The advent of instant messaging as a key part of business communication has added words like "lol" and "brb" to the corporate lexicon. But despite the heady growth of the application, the three big IM providers have not yet found a way to turn the technology into a cash cow.

The three -- America Online's AIM, Microsoft's MSN Messenger and Yahoo!'s Messenger -- have all started adding display ads to users' buddy lists but, outside of these capabilities that offer opportunities for marketing partners, none have been able to secure a foothold in the enterprise market.

Officials from AOL Time Warner's digital division could not be reached to discuss the company's long-term IM business plans but experts believe the company must find a way to target the enterprise market if it wants to maintain its standing as the number one IM provider.

The latest research from Jupiter Media Metrix shows AOL as the clear leader among home and workplace IM users but, with the ongoing rollout of Microsoft's all-encompassing Windows XP OS, AOL's dominance is facing its stiffest competition yet.

The America Online Internet division, which runs the AIM service, has reported flat revenues in the fiscal fourth quarter -- $2.26 billion, up from $2.06 billion -- mostly from subscription, advertising and commerce revenues. Against that backdrop, many believe the division's priority is to turn the AIM platform into a profit center.

CROSS MARKETING
In recent months, AOL has added a bunch of new features to the buddy lists of IM users, all aimed at increasing traffic and sales from its Web channels or at cross-promoting movies or music acts from its Warner Bros. subsidiary.

The most significant sign of AOL's plans for the IM infrastructure came when the company teamed up with New York-based ActiveBuddy to launch a comprehensive marketing campaign for New Line Cinema's The Lord of the Rings trilogy.

Bob Woods, who closely covers the IM space for atNewYork sister site InstantMessagingPlanet believes the cross-promotional push associated with that announcement for The Lord of the Rings is exactly what AOL will do a lot more of.

LATEST NEWS

Microsoft's Dynamics ERP to Gain New Services
Barnes & Noble's e-Reader Nook Sold Out Already
Memory Market Due for Big Shift in 2010
Microsoft: No 'Back Door' in Windows 7
Tech's H-1B Hiring Faces 'Employ America Act'

"When AOL announced the Lord of the Rings promotion, it signaled a major change from what AOL has done with its IM architecture. I think that's what we'll see a lot more of. AOL can use IM to cross-promote everything. That's the power of having a lot of online brands," Woods said.

ActiveBuddy CEO Stephen Klein agreed. In an interview with atNewYork, Klein said the power of instant messaging has opened the door for online companies to use the tool for e-commerce customer support, online marketing, order tracking and even publishing.

INTERACTIVE AGENTS/BOTS
ActiveBuddy, which has a very close relationship with AOL, builds interactive agents (IM bots) that run on the AIM platform. "Of course, I can't speak for AOL or its plans but they seem to be very excited about using IM as a business tool," Klein said, referring to the Lord of the Rings campaign and an interactive agent built to promote Warner Bros. Record's artist Lindsay Pagano.

In both cases, AOL used the IM bots to develop viral marketing campaigns (and push sales) across its channels. Klein believes, too, that AOL can make use of the bots to run eCRM functions within its e-commerce channels.

Klein said instant messaging bots can be used to let customers track online orders, ask customer service questions or simply announce the sale of a particular item from within the AOL portal.

Because the bots can actually be programmed to initiate a conversation, they are potentially a valuable tool for AOL's e-commerce partners to direct shoppers and Web surfers to Web sites.

TELEPHONE CALLS VIA AIM

All three providers have dabbled in sales of Web-based telephone calls to IM users but, here again, it appears AOL is missing the boat and giving up ground to Yahoo! and Microsoft.

AOL, which sells phone minutes for New Jersey-based Net2Phone, Inc. on the AIM platform is "a distant third" in terms of revenues and minutes purchased, according to Net2Phone spokesperson Sarah Hofstetter.

"In the fiscal first quarter, Yahoo! and MSN had almost identical numbers on revenue and minutes purchased from us. AOL accounted for less than half of what was purchased by the other two," Hofstetter added. "We've already routed over a billion minutes for MSN, so we know the market is there."

She believes the lower sales via AOL could be attributed to less marketing and the clunky way the technology is integrated on the AIM buddy lists.

"We believe telephone calls via AIM could be a substantial revenue earner if AIM integrated our services more tightly. For example, they can place an actual button on the buddy list toolbar that is visible and that simply says 'CALL'. That would certainly help AIM users find the telephone service," Hofstetter said.

"AOL is not nearly as tight with the integration as the other IM integrations," Hofstetter said, pointing to highly visible buttons on the MSN and Yahoo! buddy lists that shuttles users to pop-up telephone keypads.

By comparison, AOL's AIMPhone service is buried in the system. To access the Net2Phone service, a user has to go to the "people" section in the buddy list menu bar and select "Connect to AIM Phone" there.

Even after that, it still isn't as user-friendly as MSN and Yahoo!. Instead of a telephone keypad pop-up, AIM sends users to a co-branded Web site that require a separate download and sign-up process.

Despite all the knocks against AOL, no one is willing to bet against the company's sheer financial (and marketing) muscle. While IT managers have legitimate gripes about IM security and consumers quibble about the company's foot-dragging on IM interoperability, everyone agrees the market is ripe for the picking.

They just don't agree on how to make money from it.