• by Shankar Gupta , February 3, 2006

America Online's decision to implement Goodmail's e-mail authentication services has come under attack by Return Path, a major competitor of Goodmail.

AOL this week announced it was phasing out its enhanced white list in favor of Goodmail's CertifiedEmail product. CertifiedEmail allows senders, after an approval process, to guarantee delivery of their commercial mailings, with full link and image functionality--something that many e-mail sites disable for security reasons. For the service, Goodmail charges a per-email cost. In October, Goodmail announced the deal with AOL as well as a deal with Yahoo, which has yet to be implemented. AOL plans to start phasing in the program later this month.

Matt Blumberg, CEO of e-mail marketing firm Return Path, sharply criticized AOL's decision, saying the program amounts to a "tax" to send e-mails to AOL. "There's some serious problems with it as far as the industry is concerned," Blumberg told OnlineMediaDaily. "Legitimate e-mail marketers--the ones who have permission to mail their customers, and who work hard to maintain a good reputation--are now going to be forced to pay a tax, essentially, on every single e-mail they send to AOL," said Blumberg, who also condemned the plan on Return Path's blog. Blumberg's firm provides its own e-mail authentication service, Bonded Sender, which has a contract with MSN's Hotmail.

Not everyone agrees that the program will hurt e-mail marketers. Jupiter Research Director David Daniels said that AOL's decision to use Goodmail will benefit the industry because a per-e-mail charge will force marketers to winnow their e-mail lists.

He said that now, only about one in three e-mail marketers target based on open rates or click-through data. The industry would benefit, he asserted, if the extra cost encourages advertisers to stop sending e-mail messages to consumers who routinely delete them.

One reason is that customers would get less unwanted e-mail--which they now mistakenly report as spam. Also, when consumers are bombarded with e-mail, they end up over-compensating and deleting messages they would have otherwise read.

"E-mail marketing is an incredibly efficient marketing channel, because it is so inexpensive. But that is in itself the problem, because it leaves marketers to pound the same lists, when 60 to 70 percent of that list is completely ignoring those messages," he said. "This is going to force marketers to say: "Should I really be e-mailing my entire list every week?"

Daniels said a May Jupiter Research study, "The ROI of E-mail Relevance," concluded that e-mail campaigns targeted with Web analytics can produce nine times the revenues and 18 times the profits of broad mailings.

At the same time, Daniels said, Goodmail's pacts with AOL and Yahoo could be limiting because they potentially squeeze out competitors, like Return Path. "There's certainly some concern from other providers with legitimate business models that are competitors to this solution. For AOL and potentially Yahoo to get behind this one provider limits the potential for some of those other solutions," he said.

Plus, if Goodmail guarantees delivery, e-mail marketing firms that provide "delivery audits," or reports that tell companies what percentage of their e-mail lists are being bounced by e-mail providers, could also be affected. "If I'm a marketer, and a large portion of my list is B-to-C and much of it is AOL, then I may not want to do those delivery audits as often anymore if AOL is ensuring delivery and preferential treatment," he said. "That's an additional worry that some of those providers in the delivery auditing space must be having."