MSN Messenger 7.0, the latest version of Microsoft's instant messaging (IM) client for consumers, and MSN Spaces, a Web logging ("blogging") service, launched in Apr. 2005. Microsoft used the launch not only to demonstrate new features added since the beta versions of each service but also to show how advertisers can integrate their brands into the services. This introduction is part of a larger effort to convince advertisers that MSN sponsorships can be as effective as TV or print advertising at establishing brand awareness—an important initiative, given that advertising has supplanted subscriptions as MSN's primary source of revenue.

Messenger: More Interactivity, Advertising

MSN Messenger 7.0 includes new features and improvements, such as the following:

Better video chat. Users with a Logitech Web camera can engage in full-screen video and audio chat with a single click. Previous versions supported only a small video window, and users had to establish the audio and video portions of their chats separately.

Shared search. The new client includes a search pane that lets users search the Web with MSN Search (including the Search Near Me, Image, and News search functions) or their local drives (if they have the MSN Toolbar Suite installed). Users can share Web search results directly in the chat pane, letting other chat participants click on the search links.

Customized presence options. Users have more control over their presence information. In addition to standard options such as "Online" or "Out to Lunch," users may type a short message, such as "doing homework." Another option, "What I'm Listening To," lets users share information about any song that they're currently playing with the Windows Media Player or Apple's iTunes application; the user's IM contacts can then click an active link to buy the song from MSN Music. Contacts cannot actually hear the song that the user is playing, but this type of audio-sharing feature is available in Microsoft's threedegrees IM client and could appear in future versions of MSN Messenger.

PC to mobile phone connections. Later in 2005, users will be able to add mobile phone numbers to their contact lists and exchange text messages with a recipient via his mobile phone, even if the recipient is not an MSN Messenger or MSN Mobile user. At launch, Microsoft claims, this service will work with two-way SMS phones from about 80% of carriers worldwide, although in the United States, Sprint and Verizon will not initially be supported.

Advertising opportunities. The new Messenger client presents many new opportunities for advertisers to reach MSN Messenger's significant audience—the company claims that 155 million people use the service at least once a month, with an average of 17 million conversations happening at any one time.

New features for advertisers include the following:

• Downloadable Theme Packs, which include branded backgrounds, photos, emoticons, and "winks"—interactive animations that users can exchange
• The ability to show advertisements to users as they wait for a video conversation to start
• Text advertising at the bottom of the conversation window
• Sponsored tabs at the top of the main Messenger window
• More video and interactive advertising opportunities at MSN Today, a smaller version of the MyMSN home page that's directly available from the MSN Messenger client.

MSN is aware that IM advertising must not be overly aggressive or it will alienate users, so MSN is emphasizing Theme Packs, which users must choose to download, as an example of how advertising can both serve advertisers and entertain users. For example, a Sprite Theme Pack lets users exchange humorous messages featuring an animated character seen in other Sprite advertising. Yahoo has been offering a similar theme-based advertising program, IMvironments, for its Yahoo Messenger IM client since 2001.

Spaces: Quick Ramp-Up

Available in beta form since Sept. 2004, MSN Spaces offers traditional text blogging (as found on Google's Blogger and other sites), as well as the ability to upload digital photos and lists (such as song playlists). Despite relatively little marketing, MSN claims that 4.5 million users have built a site on Spaces, most arriving through links in the MSN Toolbar Suite and MSN Messenger. These numbers show MSN's ability to leverage popular products and services to build a user base quickly.

For the Apr. 2005 launch, MSN has tripled the amount of storage space for photos to 30MB and added more than 50 new personalized backgrounds. At launch, MSN and Volvo Cars unveiled an advertising campaign that places Volvo's branding in various areas on the service and includes a Volvo-sponsored Web site that compiles personal stories from public Spaces pages.

Resources

MSN Messenger 7.0 can be downloaded from messenger.msn.com; the Sprite advertising campaign can be experienced at music.msn.com/thescenario.

MSN Spaces is at spaces.msn.com; the Volvo-sponsored Web site is at whatsyourstory.msn.com.

MSN's advertising strategy is covered in "MSN's Evolving Advertising Business" on page 29 of the July 2004 Update.