April 2, 2004, 12:00 AM

The battle between good e-mail and bad e-mail

Spam continues to be a major concern among e-mail marketers. ISPs are fighting back with suits, but some retailers are depending on their creativity to float above the spam flood. Also: -- What’s in CAN-Spam -- The suit against spammers -- How one retailer deals with -- The FTC seeks spam guidance -- CAN-Spam

They’ve had enough and they’re not going to take it any more. That’s the message that four providers of e-mail services to consumers said they were sending to spammers last month when they filed the first action under the 2-month-old federal CAN-Spam Act.

Four leading Internet service providers, AOL Inc., Microsoft Corp., Yahoo Inc. and EarthLink Inc., came together to put the new law to its first test as a major weapon in the fight to wrest control of e-mail from in-box-clogging spammers. Spam accounts for 62% of e-mail volume, up from 45% a year ago, reaching 13 billion messages, according to e-mail services provider Brightmail Inc. and Forrester Research Inc. “Congress gave us the necessary tools to pursue spammers with stiff penalties, and we in the industry didn’t waste a moment,” says Randall Boe, executive vice president and general counsel of AOL.

CAN-Spam, or the Controlling the Assault of Non-Solicited Pornography and Marketing Act, went into effect Jan. 1 with promises of putting the weight of the federal government behind an anti-spam drive that had been left up to 36 state spam laws. The law prohibits the use of false “from” and “subject” headers and requires e-mailers to include an opt-out feature and their postal address in each e-mail message.

No silver bullet

But while the direct marketing industry generally cheered the suits, CAN-Spam is far from being a silver bullet that will rid the world of spam, experts say. The law has its limitations in applying to spammers who hide their tracks through multiple network servers and domain names and it is only one part of a multi-pronged legal, technological and marketing approach that calls upon marketers to make the effort to communicate more clearly and effectively with customers and prospects.

“It’s a daunting task to keep track of everything that’s changing regarding CAN-Spam and e-mail communications,” says Kelly Rader, manager of Internet ordering for Pizza Hut Inc., where e-mail marketing has been helping to drive growth of online ordering at 2,000 restaurants.

The rising volume of e-mail and spam is enough to raise serious doubts about the viability of e-mail as a marketing medium. “Our e-mail can get lost in a sea of spam, and that’s a huge concern for us,” says Larissa Hall, vice president of marketing for Buy.com Inc., which sends out millions of e-mails each month to maintain relationships with customers.

But marketers don’t want to give up on e-mail, although most agree e-mail is in need of a major fix. With in-boxes crammed with marketing messages, consumers and Internet service providers are filtering out more and more e-mail, even if it’s from legitimate marketers.

In addition, consumers’ tolerance of e-mail is going down. 65% of men and 56% of women define spam as “e-mail from a company that I have done business with but that comes too often,” according to a survey last fall by e-mail marketing company DoubleClick Inc. Moreover, 36% of men and 32% of women agreed that “any e-mail that tries to sell me a product or service” should be considered spam. E-mail marketing practitioners tend to define spam more narrowly as unsolicited mail sent in extremely high volumes to compiled lists. “We were surprised that to men, almost any commercial e-mail was considered spam,” says a DoubleClick spokesman.

The dual challenge

The surge in e-mail presents both marketers and government regulators with a dual challenge: how to reduce that volume to a manageable level and rid the world of spam without ruining e-mail as an efficient and effective marketing tool. Indeed, even the enforcers of CAN-Spam recognize the importance of reaching this balance. “It would be disheartening to see people give up e-mail, because it’s a great tool of commerce and education,” says Michael Goodman, staff attorney for the Bureau of Consumer Protection, the arm of the Federal Trade Commission that serves as the lead agency in enforcing the CAN-Spam Act.

The main provisions of CAN-Spam are that e-mail senders clearly identify themselves while giving consumers an easy way to opt out of getting more messages (see box p. 18). The rationale behind those provisions is that true spammers will not make the investment to provide that information or risk the flood of e-mails from consumers opting out.

But many retailers are taking the challenges head on, and industry experts say CAN-Spam is helping to push improvements in e-mail marketing even beyond the intended scope of the law. That can only help marketers maintain crucial relationships with ISPs as well as with their targeted customers.

Marketers who are overly aggressive with e-mail stand not only to violate CAN-Spam, but also to exceed thresholds set by ISPs for message bounce-backs and consumer complaints. Bounce-backs most often occur when e-mail lists are not kept up to date with current addresses, causing messages with invalid addresses to get bounced back to the sender. Spam-weary consumers, meanwhile, can flag unwanted e-mail as spam and have their ISPs block it from their inboxes as well as the inboxes of other users of their ISP’s e-mail system.

ISPs have set thresholds for bounce-backs and complaints that, when exceeded, place marketers on blacklists that get their e-mail campaigns blocked from inboxes. AOL says it may begin to block e-mail when a bounce-back rate hits 10% of a marketer’s total e-mail, while bounce-back rate thresholds for most ISPs range from 10 to 20%, industry experts say. Although ISPs don’t like to reveal thresholds related to consumer complaints, experts say these can run under 10% but vary based on average complaint levels for particular types of marketers.

The leading question

“The number one question a marketer should ask, is what is the complaint rate on a campaign-by-campaign basis,” says Al DiGuido, CEO of BigFoot Interactive Inc., an e-mail service provider. “If your average monthly complaint rate is under 1,000 per million, that’s good and should get you into white-lists of accepted marketers.”

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