Long considered the bane of the Internet, bulk email advertising is undergoing a quiet transformation as direct marketers implement more sophisticated techniques for better targeting messages to people who may actually want to see them.
So-called one-to-one marketing is considered the Holy Grail for Internet advertisers. But the industry has faced harsh and persistent criticism for indiscriminately blanketing millions of email addresses with annoying and unwanted messages. Such excesses have sparked calls for the eradication of email marketing and have inspired laws imposing fines for spam campaigns.
Now bulk emailers are starting to heed their critics, boosting efforts to gain permission from consumers before sending pitches via email. By most accounts, the new system has proven a win-win where it has been adopted.
By first securing consent, fewer unwanted emails are sent. In addition, online marketers say they have been able to tailor advertisements to an individual's preferences with impressive results. The huge success rates have prompted other advertisers to join the email game.
The industry still has a long way to go in gaining the trust of email users, however. Although the new practices have quelled much of the spam criticism, questions remain about how aboveboard marketers are in extracting the permission they now avidly seek.
"Marketers have gotten the permission religion," said James Nail, an online advertising analyst at Forrester Research, based in Cambridge, Mass. "But there are degrees of permission, and it's not really tightly defined yet."
Most have adopted a model called opt-in, which means a consumer must ask for the information by clicking a box placed somewhere on the merchant's Web site before it can be sent.
A few marketers prefer opt-out. In that scenario, random email advertisements are fired off unless a person asks to be taken off the mailings.
Others, like New York-based NetCreations, offer a more secure measure called the double opt-in. Once a consumer clicks on the ads they want, the company will send an email to the users confirming their request to be part of the program.
"We found that some people signed up their friends or family members without their knowledge," said Rosalind Resnick, the company's chief executive. "This way we're certain we have a clean database."
But others are sneakier. Nail pointed out that on some Web sites, the permission statements are prechecked and can be easily overlooked by a consumer.
The various services raise doubts that online marketers are sincere about pulling back on sending unwanted emails.
"The message is that unless the marketing industry cleans up its act, millions of people will go back to the malls," said Ian Oxman, president of ChooseYourMail.com, an email marketing firm based in Chicago. He also is founder of the Spam Recycling Center, an organization dedicated to getting rid of junk email.
"The threat is that consumers will get fed up," he said.
Targeted advertising has raised concerns about privacy as well.
Just last week, DoubleClick, one of the largest online advertisers, came under fire for collecting personal information and shopping habits of Web surfers.
Representatives have said the information will be collected only if a consumer grants permission.
But again, in this case permission means the person must go through the trouble of requesting not to be tracked by removing their unique computer identification code, or cookie, from DoubleClick's Web site.
The move has rankled anti-spam and privacy groups such as Junkbusters.
"DoubleClick is trying to characterize this as choice, but its practice is based on opt-out, not opt-in," Jason Catlett, president of Junkbusters, said in a previous interview. "We said this would happen--behold it has."
Still, email stuffers say the tool works because advertisements can be personalized, it can track a consumer's preferences, and it is cheaper than mailing catalogs or other sales pitches through the U.S. Postal Service.
A single catalog mailing, for instance, costs between 50 cents to $1, while a highly personalized email costs about 10 cents to send, according to Nail's recent Forrester study. What's more, response rates are high.
Marketers are finding that people want sales pitches sent to their emails as long as they speak to their specific needs and desires.
In other words, a person who enjoys traveling and takes frequent trips to the Virgin Islands would likely respond to email advertisements touting discount fares to St. Croix.
Analysts predict the field is hitting its stride and will explode in the next few years. By 2004, Forrester estimates that U.S. marketers will send 200 billion emails, generating a $1.6 million opportunity for email list owners.
Marketers expect to triple their in-house email lists as catalog makers, including J.C. Penney, Williams-Sonoma and Martha-by-Mail, ask for emails of those who buy, Nail wrote in his report.
Lured by the success stories, newcomers are joining the market in great numbers. DoubleClick, for one, launched its email advertising services in December.
But as more companies take advantage of email marketing's receptivity, the more it will become difficult for them to stand out, said Michele Slack, an analyst at New York's Jupiter Communications.
"As a consumer gets more offers in their emails, the click-through rates will go down," Slack said. "It'll be easy to lose consumer interest. Marketers will have to go beyond the $5 off or buy-one-get-one-free offers."
She cites Ticketmaster's recent service of selling tickets to a Bruce Springsteen concert as an example of what marketers will need to do to retain consumers.
A person who bought concert tickets through the online service also got information about the best place to park, which gate to enter, and what the view of the stage would be like from the seat purchased, Slack said.
After the concert, Ticketmaster sent the buyer a list of songs that were played, along with a link to a CD purchase site.
"With this type of service, a consumer is much more likely to resubscribe," Slack said.
No matter the state in which email marketing ends up, some say it's far better than it used to be.
Junkbusters' Catlett believes successful email advertising evolved only after marketers began playing ball with anti-spam groups.
"The anti-spam community in general has made it clear that we are not anti-commerce, and with proper permission, email marketing can be a valuable tool," he said. "But it's been a very, very long fight to convince them."