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Real-time chat generates up to 70% of total revenue for commercial online services, and there's no lack of Internet-based companies looking to enter the market. But the advertising potential for chat remains guarded at best.

Analyst projections of $1 billion in ad revenue from chat by 2000 seem awfully inflated. Sure, Yankee Group expects chat to increase some 30% in '97 alone and chatting has proven to be one of the most time-consuming and popular activities undertaken online. But throw in some intrusive advertisers, and users may get turned off.

Regardless, companies like Electric Minds, HotWired Network WebGenesis and iChat are plugging along with big plans to turn chat into a major ad medium.

Silent sponsorships, staggered ad rotations and user-only chats are ways that sites are attempting to keep advertising as unobtrusive as possible. But we think the jury is still out on chat as the next great ad medium.

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