Profiting From E-mail In an Ocean of Spam

By: Steve Outing At last week's Interactive Media conference (co-sponsored by Editor & Publisher) in San Diego, one of the most important panels examined news publishers' successes with permission e-mail publishing. There's some promising work going on throughout the news industry right now -- especially at newspapers -- and news companies are figuring out how to make money by collecting e-mail addresses of and permission-to-send from their online customers, then sending them limited amounts of advertising/promotional mail.

While most experts don't expect such opt-in, targeted e-mail to have quite the revenue potential of targeted Web advertising, there is optimism that this can be a significant cash source -- indeed, it already is for some news publishers. Done right, it can become the No. 2 revenue stream of an Internet news operation.

But amid the industry excitement of the promise of targeted e-mail, the spam problem has exploded to critical proportions -- and threatens to undo the good of ethical opt-in (a.k.a., permssion) e-mail as practiced by news companies. Spammers are more than an annoyance to consumers; they also dig directly into the wallets of legitimate Internet publishers.

Spam! Spam! Spam! ...

The spam, or junk e-mail, problem seems to have hit a crescendo. Last week, USA Today published a cover story on the topic. As that article pointed out, more than 2 trillion pieces of junk e-mail are expected to flood the Internet in 2003. That's 100 times the number of pieces of mail delivered by the U.S. Postal Service last year. America Online, the largest U.S. Internet service provider, says it blocks 2.4 billion spam e-mails a day -- or 80% of its inbound mail.

Even with so much spam blocked, much still gets through to consumers -- as your and my e-mail inboxes attest. And that's a major problem for news publishers who also are pushing advertisements and promotional e-mails to their customers, expecting that to provide revenue.

The issue, of course, is that consumers are less likely to open and read a piece of opt-in marketing e-mail when their inboxes are full of spam. The typical response is to hit the Delete key repeatedly to get rid of items that look like spam, before more closely going through the mail that a user thinks he/she might be interested in. In an environment containing so much spam, a news company's marketing e-mail looks similar to unsolicited mail -- and can be destined for the digital trash bin, too.

The question now is, how can a news company differentiate its ethical e-mail offerings such that its Internet customers might actually read the mail?

Industry practices

Before I attempt to answer that question, let's look briefly at what newspaper companies are doing with e-mail. A good example is a program called "E-vantage" of the Seattle Times, which is an experimental opt-in e-mail list that sends out money-saving coupons for local businesses, alongside editorial content such as entertainment lists. E-vantage is for print-edition subscribers and is marketed as a value-add. The e-mail service has sent out promotions for such things as a two-for-one admission to museums. An episode last year demonstrated the effectiveness of the E-vantage program: 3,000 e-mail subscribers received a coupon for a free cup of eggnog at a chain of local coffee shops. The coupon got passed around and the coffee shops halted the give-away because too many people were trying to redeem them.

Seattle Times director of new ventures and development Patricia Lee Smith told the Interactive Media conference last week that the redemption rate on E-vantage e-mail coupons has run between 15% and 300%. (The latter was the eggnog promotion.) The open rate of E-vantage e-mails is approximately 70% -- versus an e-mail industry average open rate of 30% to 40%, Smith reported. And the bounce rate on e-mail addresses subscribed to E-vantage is only about 2%, compared to an industry average of 11%. (A low bounced-mail rate on a list's addresses implies that most subscribers value the mail, so when they switch addresses they change their accounts so as not to miss future e-mail offers.)

E-vantage is a great example of making your targeted ad e-mail valuable enough that users want it. If subscribers know that they'll get free-offer coupons, they're likely to watch for it; it's less likely to get dumped along with all the spam.

Another interesting e-mail tactic is represented by the Sacramento
Bee's "Movie Club." Subscribers to this service receive one or two weekly e-newsletters, Onstage or Movies, which include information about giveaways of tickets to regional entertainment events. Bee business development manager Jim Bonfield said the service, which operates several hundred giveaway contests each year, has been getting calls from concert promoters that have never before done business with the Bee -- interested in participating in the e-mail promotion.

At the Tribune Company's news Web sites, similar success stories are being heard. Tribune Interactive VP of strategy and development Mike Silver told last week's conference that some targeted e-mail promotions are creating the highest CPM rates of any Tribune online program. Silver cited a targeted e-mail campaign for the theater production of Mama Mia (the traveling Broadway show based on the music of '70s Swedish rock band ABBA), which sold $34,000 worth of tickets. "This is the fastest path to targeting," he said.

Tribune's approach to targeted e-mail differs from -- and is more controversial than -- the Seattle Times' and Sacramento Bee's. The company's newspaper sites now require user registration in order for a site visitor to read editorial content. As part of the registration process, users are notified that by registering they are granting permission for Tribune to send them targeted e-mail promotions from time to time. (With the Times' E-vantage program, subscribers must sign up voluntarily.)

Relevancy! Relevancy! Relevancy! ...

As the Sacramento Bee and Seattle Times examples above demonstrate, the trick in overcoming the spam factor is in making sure that your targeted e-mail is wanted, is relevant, and is anticipated.

Permission e-mail marketing expert Gina Lambright, who is co-founder and managing director of e-mail consultancy and research firm Quris, says that the spam explosion is making it more difficult to get consumers' attention with opt-in e-mail. Consumer e-mail fatigue is growing because of spam, and open rates on permission e-mail is going down as asked-for e-mail gets mixed in with the loads of junk e-mails.

But, she emphasizes, those publishers who do it right are not seeing open rates falter. By doing it right, Lambright means that the publisher has done a good job of getting permission from the subscriber to receive future e-mails. This means that the consumer has been told exactly what he/she will be receiving, and how often. The consumer has played a very conscious and active role in agreeing to receive a publisher's e-mail.

The most important word in all this is "relevancy." If you expect an e-mail user to accept and open e-mail from your company, you've got to make sure that the content is relevant to the individuals receiving it. That's why the Sacramento and Seattle examples above work. The Tribune approach, on the other hand, is a bit dicey.

Lambright thinks that Tribune's model can work if done such that e-mails received by its registered users are highly targeted. But the model of "accept this marketing e-mail or we won't let you in to our news site" is fraught with danger. If such a company's users, for example, receive mail that doesn't really interest them, then after a few times of receiving permission mail from the company, open rates fall precipitously as subscribers start to treat e-mail from it as though it were spam.

This, Lambright warns, is really bad for your brand -- because what you send out via e-mail (even if it's marketing from other companies, done under your name) reflects on your company. Send permission e-mail to customers who don't really want it and you've tarnished your good name, she says.

Not only that, your mail also can end up on consumers' spam-filter lists, Lambright warns. That's a situation that can spiral out of control; if enough users filter you, ISPs start to identify you as a spammer and automatically block your mail to everyone else.

If you really want to do this permission e-mail thing right, consider giving control to the subscriber -- in terms of frequency, and topic. As Lambright points out, for a company that has information (or marketing content) to send that's truly relevant to an individual, that person might be willing to accept an e-mail a day or even more. "There's no tried and true rule about frequency" of e-mail delivery, says Lambright. "The biggest determination is relevancy." So, let them choose the topic, too; don't pepper them with marketing e-mails for which they haven't expressed an interest.

And here's one last -- important -- tip, which is the mantra at Quris: The "From" line is more important than the "Subject" line. Any spammer can make up a subject line that can trick an e-mail user into opening a message. But Lambright says e-mail users have become more adept at looking at the "From" line of messages to determine whether or not to open them. A message "From: NYTimes.com" is likely to get opened -- as long as NYTimes.com hasn't abused the permission e-mail relationship by sending out non-relevant messages.

Permission e-mail is a tricky business. It always has been. With the current spam explosion and no end in sight to the problem, it's all the more critical to treat your opt-in e-mail customers with kid gloves and not force anything on them. They are ultimately in control of the Ctrl-Delete keys.

But do it right, and this can be a lucrative revenue stream for Internet news operations.

---

Other recent columns

Online Business Model Progress Report, Wednesday, April 30
Web Shouldn't Avoid Horrific Images, Wednesday, April 16
War: A Defining Moment for Net News, Wednesday, March 26
Photo Phones Portend Visual Revolution, Wednesday, March 12
Breaking-news Multimedia: Not an Oxymoron , Wednesday, Feb. 26
Top Online Media Execs See Bright Future , Wednesday, Feb. 12
Previous columns

---

Stop the Presses! by e-mail

To be notified by e-mail when a new "Stop the Presses!" column has been published, sign up here.