Feedback from AD:TECH

by Bill McCloskey, May 27, 2004, 12:00 AM

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I've just returned from AD:TECH, where I was hoping to report back on all sorts of new email products and ideas. Unfortunately, this year's show was more of a reflection of the sad state of email marketing since the Can-Spam legislation was passed, with a few notable exceptions. Both on the exhibit floor and in the conversations I had with marketers and vendors alike, there was a sense of holding back, deferred plans, and in some cases, frustration. I even had one vendor, a well-known list broker, complain to me openly on the floor about how difficult it had become to make a living and to get their emails through. At parties, many marketers, even those that had previously been big users of email, had cut back and weren't emailing as much anymore.

Exhibit halls are good barometers of the industry and they highlight the cyclic nature of the technology landscape. A new technology will suddenly get hot (in this case search engine marketing), and suddenly the show floor blossoms like mushrooms with companies addressing that space. For those of us who have been around for a while, however, that type of get-on-the-bandwagon mentality usually signals the beginning of the decline of a technology in the cycle: too many players chasing too few dollars until quality and service decline and companies start cutting corners to survive. Email marketing is at the other end of the spectrum: the once-hot technology is now in decline but ripe for a major resurgence.

The fact is that email marketing is the best place to watch for the next wave of innovation. The reasons are simple. The effectiveness of email marketing has never declined, as I see every day when I look at the incredible increases in site traffic driven by email marketing done properly. As an example, a recent email campaign by Crest Toothpaste promoting their Health Expressions newsletter increased traffic to the site by 3,600%, according to data supplied by Hitwise. And as I review campaign after campaign, Web site traffic spikes are inevitably driven by email marketing, not search marketing.

But it is certain that people are confused by the new legislation, uncertain on how to counteract spam filters, and need help in overcoming these problems. All of these ingredients (proven technology with problems and obstacles to overcome) are the recipe for opportunity.

An area of innovation that I had overlooked until now is the dedicated email server hardware business. Companies such as Ironport Systems and OmniTI Inc. provide both outbound and inbound dedicated email servers to high volume email senders and enterprise clients. Of all of the companies in the space, the most interesting by far is Ironport, which recently acquired SpamCop and have a fascinating tool that they provide free of service called Senderbase that provides email administrators a tool that helps identify email senders.

On the outbound side, these dedicated hardware servers allow for the delivery of millions of email messages daily, which can be distributed over hundreds of unique IP addresses.

This means their main customers are high-volume email senders. Of course this puts IronPort in a very interesting situation. Its purchase of SpamCop and distribution of Senderbase puts them squarely at odds with much of their potential customer base and they are in fact currently being sued by the king of high-volume email senders, OptInRealBig.com. All of this probably indicates that Ironport's strategy is moving toward the inbound side of email: a movement away from their IronPort A30 Delivery platform toward a future with their C-Series gateway appliances that protect enterprise customers from spam and viruses. After all there are a lot more companies who need help receiving email these days that sending it.

This is a field we'll spend more time with in the coming weeks.

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