What, Me Spam?

Good intentions alone aren't enough to avoid alienating customers.

Executives at Motorola Inc. were stunned last March when vitriolic e-mail messages began pouring in to the companys customer service department and even the CEOs office. Motorolas supposed crime? Sending out spam, according to angry customers who had received multiple unsolicited e-mail messages from a company that appeared to be a Motorola distributor or retailer offering a free Motorola pager.

"If this is the class of company that Motorola has as retailers, then I dont want anything further to do with any Motorola products or services!" said one customer, as quoted in a lawsuit posted on The SpamCon Foundation Web site.

The incident was all the more galling to Motorola officials because the company wasnt the source of the e-mail. Rather, a company identified in the e-mail as Paging America—not affiliated with Motorola—was making the offer, said Allan Spiro, marketing manager at Motorolas wireless messaging division, in Boynton Beach, Fla. And, Spiro said, the products named in the e-mail werent even pagers the company made.

Rushing to prevent further damage, Motorola officials sent letters to Paging America, in Pasadena, Calif., demanding that it stop sending the e-mail and using Motorolas name. When that didnt work, Motorola in May filed a lawsuit against Paging America and others in U.S. District Court to recover damages and stop the e-mail.

As Motorola learned the hard way, its easy even for an enterprise with all the right intentions to be labeled a spammer. E-mail marketing partners can and do mess up, and even unrelated companies can create the impression that your enterprise engages in spam. Even more commonly, marketers are increasingly flirting with being classified as spammers as they send ever-greater volumes of bulk e-mail in an attempt to market more effectively with online consumers. As a result, experts say, the burden has shifted to enterprises to make sure they manage their e-mail lists so only customers wanting e-mail messages get them, they avoid using e-mail lists from external providers, and they avoid inundating customers with too many or poorly targeted marketing pitches. And, to avoid being incorrectly labeled spammers, some enterprises are going even further, moving to double-opt-in e-mail marketing processes that satisfy even the most ardent anti-spam activists.

The dangers of bad e-mail marketing practices are real, with increasingly serious consequences. Eighteen states have laws in place regarding spam. Penalties can include fines for sending unsolicited e-mail messages that dont follow prescribed labeling provisions and for not having processes allowing recipients to be taken off e-mail lists, which is commonly called opting out. In addition, federal legislation is in the works, and dozens of countries in Europe have spam laws with even tougher provisions that in some cases ban commercial e-mail unless a recipient had requested to receive it, a process commonly called opting in.

At the same time, spam watchdog groups such as Mail Abuse Prevention System LLC, or MAPS, and major ISPs (Internet service providers) such as America Online Inc. and EarthLink Inc. are becoming more active in blocking domains of companies considered to be spammers. Most damaging of all, though, is the potential to alienate loyal customers who perceive poorly executed e-mail marketing as spam, experts say.

Just as the risks of being perceived as a spammer are growing, the potential rewards of aggressive e-mail marketing are shrinking. Recent research indicates e-mail is losing some of its commercial effectiveness. Consumers are buying fewer products and services advertised through e-mail, according to Forrester Research Inc., of Cambridge, Mass. Of the consumers surveyed by Forrester who had been online for less than a year, 18 percent said they often bought items advertised through e-mail last year, while only 6 percent report buying such items this year.

But marketers overall arent planning to slow their push into e-mail. The volume of commercial e-mail in the United States is expected to triple to 424 billion messages by 2005. And spam is expected to consistently account for about 39 percent of those e-mail messages, according to forecasts by Jupiter Media Metrix Inc., of New York.

Back to Basics

The most basic step companies should take to avoid being lumped in with spammers is to make sure they have a working process by which recipients can request to be taken off an e-mail list. Its one standard upon which few people disagree, be they anti-spam advocates or e-mail marketing associations. Its also one of the most common requirements of current state anti-spam laws.

The easiest approach for enabling recipients to opt out is the best, experts say. That would include offering a link to click to immediately be taken off the list, said Michele Frost, vice president of customer relationship management and strategic services at YesMail.com Inc., which provides e-mail marketing lists and services in Chicago. But marketers cant stop there. They must be prepared to respond when consumers use other methods, such as calling customer service or simply replying to the e-mail to request to opt out, Frost said.

While that may seem obvious and easy, problems handling opt-out requests remain common. In many cases, the culprit is poor communication between an enterprise and its e-mail marketing service providers. eWeek and its publisher, Ziff Davis Media Inc., in fact, faced complaints starting in January from angry readers who continued to receive e-mail newsletters even after requesting to be taken off the distribution lists. The problem stemmed from the fact that Ziff Davis officials received the unsubscribe requests rather than the outsourcer used for delivering the e-mail, said John MacKenna, managing editor of newsletters for eWeek and Ziff Davis. That caused lag time and human error. eWeek alone received about 100 complaints after launching three e-mail newsletters sent to 150,000 readers. The company now is moving to an automated opt-out process directly linked with the outsourcer, DoubleClick Inc., said MacKenna, in Medford, Mass.

The Hard Part

Enabling the opt-out option is the easy part, though, compared with determining how to sign up customers to receive marketing e-mail. Obtaining some sort of permission is required if a company wants to escape the label of spam, say marketing experts and anti-spam advocates. How much permission is necessary, though, is being debated and leads to the biggest ambiguity in the definition of what is and what is not spam.

Those wanting to be on the safest side will use a double-opt-in process, also called confirmed opt-in, experts say. Under this approach, not only will potential recipients have to actively ask to receive e-mail by, for example, checking boxes in an online registration form, but they also will receive a confirmation e-mail that requires them to reply or click a link to verify their choice.

"The easiest way to avoid [spam] is to go on a pure confirmed opt-in basis; otherwise, you are playing roulette with every e-mail you send," said Ray Everett-Church, board member and legal counsel for The Coalition Against Unsolicited Commercial Email, in San Jose, Calif.

Using double opt-in will cover the toughest requirements of spam laws and also avoid the possibility of mail bombing, where someone signs someone else up for e-mail. Following the process also puts companies in good stead with network watchdog MAPS, of Redwood City, Calif., which defines spam as commercial e-mail sent without prior permission and verification of the e-mail addresses. If MAPS gets complaints about a specific domain sending spam, it judges a company against that standard. If it fails, the companys offending IP addresses can end up on what MAPS calls the Realtime Blackhole List and be blocked not only from the MAPS network but also from the networks of majors ISPs and other companies that subscribe to the list.

The result could be devastating for companies that rely on e-mail for reaching customers or prospects, as Harris Interactive Inc. learned in July last year when it was placed—unfairly, it claims—on the MAPS RBL. E-mail was blocked to about 2.7 million of the 6.6 million members who participate in Harris online market research polls conducted through e-mail. The blacklisting led to blocking from such ISPs as AOL and Microsoft Corp.s Microsoft Network and Hotmail. And all of that happened even though Harris gathered its list of e-mail panelists by using an opt-in process through partner Web sites in which panelists actively selected to participate and were able to opt out in subsequent e-mail, said Harris CEO Gordon Black, in Rochester, N.Y. But MAPS—and some of the ISPs using the RBL—demanded double opt-in.

Harris in late July last year filed a lawsuit against MAPS and several ISPs seeking an injunction against the blocking and damages. It also began negotiating with the ISPs and by mid-September dropped the lawsuit once individual ISPs allowed 98 percent of its e-mail to pass through.

"If we had not been able to get unblocked from Microsoft and AOL, it would have shut us down," Black said. "What it ended up being was an annoyance."

The blacklisting, which Black said interfered with the companys ability to conduct effective polls and cost it some business, also led the company to re-evaluate how it gathers its e-mail panel. It eventually adopted the double-opt-in approach. Harris found that double opt-in allowed it to identify the most-motivated participants. In fact, with double opt-in, four to five times more recipients responded to surveys. Those higher response rates, and the fact that the respondents from double opt-in offered more-extensive answers to survey questions, did the most to motivate Harris to announce last month that it had begun switching its entire e-mail poll list to double opt-in. At the same time, Harris was beginning a push to add more international participants to its panel and negotiating with new sites and sources of potential panelists, Black said.

"Quite honestly, it doesnt do me any good to mail people who dont respond," Black said. "Its really better to get a higher response."

The switch also satisfied MAPS, which late last month removed Harris from its RBL about a year after first blocking the company.

While double opt-in may please anti-spam advocates, its not always the most desirable approach for all e-marketers, particularly those focused on promoting products using high volumes of e-mail. E-mail marketing experts agree that using a confirmation process will slim down the list of e-mail recipients, as many choose not to respond, forget to confirm or get confused in the process. As a result, e-mail marketing organizations such as the Responsible Electronic Communications Alliance, or RECA, have suggested that, when dealing with internally developed lists, companies need only provide consumers with a way to opt out at the point of collection, commonly done with a prechecked box. A single opt-in, where recipients actively check a box or agree to receive e-mail, would be necessary only if the address might be shared with a third party, RECA says.

Hotwire, a San Francisco-based discount travel site, has taken the opt-out approach, providing prechecked boxes in its site registration process for members to receive newsletters and information updates. The company has relied heavily on e-mail marketing since launching in October last year, using e-mail delivery services from Digital Impact Inc., said John Hommeyer, chief marketing officer. Hommeyer said that, at least so far, Hotwire hasnt been labeled a spammer and, in fact, fewer than 1 percent unsubscribe after receiving e-mail offers from Hotwire.

"We ran through usability studies and did not have objections to it," Hommeyer said of the prechecked approach. "We want to get the most possible names and want to get [them] in a way people agree to."

More and more, though, companies wanting to put as much distance between themselves and the spammer label are moving away from the prechecked, or opt-out, method, experts say. Travel site Cheap Tickets Inc., of Honolulu, plans to switch to an active, single-opt-in approach when it launches a redesigned site this month. Since 1999, it has prechecked the boxes offering the option to receive e-mail communication, said Evans Gebhardt, vice president of marketing. About six months ago, the travel site decided to rethink its approach to build more trust with customers and because its wasteful to market to uninterested customers, Gebhardt said.

In fact, many e-businesses are becoming more selective about whom they send e-mail marketing messages to. Consumers are most likely to start perceiving a companys marketing e-mail as spam when they get inundated with messages, particularly ones irrelevant to them, said Shar VanBoskirk, an analyst at Forrester.

Companies such as Hotwire and Cheap Tickets are trying to be selective about the volume of e-mail customers receive. Both have policies against sharing their e-mail lists with other companies or selling them to list brokers. Both also send a limited number of messages to customers. Hotwire sends a newsletter with updates once a month and e-mails about special fares in specific regions once every two weeks. Similarly, Cheap Tickets does two to three e-mail campaigns a month, targeting subscribers in 25 locations. The company also sends fewer messages to the least-active registrants, Gebhardt said.

"You have to be very disciplined," said David Moore, CEO of 24/7 Media Inc., of New York. "The tendency is to do whatever you have to do to make revenue numbers, but that becomes a short-term proposition because ultimately you lose the consumer."

Of course, even if you think youre doing all the right things, you can find yourself getting smeared with the spammer label. In such cases, as Motorola officials learned, its important to act quickly to defend your good name. In Motorolas case, the company issued a press release in May about the lawsuit to make clear it wasnt the sender of the unsolicited e-mail messages. Since then, even with the lawsuit still pending, complaints from consumers have stopped. It saved face before the unfair label of spammer could stick.