February 27, 2003, 12:00 AM

E-mail marketing proves effective--in alienating customers

For all its advantages in market reach and cost efficiency, e-mail marketing continues to get retailers in trouble with their customers--billions of dollars worth of trouble, says a recent report from eMarketer Inc., "Privacy in the Information Age."

For all its advantages in market reach and cost efficiency, e-mail marketing continues to get retailers in trouble with their customers-billions of dollars worth of trouble, says a recent report from eMarketer Inc., “Privacy in the Information Age.”

“Research indicates that the loss of online sales in the U.S. due to the lack of privacy and security will jump from a significant $5.5 billion in 2001 to $24.5 billion by 2006,” eMarketer says in the report.

EMarketer offers several patterns in online consumers’ behavior that lead to lost online sales due to consumers’ concerns over privacy:

-37% said they would spend more online if not worried about privacy, and 34% of Internet users who don’t shop online said they would start shopping on the web if not worried about privacy;

-27% of online consumers said they abandoned online shopping carts, 21% left the web to place an order offline, and 7% of online purchases were made at an e-retailer or shopping portal other than the original shopping site due to concerns over privacy;

-89% said retailers directly violated their privacy by sharing their credit card information without permission, and 83% said retailers committed the same offense when sharing consumers’ names and addresses without permission.

A majority- 54%-think government should regulate online privacy. Moreover, only 6% of online consumers said they think the benefits they receive from sharing personal information online outweigh their privacy concerns. And when Internet users were asked if they were confident that their privacy would be protected by a particular channel, e-mail scored near the bottom of the list. By far the largest number of Internet users, or 90%, cited confidence with the U.S. Postal Service; followed by telephone communication, 68%; e-mail and fax, 57%; and web sites, 55%.

EMarketer notes that consumers prefer e-mail marketing practices that give them clear control over subscribing to e-mail programs and that provide an explicit policy of not sharing e-mail addresses with other marketers. More than 75% of consumers prefer permission-based e-mail as a method of contact with online merchants, it adds. It also notes that among e-marketers recognized as most successful in marketing their products, the largest percentage, 72%, send e-mail only to consumers who have granted permission to send it.

But eMarketer also points out that a large share of online merchants, 35%, send e-mail marketing messages to consumers without having secured their permission. It notes that 25% of these e-mails go to consumers with an option for them to opt-out and that 10% simply go without permission and without an opt-out button.

“That large slice of companies that ignore privacy concerns is a shame, since far above any other channel, permission-based e-mail is how U.S. consumers want to be contacted by online merchants,” eMarketer says in the report.

Even among permission-based e-mail marketing, however, there are problems regarding the clarity, context and frequency of messages, eMarketer says. Some marketers annoy consumers by mixing opt-in and opt-out policies. And though 45% of best-in-class marketers have policies designed to assure that the context of e-mail is relevant to its recipients, only 33% of companies in general do the same.

EMarketer bases privacy report findings on research conducted by Jupitermedia Corp., Quris/Executive Summary Consulting, IMT Strategies, Association for Interactive Marketing, and DoubleClick Inc.

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