Yahoo Adds a Word From Sponsors on Its Messaging Service

Yahoo Inc., seeking to combat a drop in advertising on its Web sites, released a version of its instant messenger service this week that adds commercial messages to give sponsors an additional way to reach customers.

Internet companies such as Yahoo, America Online and Microsoft Corp.’s MSN Internet use instant message services, which let users send and receive text messages without using e-mail, to keep customers within their networks of Web sites.

Yahoo introduced the latest version as it tries to reverse a decline in ad sales that led to a 44% drop in third-quarter revenue.

Advertising accounts for more than 80% of the company’s revenue.

“The idea [with Yahoo’s new service] is to have different kinds of branded content in the background,” said Ross Rubin, an analyst at research firm Jupiter Media Metrix Inc. “It’s really a way to allow Yahoo’s advertising partners to reach its audience.”

America Online and MSN promote their message services as a way to communicate rather than to sell advertising, Rubin said.

Yahoo Messenger was the third-most popular U.S. instant message service last month with 14.4 million users, said Jupiter Media Metrix.

AOL Instant Messenger had 28million, and MSN Messenger Service had 20.7 million.

The new software also lets users select screens that chiefly promote entertainment companies’ products, such as Sanrio Co.’s “Hello Kitty” characters and Nintendo Co. video games.

Some screens also link to Yahoo’s commerce site, allowing users to buy products promoted in the instant messenger service.

Sunnyvale, Calif.-based Yahoo will release new background screens every month, said Lisa Pollack, director of Yahoo’s messaging group.