on their sites, it can be a simple and cost-effective way to add functionality. One way to cut costs is to use an off-the-shelf chat product. Yet, Jupiter finds that 40% of chat sites use a proprietary software package for chat.