Where were you during those dark days of October 1997? The stock market was awful, the analysts were stunned and investors were frustrated and confused. If you were a customer of brokerage house Merrill Lynch you might have been online, chatting to the vice-chairman of the company on the topic: "From Irrational Exuberance to Irrational Gloom". Merrill Lynch uses software from Austin, Texas-based ichat to power its extensive online seminar programs. Merrill Lynch is also an investor in ichat.
The brokerage's use of "chat rooms" is a sure indicator that the technology has moved beyond providing a forum for pre-pubescent teenagers to work out their fantasies in front of 10,000 of their closest friends.
Those type of chat rooms still exist on America Online, The Globe and elsewhere, but industry analyst Jupiter Communications predicts that the audience for what it calls social chat will not continue to grow significantly, levelling out at around 25 per cent of the online population.
Jupiter's report, Beyond Social Voyeurism toward Marketplace Utility, predicts a surge in the use of instant messaging being able to talk online instantly with friends, family, colleagues assuming they are online and willing to talk.
Joe Kraus, co-founder of Excite, says instant messaging is successful in increasing a new user's comfort level with chat, because both parties know who they're conversing with, as opposed to the relative anonymity of chat rooms.
Excite attracts more than 10,000 simultaneous chatters to its service daily, with a combination of celebrity appearances, unstructured chat rooms, private rooms and more controlled, moderated sessions.
So what lies beyond social chat? As a new dad last year, I went online to a service called Parent Soup, to meet other new dads and try to work out what this parenting thing was all about. It was a fascinating experience.
More recently I joined a chat with my favourite investment guru, James Cramer, in one of Yahoo's chat rooms. Jupiter's research shows that celebrity appearances significantly boost online crowds, and certainly Cramer's chat was packed to the virtual rafters with interested investors.
Where there is such a focused group, advertisers are not far behind, and the advertising community is starting to take such business and professional gatherings very seriously. Unlike typical Internet users, chat room visitors tend to stay in one place longer, making them attractive targets for demographically-targeted messages. Many companies are taking this one step further, by setting up their own chat rooms to do cyber-research.
In Talk City, for example, a senior designer from toy firm Mattel convened a group to discuss new design ideas for Barbie dolls. According to Christopher Escher, Talk City's vice-president of marketing, companies sign up because, "it's easy to get the right group. You get quick results and you avoid the dynamics of a traditional focus group where one person can dominate the discussion."
Marian Salzman, director of Brand Futures at Young & Rubicam, is a pioneer in this kind of online research. She said: "Citizens of cyberspace, particularly outside North America, are widely-regarded as change leaders who are ahead of the curve with regard to trying new things. As a result, although online research may not always be scientifically representative, it is predictive of trends and attitudes that are making their way toward the mainstream."
While at a previous advertising agency, Ms Salzman worked with European toy giant, Lego, constructing a special Website which allowed parents and children to view a new product in development. Participants were recruited online, answering e-polls and questionnaires, and the entire project was conducted electronically, giving a significant cost advantage over traditional face-to-face market research.
"Because these children and their parents were able to participate in the study from the comfort of their homes and on their own schedule," added Salzman, "we were able to recruit the busy, relatively affluent families who are the product's target".
Another growing use for chat is to provide customer support. Online service, Spry Net, has two employees constantly answering questions on its Website. The company, according to the Jupiter study, reports significant savings, noting that, while 1-800 calls cost $0.33 per minute, a chat room visit costs almost nothing.
Dean Cruse, vice-president of marketing at ichat, says that 70 per cent of calls coming into a traditional telephone-based call centre are routine, and could be handled online by a combination of a knowledge-based system to answer the most popular questions, and a live customer support representative hosting real-time chat.
In an increasingly online, urbanised world, chat may well become the equivalent of the village pub, where you can drop in anytime and be sure to find somebody there who knows somebody who could solve your problem. Online, however, you'll probably get an advertisement and some junk mail along with the fix.
Frank O'Mahony lives and works in Palo Alto, California. He can be con- tacted at
