you don't know can hurt you:
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Mr. Arnowitz: So, in addition to
building a relationship with your customer through a newsletter, you can acquire customers
through renting an opt-in list or by advertising in an E-zine or newsletter. Let's take
one of our case studies now, from Dell Wilkinson, Director of Membership Marketing, and
Kevin DeWalt, Online Product Manager, of The Motley Fool.
study 1: the motley fool
Wilkinson: There's a lot we can say about email, but since we only have a few
minutes we'll make it brief. The Motley Fool is up to its ears in email. Ours is a major
Web site with about 80-100 million page impressions per day, so part of the problem we
encountered at first was that the last thing the programmers wanted was millions of emails
going out per day and potentially making the site unstable. What has won everyone over is
the success of the email marketing. For us, email marketing is both about selling our
products and about selling our site and its content. We have a number of subscription
products, and they have been so successful that we're seeing sign-ups now in the
neighborhood of about 50,000 a week. We predict that in the next several months, email
impressions will outpace Web impressions. The growth is phenomenal, and the advertising
CPM rates are going up, up, up.
The newsletters are targeted. We have one on Women And Finances,
another on Investment Clubs-all different specific areas-and advertising on these products
has been very, very popular. One example I'd like to mention is Club Fool, a part of our
site that deals with investment clubs. It was only getting about 6,000 impressions a day,
so it hadn't warranted a lot of attention. When we began to offer it as an email product,
however, subscriptions just jumped through the roof. In less than two months,
subscriptions rose to about 120,000. Now we're starting to evaluate what kind of content
we put on the site based upon email subscriptions as well. This particular newsletter
comes out quarterly, for example. If we were to switch it to, say, monthly rather than
quarterly, we know we would make an extra $20,000-$30,000 a year with current subscription
levels. Then you start thinking, if this were a weekly newsletter, there would be an extra
$70,000 just from one email, so you start looking at your content in a completely
different way. Yet it's also been a very painful process. My colleague, Kevin DeWalt has
looked at almost all of the products and outsourcing services in the Email Marketing
Resource Guide (http://netpreneur.org/connect/am/emailres.html).
Mr. DeWalt: I agree with Rosalind's remarks
that it's easy to get into email. Over the past three years, I've worked on seven
different enterprise-wide email technical solutions. The space is exploding, and the
number of vendors and options you have is becoming overwhelming. The Email Marketing
Resource Guide is a good starting point, and, off the top of our heads, Dell and I could
name 15 or 20 other vendors or options you have. It's becoming more and more difficult to
figure out where to start, and I would imagine that a lot of you are in the same position
we are-very overwhelmed. One thing I would say is, don't rule out the possibility of
having someone build you a customized solution with inexpensive Linux solutions such as
SendMail and Q-mail. They can be very easily modified, and you can get a consultant to
build you something very quickly.
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the audience &
guests: questions, answers & case studies continued...
Mr. Arnowitz: Thanks, Dell and Kevin. Another
question from the audience?
Audience Member: My target market is outside of the
United States, specifically in German-speaking countries. Does your company have any
expertise outside the U.S.? The privacy laws are very different in other countries
regarding direct mail and mail in general.
Ms. Resnick: Yes,
absolutely. This is something we do all the time. One of the great things about an email
address is that it's very easy to see where it comes from, and that ".com" could
be outside the U.S. as well. About 20% of our database is non-U.S. email addresses. Let's
say, you're mailing a health offer. You could pick one or several of our health lists, and
you could go in and do what we call "selects." You might do a select to narrow
the field to people in Germany with a ".de" extension. I know the European
community made waves when it announced a directive that would require all forms of direct
marketing to be opt-in, in other words, to require prior written permission from the
people who were being marketed to. We thought that was great, of course, because we're
double opt-in, so our mailers have nothing to worry about. Actually, what's happened since
then is that the Direct Marketing Association in this country and its counterparts in
Europe have prevailed upon the European commission to water down their directive. The
standard is no longer opt-in, it's opt-out. Our view, for what it's worth, is that we're
opposed to any regulation of email marketing or commerce on the Internet. At the same
time, however, I'm a little disappointed to see the European community back down from a
position that I thought was a worthy one.
Mr. Arnowitz: In addition to privacy, what else do
people have to worry about? What about when people change their email addresses?
Ms. Resnick: Believe it or not, that's one of the
biggest challenges we face. When we started doing this, everybody thought that people
would get sick of our email and opt out. Actually, far fewer than 1% of the people on our
lists opt out of any given mailing. Our problem isn't so much that people get too much
mail and no longer want to be in our database, it's that they change their email addresses
all the time. They go from one ISP to another. People change their email addresses a lot
more frequently than they change their postal address. In the world of postal mail,
there's something called an the National Change of Address (NCOA) database. If I'm a
direct marketer sending out a mailing in the postal world, I can match up my file against
the NCOA database and get updated on all the address changes of the people on my list.
Unfortunately, on the Internet every ISP essentially has its own little customer database.
If I were to close my AOL account and go over to Prodigy, there would be no way for a
company like ours to have any idea it had happened. A lot of our list members ask to
change their email addresses voluntarily, but for people who don't do that, we have no way
of finding out about it. The next time we send them an email it just bounces. It's one of
the biggest challenges that we and other email marketers face, and I'm hoping that one day
some enterprising company will set up an ECOA, an "Email Change of Address"
database which will help us as direct marketers on the Internet reach more people as they
go from place to place-there's a business idea.
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Mr. Hawley: Good morning, I'm
John Hawley from Netwhistle.com (http://netwhistle.com). We've been building our list over the last couple of months,
although we haven't done extensive selling or marketing from it yet. How important do you
think it's going to be, today and in the future, to have extensive demographic data along
with the email addresses, both for your own house file and putting lists on the market?
Ms. Resnick: I think demographics are going
to be more and more important. When we began doing this three years ago, all we were
capturing was the person's email address. That was fine at the time, but ho could I tell
then that the most popular request we get for selects today is zip code? That's because
the Internet has always been great for reaching people in Tanzania, but it hasn't always
been so great for reaching people in suburban Washington. We've been encouraging our list
owners very strongly to capture name, zip code and, if possible, age, income and gender
about everybody who comes to their site.
Having said that, there is a debate going on between
companies like ours from the Internet marketing side of things that believe consumer
privacy is paramount. Our view is that, if a list owner puts up a form asking for
demographic information and all the person wants to provide is his or her email address,
we won't go to one of the companies that do things like "append through
overlays" to try to find information that the person hasn't given us voluntarily. At
the same time, however, there are some companies from the postal side of the business who
are doing precisely that. My view is that the best and most politically correct way to
gather demographics on the Internet is to ask. You can certainly entice people who come to
your site by making certain fields required as conditions of entering a contest or signing
up for a newsletter, but I still very much believe that demographics need to be collected
on a voluntary basis.
Mr. Arnowitz: Here's a question from the Netpreneur Program's
Ad/Marketing discussion group (http://netpreneur.org/connect/am). "Should
we send newsletters in HTML or plain text format?"
Ms. Resnick: That's a great question. We have been seeing a
lot more demand for HTML mailings these days, but there's really no right or wrong answer
to that question. The people who should be making that decision are the people who receive
your newsletter. Even though there's technology that lets you "sniff out," so to
speak, who has the capability to receive HTML mail and who does not, we've decided not to
automatically assume that just because you can receive HTML mail, you actually want
to. There are plenty of people who don't, especially time-pressed business users who get
several hundred email messages a day. They don't necessarily want to spawn a browser for
each one. We've encouraged our list owners to put an additional question on their sign-up
form asking people whether they want to get HTML mail. I would say that the best policy is
to leave it up to the subscriber.
Mr. DeLorenzi: Hi. I'm Bob DeLorenzi with
As an ISP, I have a different perspective on this. First of all, I do not understand
people's inability to use the "delete" key, but, be that as it may, I have so
many situations where customers of good conscience are trying to use opt-in programs like
yours. Every time they send out their emails, however, I receive complaints that
characterize it as spam or abuse. It's one thing if it comes from one of our larger margin
customers, like a T1 or DSL customer, but it's frequently the person who's paying $16 a
month for a dial-up account and I've got to answer the 8-15 problem emails. I can't ignore
them because people will do nasty things to our system if I do. What advice do you have
for somebody in my position who supports the idea of opt-in conceptually, but has to deal
with it from a different perspective?
Ms. Resnick: Yes. I think the answer is to encourage your
users to adopt a double opt-in policy, even though some of them are not going to like it
since it will cut down on the number of people on their lists. The reason we switched to
double opt-in was because our ISPs started getting complaints about us and started giving
us a hard time. I told you, we actually became topic number one on the NetAbuse newsgroup
one day. Actually more than one day. One of the things people advised us to do was to
emulate the confirmation processes of email discussion group software like ListServ or
MajorDomo. They said, "We don't think you're spammers, but you have no way to verify
whether these people ever really opted in."
Yes, we still get complaints, but far fewer than we did. Maybe we
get a complaint from somebody who says, "I got a woodworking offer from Home Depot,
and I never signed up for this. It's spam." We can go back into our database,
retrieve their subscription request and say, "Well, actually on this date and time
and from this IP address, you actually did sign up for the woodworking list. That's why
you got the mail." Not only do they apologize, but, if the ISP tries to block us, it
gives us the ammunition to say, "We're the good guys and here's the subscription
record." That just makes it a lot easier both for us and our mailers. By the way,
we've never been blocked by any major ISP or online service provider, just by some smaller
I would go to the people you're having a problem with and tell them
that if they want to continue to be on your service, they need to switch to double opt-in.
Mr. Arnowitz: I think we'll take another case study
now. Joining us this morning is Lisa Perlbinder, Director of Marketing at National
Geographic Interactive, who will talk about Mother's Day.
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the audience &
guests: questions, answers & case studies continued...
Ms. Perlbinder: The Internet is a dream for every direct
marketer because of its ability to personalize and speak directly to an individual. In the
early 1980s, I planned all the advertising for the Military Book Club at Doubleday, where
the best we could do was to buy subscription lists from Soldier of Fortune magazine and
Guns & Ammo, addressing our mail, as Mitch read, to "Dear subscriber or current
resident." Yesterday, I was able to engage in a conversation with a gentleman named
Maurice J. Epstein, a colonel from the 345th bomb group who flew over the southwest
Pacific and a subscriber since 1952. Yes, the Internet enables you to do some amazing
things through email. I'm one of the people who tries to sell products and services over
the Web, so it's not just the click rate for me, it's the conversion rate. I wanted to
talk about Mother's Day because it involved a program that was less than successful. It's
important for us was to be relevant in our marketing programs, and, unfortunately, with
that one we weren't.
We have had a very strong membership
database that was started in 1888. For the email side, this is our 1888. We need to do
everything possible because, if it wasn't for that list, National Geographic wouldn't have
gone from a small research institution with a magazine to a corporation of many hundreds
of millions of dollars in annual revenue. It's as important for us on the email side as it
is on the direct mail side of the house. The people on that membership list are
predominantly male, older, affluent, white-close to the Internet demographic target, but
NationalGeographic.com tends to be much younger. It's 70% male and 18-44 years old versus
our average print audience that's almost 50. When we did our Mother's Day promotion, it
was for female-skewed products-books, magazines, videos. It went out May 3 to 111,000
people on our registration list and 107,000 email messages were delivered-a 96% hit rate,
however we got a .04% response. We were all groaning. You see, we had chosen to ignore the
demographics, wanting instead to capitalize on Mother's Day, a strong retail holiday, with
the good looking stuff in our print catalog. We figured we could make it work in email,
but we couldn't. It's one of the things I 'd advise you not to do, and I would like to
offer some other tactics and the lessons we have learned.
First, target the message to the
customer. Everyone has spoken about capturing names in different ways, but if you don't
say something relevant to these people, they will turn you off. People do know how to use
that "delete" key. The fundamentals of direct mail apply to email, and anyone
who's trying to make the transition from direct marketing to email marketing will tell you
that. The offer is key in direct marketing. It was drilled into my head: offer, list,
creative. In the Mother's Day promotion we said, "Here are some nice products. They
said, "No thanks." Anything you can do, such as free shipping or a discount has
to be a key component. Next, be creative. We found that HTML mail generates a higher
response, but it depends on your audience. People may not want to spawn another browser,
but if it's a consumer mailing, I would at least test or give people the option to get
HTML. Also, measure your clicks and conversions. A lot of people are sending things out
and hoping that it works. A lot of great companies have technology to do counting and
measurement. We're doing email to drive traffic to a dinosaur story and, if it works, we
can charge more and generate higher advertising revenue.
Be aware of your subject line. We did a
mailing once and half the list got mail from
"email@example.com." If I told you only the good things we did,
you wouldn't learn, and I wouldn't feel so humble. Since that mailing didn't generate much
response, we learned. Also, personalization is key. You have a lot of data available. Use
it, use it wisely and get it right. Somebody who is interested in jazz probably doesn't
want to be told about the latest in heavy metal music, so have a good handle on the data.
Have a relationship with the customer and maintain it after. If you've contacted them
once, follow up if they've ordered. Back-end email is just as important, if not more
important, than making the first contact. Make it easy for consumers to unsubscribe, as
Rosalind said, and test the days of the week in which your email is delivered. Eighty
percent of all the email responses come within the first three days. The conventional
wisdom is that Tuesday morning receipt works the best.
Mr. Arnowitz: Lisa, thanks so much. Let's take another
Ms. Resnick: If I could just add my two cents. Our experience
has been that the best day to send a business-to-business mailing is Tuesday or Wednesday,
but the best day to send a consumer mailing is Friday. The weekend is when consumers are
home with their computers.
Mr. Doyle: Hi, I'm Jim Doyle from
FDI Services and an instructor of direct marketing at American University (http://american.edu) in the evening. By the way, we call that "seasonality."
We're conventionally interested in days of the month and seasons of the year, not hours of
the day and days of the week, but that's the term we use for the most appropriate time to
send an offer. On behalf of the industry, I would just like to say welcome. We knew email
belonged as one of our tools, and thank you for recognizing our skills. I would like to
follow up first on the question of HTML versus plain text email. Do you create two
different offers, one for each? The rule of thumb I've heard is about that 30% of browsers
can now accept HTML email. Can you also briefly explain your partnership program works?
Ms. Resnick: Thank you in the direct mail industry for
I don't think anybody really knows the percentage of browsers that
handle HTML for sure, but I think it's probably more than 30%. We're not really involved
in the creative end of it, we get that from our mailers, but typically when we send out
HTML there will be the HTML portion at the top and text portion at the bottom. If the
person can't receive HTML, at least they see the text part.
As to our partnership program, you're talking about
our network of sites that builds lists for us. Essentially, the partners in our network
are what we call the list owners. They're the ones who have the Web sites and the traffic,
who put up the forms and build the lists. We act as the list manager and broker. It's a
simple business model that we brought over pretty much wholesale from the postal world
with a few modifications. Basically, the list owner, Internet.com (http://www.internet.com), for example, owns a list of names, say 100,000, in our database.
They own the names, and we have no right or title to them. If they ever want to cancel
their contract with us, they could take those names and walk.
We have a big server farm and an Oracle database with 50 million
records, including those 100,000 records collected when people checked boxes and filled in
forms at Internet.com. That data goes into our database; we store it, send out the
mailings, handle the unsubscribes, make the lists available in our online store, handle
the sales and marketing and send the list owners a check at end of the month.
We work on a revenue share basis. We rent our lists on a CPM basis
and split the revenue 50/50 with the list owner. For example, if we rented names from the
Internet.com list to Dell for $1,000, we would get $500 as the list manager/broker and
Internet.com would get $500 as the list owner. We've always believed in partnering from
day one, and one of the things we learned very quickly about the list world is that
brokers like to get a 20% commission on every sale. Since we wanted to reach out to
brokers, we told them that if they brought us an order, we'd give them a commission. If a
broker brings us the order, as opposed to our sales force bringing it to us directly,
we'll pay the broker a 20% commission. In the case of that Dell example, the revenue would
be split $500 to Internet.com, $200 to the broker who brought us the business and $300 to
Even though it's a business model that's as old as the hills, it's
working extremely well on the Internet. Currently we're turning our databasethat's
how we measure our success as a list managerat a rate of $4.50 per name per year.
That's calculated at an average list price of 20 cents a name times 22 or 23 rentals a
year, so you're looking at $4.50 gross sales, of which half goes to the list owner. We
have list owners making $100,000 a month from our program.
Mr. Doyle: Does each partner's opt-in categories
remain the same?
Ms. Resnick: Not necessarily. We have 3,000 categories they
can build, ranging from very broad topics like the Internet or business or travel, to very
specific topics like gothic novels or aromatherapy or woodworking. We allow each list
owner to decide which list would be most appropriate and most relevant to the people who
come to their site, then they can build as many or as few lists as they want on a topic.
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Mr. Driscoll: My name is Mike Driscoll with CustomInk.com (http://customink.com). What is your
opinion of the AllAdvantage.com (http://alladvantage.com)
business model? With all the revenues you're talking about, should consumers be
compensated rather than the marketers?
Ms. Resnick: That's an interesting question. In
fact, a guy wrote to me from the U.K. recently about AllAdvantage.com and we were batting
this issue back and forth. Why not pay the consumers? After all, they're the ones letting
their names be rented. Why pay the sites that collect the names? I believe that at some
point in the future there's going to be a court case which will decide that consumers
actually own their own intellectual property and should be compensated in some way.
At this point, however, the logistics of making micropayments to
four million consumers would be relatively daunting. If you take a look at how it's being
handled at MyPoints (http://mypoints.com),
Web Stakes (http://webstakes.com),
Cybergold (http://cybergold.com) or any
of the incentive marketing programs, they are giving points, frequent flyer miles or some
kind of incentive, bonus or reward for joining and responding to their lists. In those
cases, consumers are being paid not in cash, but in credits they can use for products and
We've taken a more traditional list management and brokerage
approach, saying that it's the Web site owner or aggregator of the names that deserves the
payment. To be honest, we see our business as bringing buyers and sellers together. We
believe that the reason why four million people sign up for our lists is because they are
getting information and news about valuable services, products and discounts. They are
getting value, even though they're not getting a cash value. If it ever went the other
way, either in court or because it's what the Internet community wanted, we would write
the software and develop the technology to make it possible for every single one of our
list members to be paid. Having said that, I can tell that you that I don't think it's
ever going to be cost-effective for an individual list member to go around to ZD or Dell
or Compaq or the thousands of mailers that we work with and individually offer up their
names. The companies we work with will always need to go through a broker or middleman
like us that can give them not just one or two or three names, but a million names at one
time. If some day we're writing checks to the list members as opposed to the list owners,
that doesn't really matter to us. At the end of the day, the important thing is putting
buyers and sellers together and aggregating a large database of qualified names.
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