Commentary

How Would An Email Tax Change Email Marketing?

On April Fools’ Day, Forbes ran a story about how Congress was considering a tax on email by amending the Internet Tax Freedom Act the next time it comes up for renewal. It was a great gag, and while I think there’s zero chance of any kind of email tax coming into being, it’s interesting to think about how the email marketing industry would change if some kind of tax were levied.

Possible Tax Schemes

About 10 years ago, I thought the email industry might actually benefit from having additional costs associated with sending. At that time, malicious spam was still a significant problem. Since then, ISPs have done such a stellar job of eliminating traditional spam from inboxes that the definition of the word “spam” now means something entirely different: email consumers no longer want, even if they opted in to receive it.

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That said, illegitimate email still represents 95% of all email volume. That’s a lot of email for ISPs to filter through to get down to the 5% that’s legit. Even a tiny tax on each email sent would collapse any centralized sending of spam; however, it might be less effective in tackling the bot networks that are responsible for much of the spam that’s sent today.

Of course, part of the trick is how to actually implement a “tax” on email. One way would be through a bonded sender program, which would allow a few different schemes. For instance, each sender would post a bond, and every time recipient complaints exceeded an established threshold, money would be taken from the bond. When your bond runs out, all your emails get blocked until you replenish it. So essentially this would be a tax on spam and unwanted or irrelevant email.

Another way of using a bonded sender program would be to charge a tiny amount for each email delivered. That would instantly change our tolerance levels of inactive subscribers.

A twist on these ideas would be for the U.S. Postal System to start a white label email system. Just like with snail mail, you’d pay for postage --and through a revenue-sharing program with ISPs, you’d get guaranteed 100% deliverability.

In all of these cases, you pay money upfront to avoid potential deliverability problems that would otherwise directly cost money to fix through remediation, and indirectly cost money through the revenue lost from blocked messages to your subscribers.

The Current Tax on Email

The central tension in email marketing is that our subscribers’ time is far more valuable than the pittance it costs us to send them email. In my book, “Email Marketing Rules,” I refer to this as email marketing’s cost-value gap. Marketers fill this gap by sending relevant emails to subscribers who want those emails.

When marketers don’t fill that gap, they invariably suffer deliverability problems from high complaints and low engagement. This is essentially a tax that subscribers impose on marketers for wasting their time. And it’s a tax that marketers can largely avoid by (1) putting in place sensible permission practices and sound collection processes across all their email acquisition sources and (2) using personalization, segmentation, triggered emails, and other tools to consistently send individually relevant emails.

It’s this ever-rising tax imposed by subscribers that’s the reason email marketing is no longer cheap. If you focus on making your emails smarter and more relevant, you not only reap the benefits of higher returns and higher customer satisfaction, but also minimize deliverability taxes.

6 comments about "How Would An Email Tax Change Email Marketing?".
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  1. Craig Spiezle from AgeLight LLC, April 21, 2015 at 11:21 a.m.

    This concept was first intorduced as a concept 2003. The concept was to apply a cost to sending email.  The cost would not necessarily be direct funds, but computatinal cycles.    http://research.microsoft.com/en-us/projects/pennyblack/ 

  2. Chad White from Litmus, April 21, 2015 at 7:21 p.m.

    Craig, thanks for the extra background.

  3. Pete Austin from Fresh Relevance, April 22, 2015 at 7:14 a.m.

    Great backgrounder and I totally agree that individually relevant email content and triggered emails are key.


    Of course emails don't really cost us a pittance, if you take into account the cost to design them in the first place. A new email template can take a day's work by a skilled designer, and refining the marketing message can take as long as you have.

  4. Chad White from Litmus, April 22, 2015 at 8:51 a.m.

    Pete, for larger brands, design and other costs are small relative to email marketing revenue. At scale, even doing a mediocre job at email marketing can be very profitable. Of course, for much smaller brands those cost can be more significant.

  5. George Bilbrey from www.returnpath.com, April 24, 2015 at 5:23 p.m.

    I thought this concept was dead.  There have been several attempts for a "pay for delivery" services (Goodmail) or a bonded sender product (Ironport System/Return Path's "Bonded Sender" program).  Both failed.  Having worked in this space for over a decade with the largest mailbox providers, I don't believe this is a problem that can be solved by economics alone.

    There is a room for independent whitelisting services like Return Path Certification and our competitors.  However, we are all just providing an additional signal to the mailbox providers about the quality of commerical mail.  We are not using economics to solve the problem.

    I think the approach Chad suggests - sending messaing that is more relevant for the subscriber's context is one of the most effective ways to pay the "tax".

  6. Chad White from Litmus, April 26, 2015 at 8:20 p.m.

    George, you're absolutely right. The email industry has evolved well beyond the point where any kind of bonded sender "pay for delivery" system is necessary. The Forbes article just got me thinking about those old attempts to defeat spam, and how permission and relevance are the current ways to safely pay your way into inboxes.

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