Online chat, already a proven favorite pastime of online consumers, is something the ad community is talking about as well.
In recent weeks, some of the most successful ad-supported brands on the Web--Netscape, Yahoo!, HotWired and iVillage--have all endorsed chat as an ad medium. America Online, meanwhile, will soon begin selling ad sponsorships for its chat rooms.
11/12/96: Electric Minds signs chatty sponsors
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`MARKETERS ARE LEERY'
"The ad community needs to get a better sense of comfort as a whole from the concept of chat," said Bayard Winthrop, director of business development at Web-Chat, which serves some 5.5 million page views per day. "Chat sponsorships are pretty new, and some marketers are leery about affiliating their brands with something of which they're unsure."
Jupiter Communications predicts online advertising will reach $5 billion by 2000; other industry analysts say up to $1 billion of that could be generated from chat sponsorships.
"Smart publishers know that communicating and community are the biggest reasons people use the Web," said Peter Storck, group director of online advertising at Jupiter. "It's a great way for a hot publisher to extend his ad revenue by selling some premium new space."
While WebChat sells advertising on areas outside of its chat rooms for a cost per thousand ranging from $18 to $50, it offers free ad banners in the chat rooms themselves. The company uses the tagline "Talk's cheap; chat is free" to pitch marketers on the concept.
iVillage in the second quarter will introduce a chatty twist to its content properties--Chat Village, which executives there describe as a "community of communities."
iVillage, creator of Parent Soup, About Work and Vices and Virtues, through a partnership with chat technology company iChat, will offer structured discussions based on interests like sports or cooking, but it will also allow users to create chats on the fly. Chat Village will enable marketers to target ads to individual users, based on their chat profiles.
iVillage, however, is no stranger to chats. For almost a year the company has facilitated sponsored chats on its About Work and Parent Soup areas on America Online and the Web. Novartis Consumer Health's Triaminic has sponsored a series of pediatrician-hosted chats geared toward children's health on the Parent Soup Web site.
"We sponsored chats to help establish our brand as the leader in children's health and safety information," said Frances Misenas, account supervisor at PVD & Partners, New York, agency for Triaminic Parent's Club.
"We're fully expecting to go through an education process with our sponsors," said Deanna Vincent, VP-market development at iVillage. "We provide a lot of handholding to marketers who are nervous about getting into uncharted territory."
A struggle inherent in successfully executing a sponsored chat is keeping both sides happy. Chat providers on the Web need to provide fulfilling user experiences, while still ensuring an advertiser gets a real return on his investment.
MORE THAN BANNERS
Most of the early chat sponsorships have taken the form of banner ads or logo links, but the possibilities go on from there.
"The notion of banners in and around chat is oxymoronic," said Jerry Shereshewsky, VP-marketing and business development at Yoyodyne. "If done the right way, however, chat can be an unbelievable ad medium that's a research tool at the same time."
Yoyodyne thinks the real opportunity for chat is to integrate it with Web-based games and allow users to talk with each other or plot against each other during play.
"The key will be creating environments in which the line between the game and the sponsor becomes blurry," said Mr. Shereshewsky.
However, other online brands, including Yahoo!, AOL and HotWired, are driving down more conventional sponsorship avenues for now.
Yahoo! late last year announced a partnership with iChat and now offers about a dozen chat rooms for subjects like sports, entertainment and business. The search engine would like to sign a few sponsors for each room.
Although Yahoo! chats will be incorporated into larger ad packages based on advertisers' preferred demographic targets, executives say a chat sponsorship could cost as much as $50,000 per month. Yahoo! is currently offering 90-day free trials to its advertisers.
Separately, AOL is making a major push to sell advertising on its chat areas. An Oldsmobile-sponsored chat, dubbed Celebrity Circle, has appeared for more than a year.
"People who are chatting have time on their hands, so they're actually more likely to click on banners, especially if it's targeted to their interests," said Rick Boyce, HotWired's director of advertising.
HotWired's Talk.com features 20 chat rooms in which banner ads rotate every 30 seconds. Talk.com advertisers, which pay a $20 CPM, include Tripod, Hewlett-Packard Co. and Paramount Pictures.
Copyright January 1997, Crain Communications Inc.