• by Kate Kaye , January 20, 2006

E-mail has evolved over the past several years, from a mere electronic version of direct mail to a data-driven CRM tool. Al DiGuido, CEO of e-mail marketing technology provider Epilson* Interactive, believes that before e-mail marketers can think about applying behavioral targeting technologies to their campaigns, they'll need to focus on employing the consumer data they already have more efficiently across multiple channels. Epilson Interactive works with clients including Newsweek, Alitalia, Domino's Pizza and Cox Enterprises. Behavioral Insider spoke with DiGuido about the potential for behavioral targeting and e-mail joining forces.

Behavioral Insider: Are you seeing your advertiser clients or other advertisers out there express specific interest in behavioral targeting as it can apply to e-mail?

DiGuido: Oh, yes. The top-tier players we deal with in the retail sector, and the financial services sector and the entertainment sector--we have been talking to these guys for several years about this... these guys have been doing the most modest targeting in terms of using the transactional records they have on folks...the top-tier folks are saying now we understand [a consumer's] behavior in multiple channels, so when we message back to [that consumer] in those channels...we can be more relevant in terms of messaging regardless of channel.

BI: With e-mail, you need to have consumers register and give you their e-mail addresses. So, it's almost an extension of what you're already doing as opposed to applying this whole new idea of behavioral on top of it.

DiGuido: Right. Because I think the issue there is e-mail is a one-to-one communication. There are a lot of issues around privacy, security, and all those types of things. The consumer who is giving the e-mail address is saying, "I want a relationship with you." And the more information they give you, the more they feel you should be relevant to them....The relationship is a much tighter relationship than you passing through the site and I cookie-ed you, so now I'm going to pop up banners in your browser or in your e-mail.

Google was trying to do that a while back in Gmail, but I think they abandoned that whole effort. I think it's antithetical to what e-mail is all about, and the relationship that you're trying to build with somebody that's very open and very permission-based.

BI: This potential that people are talking about in terms of behavioral being used with e-mail seems like it might be stunted from the beginning because of the opt-in issues and the fact that one advertiser can't necessarily use information gleaned on another publisher's Web site or another retailer's Web site in order to serve up an ad, because they can't be sharing that e-mail data.

DiGuido: When you talk about behavioral inside of e-mail, there's a heck of a lot more to be done in terms of leveraging that data that you already have on your customer to build relationships, much less adding more data on that individual and where they go in other places. The scorecard on the percentage of marketers who are truly leveraging the power of the data they have today from people who have given them e-mail addresses and permission...maybe 15 to 20 percent are doing a really good job. The balance [of marketers] really has a lot further way to go before they even start thinking outside of that box.

BI: Could you foresee--or maybe this is happening already--a portal site like a Yahoo! or an MSN serving up an e-mail that is branded as Yahoo! or MSN, but introduces the recipient to a particular advertiser, or to a particular offer based on that consumer's online behavior?

DiGuido: While I see the motivation for a Yahoo! or an MSN to do something like this, I don't think consumers are going to be all that happy about it. All of the issues around privacy, and how you use my data and how you learn about me and what I'm doing, are very much in the forefront of discussions today. Consumers are very sensitive about that.

BI: Although you have companies that have a client-side behavioral product through which people are served ads based on their online behavior in exchange for accessing software. In those cases, those companies have their e-mail addresses--they have a robust profile that they're building.

DiGuido: There are all types of companies doing those kinds of things. Whether they all really achieve critical mass... I have my doubts, because it runs counter to what we see in terms of consumer behavior. Consumers are trying to reduce the number of e-mail messages they get into their box that is unsolicited and irrelevant. So, if... there are people out there who say that for free software, companies can come in and send them relevant messaging, what's the overall performance of those messages inside that person's mailbox? Was the primary reason for them to do this to get the free software? Are they really transacting all that much in terms of the open-rates and click-through rates on those messages? That's a big question.

BI: I know of an instance where one company worked with another to execute e-mail campaigns based on behavioral methodology. Do you expect more of that sort of thing to happen--where a company like Epilson Interactive might partner with a behavioral targeting company to enable this sort of thing?

DiGuido: It's not on our radar screen right now. Being acquired by ADS [Alliance Data Systems Corp.] and being a part of Epsilon was the most significant partnership we can think about [right now]...

BI: Are you hearing advertisers express some of the privacy concerns you've brought up when it comes to potentially applying behavioral targeting to e-mails?

DiGuido: The reputable marketers are saying they want to make sure they play by the rules. The rules are what the customer expects in terms of our use of data and how we get data...I'm not hearing from a lot of advertisers that... outside of their own database... they're really looking for that right now.

*In our original newsletter, DiGuido's company was called Bigfoot Interactive, which is no longer correct. The current company name has been added above. Correction: Starbucks and Thomasville are no longer StarLink clients, as was reported in last week's Behavioral Insider. Jaime Onorofski's (Starlink's IP manager) current clients include Harry and David, E*Trade and NBC Universal.