September 30, 2004, 12:00 AM

SPONSORED SUPPLEMENT: E-Mail Marketing: Sailing High in Troubled Waters

Just a year ago, near hysteria swirled around e-mail. Consumers` inboxes were clogged with junk e-mail and e-mail marketers feared that spam was killing one of the most effective mediums in the history of direct marketing. Legislators jumped into the fray and passed the CAN-Spam Act that promised to jail spammers—if they could be caught.

Today, just as much spam is swirling around, and precious few spammers have gone to jail. And e-mail marketing, far from dying, is as strong as ever. Consumers are opening their e-mails at rates comparable to historical rates—33.4% opened their e-mails in the latest quarterly e-mail report from DoubleClick Inc. vs. 37% a year earlier—while click-through rates have hardly diminished at 6.3%, off only slightly from 6.7% a year earlier.

Meanwhile, marketers` attention has shifted from wringing their hands about spam to devising ways to improve e-mail deliverability and response rates—the keys to a successful e-mail campaign. "Spam continues to be a problem, but there is a lot being done on the technology side about it," says Adam Benjamin, vice president and general manager of e-mail solutions with DoubleClick.

Improving deliverability

Consumers have learned to live with spam, although marketers are still cautious. "We will see a resurgence of interest in e-mail marketing following a clean-up of the spam problem," says Mike Adams, CEO of Arial Software, which develops e-mail software for in-house use. "Persuasion-based e-mail marketing won`t evolve unless we have a clean medium."

But marketers need to look to the future. And the future for e-mail marketing is bright, e-mail advocates project. "We are nowhere near the level of utility that e-mail marketing will be in the future," Adams says.

One area of e-mail marketing that the spam problem has exacerbated is deliverability. The major Internet service providers, AOL, Yahoo, MSN and others, have all installed spam blockers. While they have significantly reduced the amount of annoying e-mail that has landed in consumers` inboxes, they have created headaches for e-mail marketers. "Marketers are focusing on delivery strategies," Adams says.

Among the most basic approaches to ensuring delivery, Adams points out, is to ask ISPs what it takes to get on their so-called white lists, then monitoring delivery to make sure that the mail is getting through. One way to monitor delivery, Benjamin adds, is to seed e-mail lists with addresses that the sender establishes, as DoubleClick does. "That`s a service we provide to all customers," Benjamin says. Another tactic, notes Adams, is to avoid outside services that group clients on one server. If one client violates an ISP`s guidelines, mail from all clients on that server could be blocked.

Apart from the issues related to dealing with spam, DoubleClick believes there is another approach to e-mail marketing that retailers have overlooked: the e-mail messages they send in response to an order. DoubleClick is in limited production with a rollout planned for next year of a product that it calls DARTmail Real-Time Messaging. Those messages are tied in to a transactional message and are designed to reach consumers just after they have interacted with a retailer. Under the real-time message system, a customer who makes a purchase receives a nicely formatted e-mail confirming the purchase and payment information, but with an upsell or cross-sell area. "Those kinds of messages are traditionally driven out of the IT department and not marketing," Benjamin says. "This ties in operational activity with the marketing team."

Doing what each does best

From an operational point of view, the retailer benefits form the real-time messaging system because it removes the IT department from a tedious job. "The IT department doesn`t have to spend time on an operational e-mail," Benjamin says. The marketing department also benefits because it doesn`t need to wait in line for operations to complete the e-mail. "It alleviates the problem of having the marketing team deal with IT," he says. "Marketing can select the offer and send the e-mail to customers with the right profile."

The Real-Time Messaging product automatically triggers e-mail messages to customers when they complete a specific action, such as a purchase, customer service request or profile update notifications. The entire process is automated, with the major work coming in creating the templates with the offers and business rules, Benjamin says.

Such messaging fulfills two of the most important criteria in e-mail marketing, Benjamin says: relevancy and timeliness. Placing cross-sell and upsell pitches in confirming e-mails makes sense because consumers expect to receive them, Benjamin says. A DoubleClick survey shows that 95% of online buyers expect to receive an order confirmation, 90% expect shipping information and 79% expect billing information. "Many people are expecting it so they`ll click on it when it comes," Benjamin says.

Today, though, the messages are strictly utilitarian. "You don`t see much upsell," Benjamin says. "Yet this is prime real estate." He cautions, however, that under e-mail marketing laws, only certain percentages of transactional messages can be used for marketing purposes so it`s important to make sure that messages meet the law.

While most retailers send confirming e-mails, they usually are not HTML e-mails that can contain a pitch to entice the customer to buy more. "Today, a high percentage are text-only and not formatted," Benjamin says. "That`s the way it was and still is and we are trying to change that."

The outcome of using Real-Time Messaging, Benjamin says, is increased sales. "This will provide a competitive edge because retailers can directly monetize these kinds of e-mails," he says.

Growing sophistication

Arial Software, too, is working to bring control of e-mail into the hands of the practitioners. Its software is designed to be installed on a company`s servers and operated by an in-house marketing staff. "That`s a real trend we are seeing in the industry," Adams says. "Companies are becoming more mature in their ability to bring e-mail marketing in-house. They outsourced because they didn`t have the experience or technical skills. But as they get more experience, they are more comfortable bringing it in-house."

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