'Opting in' woos e-mail business

By DITA DE BONI

A visiting "permission advocate" says spam (junk e-mail) is an unforgivable marketing no-no and can ruin a business' reputation.

Derek Scruggs - who says he would rather be known as a permission evangelist "but they'd have to pay me more" -is unrepentant about soliciting business with e-mail, saying people "opting in" to receive e-advertising is the only way to avoid turning off potential customers.

"If your audience thinks you are spamming - even if you aren't - you are!" he says. "And once you are known as a spammer, your ability to market using e-mail is seriously damaged."

Mr Scruggs speaks about permission marketing - when permission is sought to kick-start personalised marketing campaigns via e-mail - on behalf of US-based e-mail marketing company MessageMedia. The company has recently entered a joint venture with Craig Heatley's listed e-commerce vehicle eVentures to set up operations in New Zealand.

MessageMedia sends Mr Scruggs to far-flung corners of the globe to both garner converts to direct e-marketing, and warn an emerging electronic marketing industry to avoid some of the mistakes US companies have made in their quest to exploit the medium.

It is estimated there will be over 1.2 billion e-mail addresses worldwide by 2005. E-mail marketing consumes at present around 5 per cent of the total online advertising spending in the US and that figure is projected to reach 15 per cent by 2005. New Zealand is at the same stage as the US was five years ago, says Mr Scruggs.

"I haven't noticed there to be too much e-mail abuse in New Zealand as yet, but the market is ripe to learn about the right way to do things. I'm sure spam does exist here - as it does wherever there is e-mail - but I would hope it wouldn't get to the level of the US, where estimates put spam at 20 per cent of all internet traffic."

Nevertheless, e-mail remains one of the most time and cost-effective methods of direct marketing, he says.

"There are many reasons why e-mail will prevail as a central method of online advertising. First of all, it is much cheaper than other forms of advertising.

"While banners have around a 1 per cent click-through rate and about a 1 per cent conversion on click-throughs, and direct mail has a slightly higher response rate for around 40 cents per envelope, we've found e-mail has click-through and conversion rates of around 10 to 15 per cent," he says.

(Click-through is the percentage of people viewing the banner, mail-out or e-mail message who click through for more information; conversion is the percentage of those "click-throughs" that eventually translates to sales.)

"People may not visit your site often, but they always check their e-mail; e-mail is easy; e-mail is the primary reason people use the internet. It can be customised, just like a website, and it is persistent," he adds.

But like any other direct mail tool, "opt-in is always more effective."

While just 12 per cent of all messages sent to terminals are currently opt-in - meaning the viewer actively participates in handing over details to receive more information, subsequent offers, or related material - Mr Scruggs is optimistic that in two years that chunk will have grown to 20 per cent.

"While the theory of some corporates goes something like this: 'We have an existing business relationship,' or 'It's simple to unsubscribe' or 'They can always hit delete,' the reality is something quite different.

"Complaints will be shrill, frequent and may result in [blacklisting] or your advertising being bounced out of your customer's orbit.

"It also encourages distrust. It is said that something like 60 per cent of people have given false information when filling out forms to avoid future harassment," he says.

More than just offering customers the option of "opting out" - usually a tiny blurb with small check-boxes requiring the 20/20 vision of a young child to see - "you must get permission to send e-mail to someone, confirm your permission at least once, and then make it easy for them to opt out in future."

In the US, one disincentive to barraging clients with messages is inclusion on the dreaded "Realtime Blackhole List," which names internet provider addresses that are known sources of spam. Messages coming from or going to a provider on the list disappear into a "black hole."

Mr Scruggs says even corporations such as Microsoft and AOL have, at various times, been listed, and have had their messages bounced off recipients' accounts.

On the flipside, there are companies with clever opt-in electronic marketing that has fulfilled the promise of the medium, he says.

The New York Yankee website asks all first-time visitors to opt into a "free, online Yankee newsletter," while Amazon.com will e-mail new book releases from favourite authors to those who signal their interest.

Most importantly, says Mr Scruggs, is to remember that with one-to-one marketing methods such as e-mail, which can be highly personalised at minimal cost, value must be added with every message to avoid giving them a spam-like demeanour.

"Permission, given by your audience, is selfish, so you must add value - make the customer eager to get your message.

"Only gather the information you need, not every bit of data you can extract. And I would say to remember that permission is a process, not a moment, so create a learning relationship, not a quick hit."

One of New Zealand's largest e-mail marketing firms, Email Impact, says click-through rates for its largest clients, including Eftpos, Trademe and Scoop.co.nz, have reached up to 39 per cent.

The highest click rate it has recorded is for Quicksilver Internet, which reached 58.6 per cent. The lowest figure for the year is 8.38 per cent among companies recorded, "still [considerably] higher than that of a successful banner [click-through]," according to Email Impact managing director Tom Skotidas.