by Contributing Editor Anna Murray

"We've had some really strong numbers using IM skins," says Gene Kelsey, VP Brand Strategy Group, Panasonic Consumer Electronics Company. "Kids have fun with the experience. They're formulating lifelong brand opinions at that stage in life. IM puts the brand in their face day after day."

When Panasonic first tested advertising on instant messaging "skins" (the area that surrounds the messaging box) in the summer of 2003, their Yahoo skin offering competed with about 20 other sponsored skins for user pick-up.

By the summer of 2004, that number shot to more than 50 sponsored skins competing for Yahoo IM users. "We're still in the top five I'm proud to say," brags Kelsey.

According to Pew Report stats, IM advertising may be your best chance at reaching the young adult market -- ages 18-27 -- 62% of whom use IM frequently.

In fact, 46% of these young adults use IM *more* than email. "For advertising IM remains vastly underutilized relative to its usage," Jeff Lanctot, Vice President of Media for Avenue A/Razorfish.

Here's our quick primer on IM advertising for you:

The Basics:

Why aren't more sponsors leaping on IM? Three reasons:

#1. IM is not email. The interface is tiny, with little room for text and graphics. You can't send an email newsletter in IM. (See link below to creative samples of what you can do.)

#2. Until recently, the major services (AIM, Yahoo! and MSN) were offering little in the way of features that marketers could take advantage of. More notes on what's changing below.

#3. The three major services do not interact. So, you can't reach the broad IM audience through one point of contact. You must either pick a service or make separate deals with each. That said, each has millions of users.

What's a skin?

An IM "skin" is the wrapper around the window holding a user's IM buddy list and the window of the messaging box a user uses to type chat into. It's what IM users spend most of their time looking at.

Skins are also referred to as "Themes," "Environments" or "Expressions."

IM users can get a new skin in any number of ways -- the key is you have to get the user to voluntarily select your skin. Skin changes, in general, are not thrust upon users, and users can switch skins at any time. So your creative has to be something folks are willing to raise their hands for. Users access skins in one of three ways: 1. Downloaded as part of a private branded IM offering. 2. Skin sharing -- received as a viral offer from a friend. 3. Selected from a skin "library" of many competing skin offers.

Depending on the IM service you're sponsoring, your skin ad components can include:

Wallpaper: To different degrees, IM services offer users the ability to change the background of both their contact lists and the message window. In some services, this graphical space is limited to decorative rectangles. In others, the entire typing window becomes branded and colorful.

Icons: Many IM users already know that they can show a picture of themselves -- or their dog, for that matter -- to those they chat with. A ping to another person not only includes your text, but also your snapshot. As part of an IM theme, brands can provide icons for users.

Avatars: Avatars are more sophisticated than icons. In some cases, they can be dressed and given the hairstyle and skin color of your choice. In other instances, they can actually react to what you type.

Emoticons: Many people accustomed to ASCII emoticons may have been startled one day to notice that their IM service suddenly inserted a graphical smiley face where they had typed colon-dash-parentheses. In an IM theme, these emoticons can be customized.

Interactivity: Within the graphical wrapper, IM services provide room for tiny little games such as painting, word-fill-in, or polls. For example, Panasonic offered a scratch-off sweeps entry last summer.

Rich media: Some skins can contain a soft link that calls Web, audio, and video content. Sponsors can change the content as frequently as daily.

Viral pass-along: Once a user has created a theme, he or she can share it with other users who will see a link like "get this skin."

Outline of top IM services' ad offerings

-> AOL/AIM

In the US, AIM is the powerhouse with roughly 40 million users. AIM is a free IM service available for download. AOL service subscribers -- those who pay a monthly fee for AOL Internet access -- also get IM as part of the AOL interface.

In terms of graphical skin space, AOL offers limited real estate. The area of customization is confined to a small strip along the Buddy List and a rectangle to the right side of the message window. Icons live in a small rectangle to the left of the message window.

In addition, AOL only recently launched its new IM client that allows for more graphical customization and interactivity. "You have to have the very current version of AIM to get video or SuperBuddies," says Sean Black, Sr. VP/Director of Beyond Entertainment. "That said, the adoption rate of new versions at AOL is very high."

But unless they subscribe to the AOL service, users have to pay for skins-- called "AIM Expressions." The cost is $1.95 per month or $9.95 a year.

Marketers may not be used to having their audience pay to receive their marketing messages. But, according to Black, the AOL offer is still compelling. "There are 500 million impressions a day on AIM," he says.

AIM also has one of the more interesting avatar offerings. The AIM SuperBuddies are 3-dimensional characters that react to what you type. For example, an M&M SuperBuddy will shake his head at you (and the person you are chatting with) if you type "no." He also has audio, uttering a very ironic, "Uh...Nnnno!"

Marketers have also attempted interactive applets as part of their "Expressions." In the Ford Focus skin, a user can click in the Ford border of the Buddy List to get his car-centric horoscope.

-> Yahoo! Messenger

Yahoo! was an early provider of skins to marketers with its "IMvironments." Though the service lags both MSN and AIM in terms of audience, its skin offering is the richest of the three.

In a Yahoo! IMvironment, the entire window is taken over by a brand's message. With M&M's, for example, which has IM themes available in both AIM and Yahoo!, a huge M&M and a chocolatey background takes over the entire chatting window.

Yahoo! has more room for interactivity as well. For example, in Colgate's IMvironment, you can play a version of "mad libs" in an effort to create a story that will get you to smile. You can elicit suggestions from your IM contacts and they will be inserted directly into the story.

You can also shock and surprise the people you are chatting with. In the Yahoo! "Apprentice" IMvironment, you can click a button and the blonde woman on the show pops up over your chatting space and says, "That's no way to get a job around here!" to the person you are pinging.

Yahoo! also has the easiest way to get to different skins, with a click-to-browse feature right on the message window.

"As we think about the strategy and goals for an IM campaign," says Avenue A/Razorfish's Lanctot, "we look for interactivity. When it's just a skin -- it's less interesting as opposed to a skin that has interactivity." Lanctot says that for certain brands, the depth of the Yahoo! interaction outweighs the smaller size of its audience.

-> MSN

Compared to AIM and Yahoo! MSN currently has a thin IM skin program. For marketing purposes, the service only provides for icons and wallpaper. And those are hard to get at to boot. You have to choose the desired icon or wallpaper and download it to your own computer. Then, in the Messenger application, you must browse to what you have saved and select it.

"The main thing to understand as we talk about the IM advertising opportunity and skins," says Lanctot, "is to know it can mean a lot of different things depending on the provider. MSN is just a skin, a brand wrapper around IM screen. Yahoo! is much more advanced, with more interactivity, motion, and sound. AOL tends to fall somewhere in the middle."

-> 2 Other Players

MECA

MECA Communications is a private-label IM tech developer. Their application allows users to unify all of their IM lists (AIM, Yahoo, MSN, ICQ) into a single interface. And, happily for sponsors, this interface was built as a great platform for skins, with lots of room for graphical customization.

Clients include Rolling Stone magazine, Marvel Comics, Rock the Vote, and Electronic Arts.

YACHNE

United Virtualities, the guys behind Shoshkele rich media ads, have launched Yachne, which is a combination of IM and rich media on a sponsoring Web page.

When a Web page contains a Yachne tag, users can create an avatar and chat with other visitors on that particular.

Mookie Tenembaum, Founder United Virtualties, says that the idea behind the technology is that it would be brand sponsored. Users could create their avatars using branded images and then engage in activities such as giving coupons to other users.

To control the environment, one user can be limited to seeing a handful of other users, the method of interaction can be constrained to canned bits of text or actions as opposed to free chatting.

IM Ad Costs and Measurement

"IM is a mass communication tool," notes Beyond Entertainment's Sean Black. "It provides a vast reach to an audience."

"And," he adds, "it is resident on your desktop providing constant exposure." This piece of the desktop, day-long exposure is what advertisers find so compelling. "It's more 'advertainment' than advertising." This means you’re paying as much for repeat and lengthy brand exposure as you are for basic CPM. If you budget on CPC alone, this may not be the medium for you.

An IM theme is usually part of a larger media program, so those prices are based on a portion of a total budget that may be well into six figures.

Panasonic's IM skins, for example, were only one part of an integrated online/offline brand building Summer Fun campaign which included a viral Web site, a membership club, a live road show, print materials, and traditional ads run in conjunction with regional US dealers.

Specific costs:

To launch an AIM expression in a "roadblock," where you take over the AIM space for a day, can cost between $60 and $100K for the day.

On Yahoo! says Lanctot, "Expect to make an investment in 25K range with creative and interactivity in addition to the skin alone."

IM ad services may also charge for theme downloads over a certain target range. "So programs can be part flat fee, part CPM and part CPA," says Lanctot.

Measurement:

Advertisers are given data on how often a theme was downloaded and metrics on how many users interacted with a game or feature.

Making sense of the information is another matter.

At Avenue A/Razorfish, these user activities are equated with more traditional online vehicles. Interacting with an IM skin, says Lanctot, "is equated for measurement purposes with something impactful, like viewing a full page takeover or a skyscraper ad."

One measurement Panasonic considers is how popular their skin offering is compared to 50+ others competing for attention in Yahoo's library.

Strategy -- when should you invest in an IM campaign?

"What do we really need this for? That's the problem," says Black. "Who needs a Pampers skin?"

Users have to be engaged enough with the content to want the skin. So, skins work best where there is an engaged fan base such as for music, a movie or TV promotion, which will form an initial eager user base. "It helps create viral buzz. It extends the message virally and ends up in desktop ownership."

Lanctot says an IM skin program can work for brands with built-in affinity. "An established brand, aspirational cars, fashion brands, these segments tend to be able to make good use of IM skins," he says. "Skins also tend to be effective when the target includes a youth market.” They are more likely to actually download a skin, embrace a skin and share it among friends."

Black agrees: "This group is very elusive and very fickle about how they absorb media. They are constantly changing based on trends. How they're participating in advertising is very strange."

IM gets 18-27 year olds where they can be found, chatting online.

Useful links related to this article:

Creative samples of various IM skin ad campaigns to inspire you: http://www.marketingsherpa.com/imskins/ad.html

Pew Internet & American Life Project Report, "How Americans Use Instant Messaging" http://www.pewinternet.org/PPF/r/133/report_display.asp (Open Access)

Related MarketingSherpa Case Study: " Kellogg's Tests Instant Messaging RecipeBuddie to Drive Consumer Brand Interaction Online" http://library.marketingsherpa.com/barrier.cfm?CID=2534 (Small fee)

Renegade Marketing Group - the agency behind Panasonic's now annual Yahoo IM summer skin campaign: http://www.renegademarketing.com

Avenue A http://www.avenuea.com

Beyond Entertainment http://www.gobeyond.com

United Virtualities http://www.unitedvirtualities.com

MECA Communications http://www.meca.com