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

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.”

ISPs offer multiple ways for marketers to deal with bounce-back and complaint issues. In addition to following CAN-Spam guidelines on e-mail formatting, e-mail marketers should check such basics as correctly spelled addresses as well as technical guidelines like not sending e-mail from open proxy servers, which are servers configured to allow outsiders to send e-mail through them. AOL publishes its guidelines at http://postmaster.info.-aol.com, where it also provides a phone number for its Postmaster Help Desk. Yahoo provides assistance at http://help.yahoo.com.

To maintain the best relations with customers and ISPs as well as abide by CAN-Spam, Performance Inc., a retailer that sells bicycles and accessories through three web sites, a catalog and 50 stores, has started personalizing the 500,000 e-mail marketing messages it sends each month. “In a weird sort of way, I’m glad CAN-Spam came along because it pushed us to do this sooner,” says Andrew Ruggeri, director of Internet operations.

In the past, he says, Performance blasted out e-mail messages to customers without personalizing messages or analyzing responses. “We bombarded our list with an endless stream of offers each week and we didn’t have any back-stream analysis to see the open rate or sales conversion rate,” he says.

Now, with help from e-mail services provider EmailLabs, a unit of CRM software company Uptilt Inc., Performance analyzes which customers respond to particular offers. And by adding other customer data, such as geographic location, it sends targeted messages with a greater chance of generating a response, Ruggeri says. “Now we can learn that a southern California customer likes mountain bikes, and that we should e-mail marketing messages about mountain bikes to that customer in winter,” he says.

Performance also routinely asks customers how often they prefer to receive marketing e-mail. “Overwhelmingly, customers said they wanted e-mail once a week,” Ruggeri says.

Better response

Performance, which started its targeted e-mail campaigns in late January, a few weeks after CAN-Spam went into effect, has already realized increased open rates in some e-mail campaigns, particularly those with coupons attached to customized offers based on interests customers revealed in prior campaigns, Ruggeri says. Open rates reached 50% of e-mails with coupons, compared to 25% without them, he says. He expects these rates to improve even more as he personalizes e-mail with first-name greetings.

Setting up the custom marketing system with EmailLabs took about two weeks to coordinate customer data, Ruggeri says. Performance spent a few hours to pull data including first and last names and postal addresses out of its customer database, then sent that data along with its customer e-mail list in an FTP batch file to EmailLabs, which coordinated the customer e-mail addresses and personal data with e-mail click-through data.

Ruggeri, a marketing specialist and two IT staffers spent about four hours in telephone training with EmailLabs, learning how to analyze reports on customer responses. The system includes an administration web page for analyzing reports, conducting customer surveys and setting up custom e-mail campaigns.

As their understanding becomes more sophisticated, Ruggeri expects to begin setting up automated e-mails triggered by particular customer events, figuring it may take about six months for his staff to fully learn the system through trial and error. Eventually, he expects customized e-mails to help build relationships between customers and managers of stores whenever e-mail recipients live near a bike shop. “We’ll get more sophisticated as we see the return on e-mail marketing campaigns and can judge the ROI based on increases in sales in different channels,” he says.

As the spam issue coincides with a push for more targeted and personalized marketing, e-mail service providers, including Bigfoot Interactive and ExactTarget, are promoting what they characterize as one-to-one marketing. In a recent survey of consumers, Bigfoot found 40% said retailers could do a better job of targeting them with e-mail marketing messages that cater to their individual needs.

Bigfoot is developing a system for a large retailer, which the company won’t name, to compile more than 500 attributes about individual customers—including personal data like name, address and age combined in multiple ways with shopping history related to dozens of products. It will then run multiple combinations of that data with all of the retailer’s product SKUs, prices and other details that could go into designing marketing messages tailored to a single customer’s interests. “Each marketing piece could be reconfigured to market to the same person in a million different ways,” says Michael Della Penna, chief marketing officer. Bigfoot takes from a week to a month to set up a retailer’s e-mail database with customer attributes to support personalized marketing. Bigfoot charges $1,000 to $2,000 a month, plus a fraction of a cent per sent e-mail.

Predictions

ExactTarget is working with retailers to develop customized e-mails that seek to connect a customer’s expressed interests with personal service from local store managers. It is building a database of customers’ interests, demographics and geographic locations by analyzing customer responses to e-mail messages, running pop-up surveys on web sites and asking store customers at the point of sale for information. “Now we can build a relationship with a customer and predict what they’ll be interested in,” says Chris Babbott, co-founder and senior vice president of marketing. And to build on the relationship, ExactTarget will work with retailers to send a personalized e-mail message from the manager of a store near a customer’s home.

Some analysts, however, suggest that true one-to-one marketing, where individual consumers get unique messages, is still outside of even these latest applications. “These systems will offer more personalized marketing and support event marketing, with promotions triggered by particular events, but they’re still segmenting messages to groups of consumers,” says Elana Anderson, analyst with Forrester Research.

Other technology systems designed to coordinate e-mail marketing best practices, meanwhile, have become easier and cheaper to deploy, says Keith Powell, senior manager in the retail practice at consultants BearingPoint Inc. “Even from two years ago, it’s much easier today to use tools that help e-mail marketers get things right,” he says. For example, he says, the latest marketing software applications from companies like Art Technology Group Inc., Blue Martini Software Inc. and Broadvision Inc. integrate e-mail opt-in buttons on web sites with marketing databases, making it easier for marketers to maintain permission-based e-mail address lists.

In the past, companies had to rely on IT staffs to write new code for an opt-in feature, then tie customer opt-in activity to a marketing campaign system. “Now this can all come pre-built into business-to-consumer e-commerce software,” Powell says, noting that a software package offering this integration can run about $500,000, compared to the $1-$2 million it used to cost.

Mixed reviews

Although raising the level of e-mail marketing is helping legitimate marketers stay legitimate, experts caution that the battle against spam may be long and difficult. The challenges can be seen in the mixed reviews given the CAN-Spam Act itself, which critics say may actually lead to an increase in unsolicited e-mail while having a limited effect on halting spam.

“I think the law will be ineffectual, at least in the short run,” says Scott Dailard, Washington, D.C.-based attorney who specializes in marketing and advertising law and represents major retail chains for law firm Dow, Lohnes & Albertson PLLC. CAN-Spam is actually encouraging more marketers to send unsolicited e-mail, Dailard says. “The law created a loophole for legitimate marketers to send e-mail that people don’t want,” he says. “Because the law created a national opt-out standard, it’s not illegal to send e-mail unless a marketer is specifically told by recipients that they don’t want its e-mail.” He adds that the federal law has also emboldened marketers to send unsolicited e-mail because it lacks a provision allowing consumer-initiated class-action lawsuits.

Before the CAN-Spam Act went into effect, Dailard adds, many legitimate marketers were less inclined to send bulk e-mail in nationwide campaigns, because it was too difficult to keep abreast of some 36 state anti-spam laws. CAN-Spam supersedes state laws.

Moreover, many of the worst spam offenders are unlikely to be fined, apprehended or even discovered under efforts of CAN-Spam, Dailard adds, because of their ability to hide their base of operations and the increasing tendency of many to operate overseas. “Spammers have been operating in disregard to 36 state statutes, so there’s no reason to believe they would fall into line with new federal standards,” he says.

Adding to doubts over the effectiveness of CAN-Spam, at least in the near term, is a lack of awareness about the law and its provisions among small companies. Interland Inc., provider of web hosting and other online services for small businesses, reported last month that while 85% of small companies it surveyed use e-mail to communicate with customers, 62% had never heard of CAN-Spam or were not aware that it affected their business.

Much of this ignorance about the law stems from the way it was introduced during the retail industry’s busiest season last fall, some observers say. “CAN-Spam came out at the height of the holiday shopping season, so many retailers didn’t even know about it,” says Jordan Ayan, CEO of Subscriber Mail LLC, an e-mail service provider.

The refrigerator

The FTC is charged with CAN-Spam enforcement, though building cases can take time because of the way spammers try to hide their identities, Goodman says. The government is expected to appropriate $12 million in new funds for enforcing CAN-Spam along with other measures pertaining to Internet fraud, says a spokesmen for Sen. Ron Wyden (D, Ore.), who introduced CAN-Spam along with Sen. Conrad Burns (R., Mont.). In addition, the FTC’s Bureau of Consumer Protection is dedicating its largest enforcement team to CAN-Spam and cooperating with a newly formed Spam Task Force, which coordinates investigation efforts by federal, state and international law enforcement groups.

One of the ways the FTC looks for leads in spam cases is by tracking spam messages forwarded by consumers to what the FTC calls its “spam refrigerator” database, which can be reached at UCE@FTC.gov. The law applies regardless of the volume of e-mail a marketer sends. “A single message can violate the act and lay the foundation for a law enforcement action,” an FTC spokeswoman says.

Proponents of CAN-Spam say it’s designed to use legal recourse to its best advantage. It provides, for instance, for prosecution of the company that is marketing something via spam as well as for the companies that transmit the supposed spam. Many spammers attempt to shield themselves as the source of spam by hiring a third-party transmitter, but CAN-Spam clarifies that all parties that “initiate” spam are liable. “The definition of ‘initiate’ is broad enough to capture both the transmitter and the marketer,” the FTC spokeswoman says.

A wider net

While many spam transmitters hide their home network servers by routing messages through a series of servers, identifying and finding the actual marketer can be easier and a more effective means of enforcement. “The real advantage of the CAN-Spam Act is that it doesn’t limit enforcement to one group or another,” Goodman says. “The act can go after the spammer or the marketer; anyone involved in spam could be subject to a law violation.”

CAN-Spam isn’t the only solution to spam, however. Several technical approaches are under development, although, as with CAN-Spam, none is expected to act as a stand-alone solution. Address verification tools, including CallerID from Microsoft Corp. and Domain Key from Yahoo Inc., are being designed to work within e-mail management systems and filters to authenticate senders’ e-mail addresses. Each tool operates differently. Yahoo’s Domain Key system is being designed around the use of encryption keys, or mathematical algorithms used to record and protect the identities of e-mail senders. Before an ISP would pass incoming e-mail to a subscriber’s inbox, it would use a key provided by a marketer to match the server sending each message with the sender’s information registered with the Internet-based Domain Name System.

CallerID requires e-mail marketers to publish their e-mail-sending policies, including the types and identities of servers they use, in the DNS. Before an ISP will accept incoming e-mail, it would check the source of the e-mail against the information registered in DNS. “Caller ID will help get rid of illegitimate marketers because one of the appealing things about e-mail to spammers is that they can remain anonymous,” says Anderson of Forrester.

Ease of use

They may be available as early as this summer and be fairly easy for marketers to implement, says Eric Allman, CTO of Sendmail Inc., an e-mail service provider. He notes that an in-house IT staff should have no trouble publishing its e-mail policies to the DNS, for which Microsoft publishes detailed instructions on its web site.

In addition, software should soon be available for deploying Yahoo’s Domain Key system. “We’re supporting both Caller ID and Domain Key,” Allman says, “because once you have authentication, it will make the use of spammers’ zombie machines more difficult.” Zombies are computer servers that send spam, often without the server owner’s knowledge, after being attacked by a network virus designed by spammers, Allman says, noting that as much as 80% of spam could be coming through viruses.

Because spammers may figure out ways to get around e-mail authentication systems, the e-mail industry is also working on two methods to make it economically infeasible for spammers to do business. One is “challenge response,” which Microsoft and others are researching as a way to require suspected spammers to solve computational puzzles before their e-mail could arrive in inboxes. The system might be set up so that any e-mail address not listed in a consumer’s address book or “white list” would trigger an automatic bounce-back along with a task intended to be solved by a person, such as identifying a picture or completing a mathematical puzzle. Ideally, this would block spam sent automatically from hacked servers as well as make it too time-consuming and costly for spammers to address personally, since spammers rely on sending hundreds of thousands of e-mails a day to get a small response.

But challenge response has its limitations, experts say. For example, it would interfere with retailers sending order confirmations to customers who hadn’t thought to include them in their address book. And some spammers might be able to allocate enough computer power to get around the puzzles fast enough to do business.

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Fees

A more effective, long-term solution, Anderson says, is forcing high-volume e-mail senders to pay a fee per sent e-mail. Research for a way to implement such a fee is under way. This system would require all large e-mailers to register their domains with a third-party service that would serve as a fee-imposing clearinghouse. Although the ISPs have yet to speak publicly about working with such a fee-imposing gateway, experts say it offers clear advantages to ISPs as well as corporate and consumer recipients of e-mail, while promising to kill the business case for sending spam.

A fee system, which would work in coordination with authentication services like Caller ID and Domain Key, would be set up so that ISPs would check the identity of the sender in the Domain Name Service and check the volume of e-mail sent with an additional online registry. The registry, operating under standards set by an industry governing board, would periodically tally e-mail volume from individual marketers and send them an invoice. The collected funds would then be distributed to the ISPs or corporations channeling the e-mail to inboxes, helping to pay for the ISPs’ costs of filtering spam.

Forrester proposes that an e-mail gateway system would be owned by ISPs, of which there are some 18,000, following the model of Visa and MasterCard, which are owned by thousands of financial institutions that issue credit cards. The typical gateway fee, which could kick in at, say, a threshold of 1,000 e-mails per month, would amount to $2.50 per thousand e-mail messages, a tiny amount compared to the cost range of $50-$300 per thousand for building or renting permission-based e-mail lists, Forrester says in a December 2003 report, “The Real Answer to the Spam Problem.”

But while the gateway fee would amount to a tiny cost for legitimate marketers, Forrester adds, it could force spammers out of business. “A charge of $2.50 would add $2,500 to the cost of a 1 million-message campaign, seriously undermining spam’s economics, in which names are acquired free through harvesting and sending e-mail costs as little as 10 cents per thousand,” or $100 per million, Forrester says. Although it may be years away, the fee-based idea is gaining acceptance in the e-mail industry. “There is certainly more openness to that idea than there was a year ago, but there’s a lot more work to be done,” says Helen Roberts, COO of e-mail service provider Responsys Inc.

Getting to open

But even if the drive to rid the world of the most offensive spammers is successful, legitimate marketers will still face the pressure of using e-mail in a way that gets consumers to open the messages. With all the new techniques that marketers are learning along with the new tools of the trade, e-mail should continue as an effective means of building customer relationships, says Hall of Buy.com.

“I see e-mail continuing to be a good marketing tool, as long as customers get what they want out of e-mails,” she says. “Because at the end of the day, that’s what e-mail marketing is all about—delivering relevant messages to customers.”

paul@verticalwebmedia.com

What`s in CAN-Spam

The federal CAN-Spam Act, which became effective Jan. 1, includes several provisions intended to clearly identify e-mail senders while giving recipients control over receiving future messages. The law prohibits marketers from using misleading "from" or "subject" headers in e-mail messages, and it requires them to identify their physical location by including their postal address within the text of the e-mail message.

The law also requires marketers to place an opt-out link within each e-mail message, and the opt-out feature must also give e-mail recipients the option of telling senders to halt all segments of their marketing campaigns. The latter measure is intended to let consumers choose only those parts of e-mail campaigns that suit their interests. The law requires marketers to remove or suppress opt-outs within 10 days.

In addition, the law prohibits marketers from mixing e-mail messages tied to e-commerce transactions-order confirmation e-mails, for instance-with promotional messages.

The law also makes it easier for plaintiffs to prove harm from spam in prosecutions that can now cross state borders, and it provides penalties that hit to the heart of spammers` ability to make money, legal experts say. In the past, plaintiffs had to come to court with reams of hard evidence, including the false headers of hundreds of thousands of spam e-mails, to prove that spammers had damaged their e-mail system, then hope the court would impose significant fines, says an attorney who filed a CAN-Spam lawsuit for one of the ISPs. But CAN-Spam shifts most of the burden of proof to the defendants, who must prove that they used legitimate headers to send all of their e-mail and met other requirements of CAN-Spam, he adds.

And because the law provides for a fixed amount that plaintiffs can recover in damages-$100 for each false e-mail header and $25 for each additional violation-it`s designed to financially cripple spammers while sending a warning to others that spam is no longer economically feasible. CAN-Spam carries penalties of up to $250 per spammed e-mail message, with a cap of $2 million that can be tripled for aggravated violations. There is no cap on penalties for e-mail sent with false or deceptive headers. Defendants can also face up to five years in prison.

While the law doesn`t allow for consumer-initiated class-action lawsuits, it allows for suits to be brought by Internet service providers and state attorneys general as well as by the federal government. The law`s designers justify that provision by saying they wanted to concentrate legal action among entities with the best vantage point for suing. "We wanted to empower ISPs to take legal action, because they know better than anyone who`s sending messages over their servers and causing ISPs real economic harm," says a spokesman for Sen. Ron Wyden (D., Ore.), who introduced CAN-Spam along with Sen. Conrad Burns (R., Mont.).

But attorneys who represent retailers in spam issues note that the threat of consumer lawsuits was one of the strengths of operating before CAN-Spam under 36 state anti-spam laws, about half of which permitted consumer-initiated suits. "The view of many marketing companies was that spam wasn`t worth the risk, partly because of the risk of consumer lawsuits under state laws," says Scot Dailard, an attorney who represents major retailers and specializes in marketing law.

Pizza Hut cooks up e-mail marketing innovations-within the law

At Pizza Hut Inc., new e-mail marketing campaigns are reaching customers in innovative ways while fulfilling CAN-Spam`s requirement to run separate promotional and transactional messages. Working with e-mail marketing message templates provided by Postfuture Inc., PizzaHut.com sends out a series of follow-up e-mails after customers place orders online.

The first follow-up message, which arrives as an order confirmation, adheres strictly to the rules of CAN-Spam by arriving in the customer`s inbox as a text-only message with no promotional information. "We want customers to take online confirmations seriously, so we don`t include promotions and we use text-only messages in case their computers can`t accept graphic messages," says Kelly Rader, manager of Internet ordering.

But because many online customers are placing their orders days early, Pizza Hut realized it had the opportunity to send repeated follow-up messages. Pizza Hut does much of its business on weekend evenings, so a growing number of online customers place orders mid-week to assure early delivery on a Friday or Saturday evening. After sending the initial confirmation order, Pizza Hut will send additional follow-up messages to remind customers of scheduled deliveries. Those messages include what Pizza Hut considers soft promotions that may inform customers of new features, for example, its loyalty program that offers discounts for multiple purchases or new features on PizzaHut.com that provide for easier ordering.

Pizza Hut will send more aggressive promotional messages related to other types of customer transactions, while staying within CAN-Spam rules that allow for promotions directly related to an interest already expressed by a customer. PizzaHut.com encourages visitors to register online, then follows up with e-mailed promotions to new registered users who have yet to place an order.

The Postfuture template includes an opt-out feature designed to help Pizza Hut assure that CAN-Spam is followed by all its franchisees, Rader says. While Pizza Hut maintains 1.6 million e-mail addresses in its national customer database, individual restaurant franchisees use parts of that database to target local customers through their own campaigns using Postfuture`s templates. The templates allow franchisees to customize the marketing promotions, but not alter or delete the opt-out link. "That lets us feel more confident about franchise partners sending messages on our behalf," Rader says.

Rival ISPs launch first CAN-Spam suit

More commonly market enemies out to grab as much of the Internet pie as possible, four of the top Internet service providers joined together to simultaneously kick off the legal action under the new federal CAN-Spam Act.

An attorney who filed one of the lawsuits says he expects the suits to be successful because, unlike prior laws used to fight spam, the CAN-Spam Act is the first law to specifically cite spam as a target while putting the major burden of proof on the defendants, the first to support consistent suits across state borders, and the first to set fixed penalties per e-mail message in an effort to make it financially impossible for spammers to operate. With penalties of up to $250 per e-mail message, "spammers can go bankrupt soon after they start an e-mail database," he says.

The four ISPs-AOL Inc., Microsoft Corp., Yahoo Inc. and EarthLink Inc.-have charged defendants with sending a combined hundreds of millions of e-mail messages to the ISPs` e-mail subscribers. Although many of the defendants are named only as "John Does," the ISPs say their lawsuits are going after some of the kingpins of spam. Yahoo noted that, in suing a group of alleged spammers known collectively as "The Head Operation," including Head Programming Inc., Gold Disk Canada Inc. and Infinite Technologies Worldwide Inc., it is targeting the source of about 94 million e-mail messages in January alone.

EarthLink said one group of 75 John Doe defendants and other alleged spammers have been responsible for a substantial portion of the incoming spam on EarthLink`s network since Jan. 1. And AOL noted in "AOL v. John Does 1-40" that the defendants` millions of e-mail spam messages sent from at least last November led to more than 500,000 complaints filed by AOL e-mail subscribers.

The four ISPs, which formed an anti-spam alliance last April and have met regularly to address the spam issue, say the alleged spammers used a variety of methods to deliver spam in violation of CAN-Spam. They note that much of the spam cited in the lawsuits was routed through open proxies or third-party computers to disguise their point of origin; they were sent with falsified "from" addresses and without the inclusion of a physical address or unsubscribe option as required by CAN-Spam. The spam covered a broad range of marketing pitches, including get-rich-quick schemes, pornography, mortgage loans and cable de-scramblers.

The ISPs say they expect the CAN-Spam law and other efforts to have a long-term impact on spam. "With the creation of this anti-spam industry alliance and the implementation of a federal law to litigate effectively against spammers, we are witnessing the impact that this industrywide attack on spam is having," said Nancy Anderson, deputy general counsel for Microsoft. "We`ve had the opportunity to share investigative best practices and various legal resources and information to ensure that spammers are going to have an increasingly difficult time continuing their deceptive practices with the full force of this industry coming down on them."

The FTC asks: Exactly what is spam?

CAN-Spam is a work in progress. To help devise its strategy to enforce the CAN-Spam Act, the Federal Trade Commission is seeking public input into the definition of spam. Areas the FTC wants to clarify:

CAN-Spam exempts messages that complete or confirm a transaction between the recipient and the sender. Should the FTC modify the definition of a transactional message and if so, how?

l Is the 10-day opt-out period reasonable?

l What constitutes an aggravating violation, in addition to harvesting of names and dictionary attacks which the act specifically prohibits, while violating another provision of the act? Aggravating violations increase the fines.

Are recipients who forward messages in "forward-to-a-friend" system liable under CAN-Spam?

l Are multiple senders of a single e-mail liable?

l Do post office boxes or commercial mail drops satisfy the requirement that commercial e-mail messages include a physical postal address?

l Is the act`s treatment of "from" line information sufficiently clear? Must the "from" line identify a sender by name?

Comments, which can be entered at FTC.gov, must be submitted by April 12.

An alternative

Some marketers are beginning to explore new means of marketing as a hedge against over-reliance on e-mail. Among the candidates: marketing through social or peer networks and Internet chat rooms. These techniques, which may target informal groupings of consumers with common interests, are less concrete than more traditional forms of marketing.

But they show great promise, says Craig Wilson, director of e-commerce for outdoor sporting gear retailer Patagonia Inc. Patagonia`s product experts have been participating in Internet chat rooms frequented by outdoor sports enthusiasts, where Patagonia not only learns directly about consumers` interests but also is able to display its expertise.

"It`s pretty powerful, because any dialogue online develops as word-of-mouth marketing," says Wilson, who compares chat room participation to meeting consumers at outdoor-gear shows.

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