For direct marketers, the 1999 holiday season confirmed the value of e-mail marketing. And while there has been some progress, as a whole, direct marketers are still reluctant to use e-mail. This stems from the absence of a definitive set of guidelines for collecting, storing and sending e-mail messages.
The fear of being branded “spam” has left most direct marketers on the sidelines, but all this is about to change. More e-mail addresses, endorsed e-mail and federal legislation will make e-mail the preferred way to market in the new millennium.
Opt-in E-mail Applications
Many direct marketers have begun asking consumers for their e-mail addresses. This is usually done on the company’s Web site, where the consumer will register for access or special services. E-mail addresses are also collected during purchase transactions on the Internet.
Recently, more progressive marketers have begun asking consumers for their e-mail addresses in offline settings, most typically during a telephone order. They are also collected in retail locations and in surveys. While collection of these e-mail addresses can accompany a transaction, one is not required. These marketers are making fast strides in learning to use new e-mail addresses, and in refining the offer, copy and look used in marketing efforts.
In addition, a group of third-party companies have began to obtain permission to send e-mail to consumers from a variety of marketers. These companies may even offer incentives, including point-based bonus programs, personalized content or sweepstakes. Some offer little or no incentive except a promise to send offers that interest the consumer. These companies are now renting their lists based on their opt-in relationship with the consumers in their files. There are, collectively, about 18 million to 25 million consumers who have opted in to these programs.
The Current Legislation
Several laws have been passed in state legislatures that affect the use of e-mail. Some require the use of a legitimate return address, while others require the use of an opt-out feature. However, few have gone as far in defining acceptable e-mail practices as those laws passed in California in 1998 and Tennessee in 1999.
The California and Tennessee laws define three types of acceptable e-mail uses. First, marketers can send e-mail to consumers who have opted to receive such messages. Second, marketers can send e-mail to consumers with whom they have a prior business relationship. Finally, marketers can send e-mail to consumers who do not fall into the first two categories, as long as the subject line is labeled with the letters ADV. This allows consumers and their Internet service providers to identify unsolicited commercial e-mail.
In last year’s session of the House of Representatives, a bill (HR1685) was introduced to bring rules to a variety of Internet issues, including e-mail. This bill essentially used the same parameters as those set out in California and Tennessee bills, but was not passed before Congress closed session. However, it is expected to be reintroduced in the next session of Congress.
E-mail Applications Based on Prior Business Relationships
The prior business relationship standard has been introduced to benefit both consumers and marketers. Today, the only viable way for marketers to obtain their customers’ e-mail address is to request it. However, it is both costly and time-consuming for a marketer with a million customers to obtain permission to include them in their e-mail program. The prior business relationship rule leaves open the option for marketers to develop and use e-mail matching services that help them obtain and update e-mail addresses of current customers.
The rule also benefits consumers. They will no longer have to contact every business with which they have a relationship in order to start receiving e-mail offers from those businesses, or every time they change their e-mail. Consumers have already established their desire for a relationship with these marketers. The marketers already know the consumer and may have specific information about their interests that will enhance the e-mail experience.
Also, there is a built-in assurance that these marketers will respect their interests, since the marketer stands to lose an existing customer or prospect if they do not. And consumers should always be presented with the opt-out options.
Prospecting Using Endorsed E-mail
Many marketers are concerned that opt in and prior business relationship could restrict their ability to prospect using e-mail. Endorsed e-mail could be the answer. Endorsed e-mail occurs when one marketer sends a communication to customers, which includes an offer from another marketer. This approach is widely used by catalogs in their current package insert programs. In another instance, a magazine could send a credit card offer to its e-mail file. This mailing would be allowed per the existing relationship and would conform to existing and proposed legislation. Currently, companies providing opt-in e-mail services are practicing endorsed e-mail. They are sending offers from third-party marketers based on the opt-in e-mail company’s relationships with the consumer.
Certainly, the concept of mailing offers to the customer files of other mailers is the foundation of the direct mail list industry. In addition, endorsed mailings have been conducted for decades by such noted mailers as Spiegel and American Express. By adapting the best practices of the direct mail industry to e-mail, the opportunity exists to grow the ability of marketers to prospect using e-mail and do this in conformance with established e-mail guidelines.
Growing The E-mail Market
While the opt-in companies offer valuable access to consumers, at 18 million to 25 million names, they do not provide a marketplace large enough for most direct marketers to utilize in a targeted fashion. Compare this with more than 30,000 postal lists with an average of about 200,000 names each. There are more than 6 billion names from which postal mailers can choose. As each of these list owners begins to ask their customers for their e-mail address, it is expected that, within a year, almost a third will provide it. This could result in an e-mail marketplace with more than 2 billion names from which to select.
So what will stem the flood of e-mail? Marketers will. And the reason is this: Unlike the postal marketplace, endorsed e-mail will require the list owner to identify himself. Therefore, the offer must enhance the list owner’s relationship with customers. List owners will not endorse offers that do not interest their customers. Reputable businesses with an existing relationship with a consumer are better positioned than the government to regulate the flow of e-mail. And since consumers decide where they build relationships, they make the ultimate decision. Requirements to offer opt-out with every e-mail will ensure that consumers continue to control their e-mailboxes.
Support Federal Legislation
To realize the potential that e-mail holds, rules must be put into place. The direct marketing industry should support federal legislation that would allow commercial e-mail based on opt in or prior business relationships. These should become the only acceptable conditions for e-mailing a consumer or a business. Opt-out approaches, or labeling, will only lead to flooded e-mailboxes, angry consumers and a distraction from legitimate e-mail communications.