Is that golden egg-laying goose actually dead yet? According to the lore and exhausted metaphors surrounding email marketing in the past year, spam and overeager permission-based missives were choking inboxes, depressing email CPMs and response rates, and threatening to strangle (or at least ground) said goose, which once seemed to have hatched the most gleaming promotional platforms of the digital era.

All according to who you ask in the ad industry, the email goose is flying, dying, or simply fine-tuning its wings. Just about everyone agrees that spam and inbox bloat have quickly made the email business very complex. "They aren't killing it, but they are handicapping it," says David Hallerman, senior analyst, eMarketer. Future success is going to depend on much more sophisticated strategies to break through not only inbox clutter, but highly accelerated ISP filtering and ultimately, anti-spam legislation that most in the industry now see as inevitable, even helpful. With users' fingers locked and loaded on that Delete key, email has about a second to make its case with many users, and so the basic communications challenge is formidable. "Most of your focus is going to be in the 'From' and 'Subject' and the first couple of lines," says Michael Mayor, president and COO, list manager and marketer NetCreations' PostMasterDirect. "The Subject line has to establish honesty and relevance in thirty characters or less."

No easy task for an industry that is losing its own credibility among some planners. While DoubleClick's Email Trend Report for the first quarter 2003 claimed that, while performance for permission-based marketing messages held steady last year and actually rose in Q1 2003 (CTRs up 11.3 percent to 8.9 percent and open rates up 7.7 percent to 39.2 percent), media buyers still remain wary. Many see overall performance, CPMs dipping, and the lists market plummeting. "Average response rates for list rentals do seem to be decreasing, as are open rates," says Cory Treffiletti, media director, Carat Interactive San Francisco, who notes more vendors negotiating on rates in recent months. Indeed, Jason Heller, CEO Mass Transit Interactive, says response and ROI on standalone opt-in email has declined so much in recent years that, "our agency and many others very rarely recommend it anymore."

What's a goose to do? Scramble for better solutions.

The Spam Dividend?
Ironically, the problem of inbox bloat may have accelerated the maturation process for email marketing. "It's forcing us to manage the lists much, much better than we have in the past," says Michael Mayor, who shaved a million names from his database recently because non-responders "aren't doing us any favors."

Once free and easy, email has become much more complex and costly as marketers have to contend with ISP filtering that has become noticeably more aggressive in just the last six months. "It's literally a daily moving target," says Matt Hickman, director of business development, @Once, a messaging provider that has a full-time team assigned to ISP relations and filter monitoring.

John Harrison, VP product strategy and production, thinks that the email backlash may actually force the industry to shape up and shake out. "It is the right thing for the channel, the right way to ensure that there is a cost associated with delivering legitimate email." In fact, Al DiGuido, CEO, Bigfoot Interactive, argues that spam-phobia has sent more people his way. "It has done nothing but increase the amount of activity we get from companies looking for ways to use the platform. We are getting the exact opposite of complaints and worries about spam."

But on a deeper level, providers think that penetrating ISP spam filters and eluding the user's dreaded Delete key really is tied to moving the platform to the next level of marketing sophistication, with better data-mining, dynamic content creation and personalization, rich media, and total integration with offline campaigns.

According to Eric Kirby, VP strategic services, DoubleClick, the email is getting through, but the battle against spam, bloat, and filtering is not going to be the war in Iraq. "We are going to be in trench warfare for a while, but the good news is the leadership in the email marketing space are getting more sophisticated in fighting that war."

Drilling the Core
Spam has helped move many companies from email "blasting" in order acquire customers to CRM, cultivating an electronic relationship with a customer base by growing and deepening its own database. "The in-house list is being focused on more and more, finally, by companies," says Jeremy Hughes, COO, Monster-I. By capturing email addresses at point of sale, through catalogs, call centers, and direct mail, more companies are reaching critical mass, an e-base that is 20 to 30 percent the size of their direct mail lists.

With that sort of scale, e-marketers argue, the next stage of segmentation sophistication is using the feedback loop from email to identify and market to your most valuable or influential constituencies, even when that amounts to a handful of users. One of Monster-I's clients sent a B2B campaign to 15,000 names among 39 mutual fund wholesalers, Hughes recalls, "but out of that, there were roughly ten people they really cared about." They used the open and CTR feedback to refit the creative for stronger response from that critical core.

Heller mines the mass of data he gets from a campaign to determine the composition of his response rate, whether the CTRs are coming from new respondents or the core of customers. "Response and value don't always have a direct correlation." He thinks the email channel is most valuable when it leverages the technology already at hand to identify a client's most valuable customer base and cultivate that value. "Over time, you can collect data on a subset of those consumers, overlay the value data onto your database, and make a correlation between response and value." This takes a degree of time and patience that many companies lack, however. "It is a commitment you have to have for building and maintaining your database," says Heller. "If you just go in winging it because everyone else is, it won't be successful. You're just pissing in the wind."

But while hard times seem to have driven many companies into using email more for CRM than customer acquisition, Dave Morgan, CEO Tacoda Systems argues that some of these same data-mining technologies are about to become more viable for traditional email advertising as well. Using his audience management product, Morgan says that publishers are experimenting with merging browser behavior among cookied, registered users with email ad programs. "Now you can start sending email messages to imminent car buyers by targeting people who have been searching in your auto classifieds in the last 14 days," he says.

Hyper-Mail Heaven
Some rich media email providers like DigitalProduce insist that blasting and branding in this medium are still possible, and that email can be as elaborate as TV ads, if a massive campaign is parsed intelligently. The company is dropping 20 million Flash-powered audio-video emails in June to help Exxon/Mobile relaunch a decades-old Mobile Travel Guide "that nobody really knows about," says Chris Taddei, president and CEO. The campaign is being used to test consumer response. "It's all broken down into different subject lines, price points, and aspects. The objective is to determine what price point people are ready to buy, based on subject line. It's being used as an analytics tool."

"We're doing a lot of work with large and medium-sized clients that either have a highly emotional impulse purchase or a highly complex product that requires show and tell," says Jeff Gauss, VP sales and marketing H2F Media. He says that a recent email-only campaign for the Venetian Hotel, including an embedded video, sold $1 million in excess room inventory in 24 hours, and that H2F tests show that embedded video or Flash components can raise response rates 30 to 50 percent and conversions up to 60 percent. Nevertheless, even Gauss agrees, it is still about getting the right proposition (i.e., a $99 room at the Venetian) to the right customer. "Rich media will only work if it is supporting a good offer. Rich media is not going to sell a Saab for $50,000."

Even rich media promoters acknowledge that the platform is most effective in the B2B space where the lists are cleaner and the platform robust enough to handle them, says Monster-I's Hughes. His client, LimitedBrands relied exclusively on a two-minute video email invitation to lure a predominantly New York-based analyst audience to the company's 2002 Annual Update Meeting in Ohio. Hughes says attendance rose 120 percent over the previous year's multi-channel pitch, with over 55 percent of recipients signing up. "We have seen open rates as high as 90 percent, over 45 percent clickthroughs, and actionable response rates of 25 percent on several campaigns," he says.

Intriguing as these select results may be, however, DoubleClick and NetCreations say they are seeing little if any rich media email pass through their delivery systems. Getting the right message to the right user at the right time (and getting it noticed) is not a matter of making email look and sound more like TV -- it is more a matter of using the exiting targeting and tracking technologies to make marketing email seem more like, well, email.

One-to-One Nirvana?
The most important cutting edge technology at work in email, but also is invisible to users, is dynamic content creation that parses both the database and the creative intelligently to deliver highly customized pitches. "Content specific emails that are targeted to individuals are the nirvana of email marketing, says Matt Hickman, director of business development, @Once, which works with Nike, Nintendo, and Home Shopping Network. Nintendo leverages the data points in its database of gamers so that it can target promotions for specific new games to previous buyers of sports or action titles. It even geo-codes email according to zip codes to feed the customer the nearest retailer selling the product. Despite the usual worries about frequency, Nintendo and @Once sent a successful campaign involving six sequential email pieces for an upcoming game, but fine-tuned the delivery according to how the recipients responded to each piece. "It shows that if you are conscious of segmentation and relevance, then there is no reason you can't send a number of messages around the same thing," says Harrison.

And if this Nirvana has a high plane, it is the total integration of offline and online transactional data sets with dynamic content creation. While it is not for everyone, Hickman admits, when using rich transactional data sets for clients like RitzInteractive that, "we have seen literally two times to six times lift in sales."

"What we see as the biggest driver this year and into next are messages that are driven by the story of a customer -- the transactional history of the customer," says Irene Pedraza, CEO, CheetahMail, which serves Federated Department Stores and J.C. Penny. In response to purchases and even click histories, the technology assembles the five or six most relevant offers from a full catalog of product possibilities into the next email. "We're actually bucketing different types of clickers and different types of openers," says Matt Seeley, COO. "A very small optimization can yield great results."

The Holy Grail of Timing
Overall, however, much of email marketing seems to be arriving at a humbling realization that hit online advertising a year ago, that the platform is most relevant to media buyers and to users when it plays a smaller role within a larger more integrated campaign or within actual customer relationships. Bigfoot Interactive's email customers are testing heavily cross-platform email sequencing. "We're seeing more cross-sell begin with direct mail followed by email, followed by TV, and then by telemarketing," says Michael Della Penna, chief marketing officer. With precise letter tracking from the U.S. Postal service, a credit card company can literally time an email notice to a customer to the morning the card arrives at the door.

When the entire marketing effort runs off a single database, then email becomes a highly timed and targeted piece of the overall communication strategy. According to Hickman, one wireless provider is already running campaigns that drop emails to specific customers when their mobile contracts are due to expire. If the customer doesn't respond, then the database knows to shoot out the more costly direct mail. Customers at a major video store chain get geo-coded snail mail coupons that pull them into the new neighborhood outlet, where they sign up for membership and hand over an email that the company uses for subsequent incentives. @Once, which recently received a significant investment from direct mail provider CC3, is hopeful that the future of email is riding piggy-back on snail mail. "Direct mail drives the acquisition while email drives customer retention," says Hickman.

Timing is one of the key advantages of email that CheetahMail sees emerging. "Event messaging has become very important," says Seeley. One way around irrelevance is to tie messages to online sales receipts or emails that are triggered in a sequence by purchases or even abandoned shopping carts. "This becomes truly one-to-one, a single message to a single user for a single event that they caused to happen." DoubleClick's Kirby agrees that using customer events to trigger email reminders and cross-sell opportunities is greatly underutilized in the industry, but it turns email into something more than a delivery engine. "The holy grail is to get to a place where we have a great knowledge of customer needs, and then act on those needs in messaging and sequencing across channels."

Flying Low
Holy grails? Nirvanas? Unfortunately most of email marketing's heavenly hopes require massive and highly integrated database structures that only the most sophisticated companies are beginning to build. Meanwhile, planners and buyers remain skeptical about the industry's ability to beat the dual bogies of real spam and inbox bloat, and to prove itself to be a reliable branding and customer acquisition vehicle. "The methodologies of list compilation and maintenance of most vendors are no longer living up to the promise of effectively matching consumer interests with marketing messages," Heller argues. "For most client categories, at scale, stand-alone, opt-in email is no longer an effective driver of response, conversion, and ROI."

Whether it is integrating with larger customer databases or offline campaigns, or just staying small and relevant, email's future may lie in reducing expectations (not to mention chucking a few of those sacred quest metaphors). "There is a tendency to make email more than it is supposed to be," says Mayor. "All [consumers] want is the meat of the offer, and if they are interested, they will go for it. What this really is supposed to be is an invitation."

Select Email Services
@Once (www.once.com): Large-scale campaign development, rich media design, and customer reporting. Clients: Orvis, Hollywood Video, Nintendo.

Bigfoot Interactive (www.bigfootinteractive.com): Email technology and service, personalized and vertical market campaigns, and database management. Clients: AT&T Wireless, Road Runner Cable, MCI.

BoldFish/Siebel (www.boldfish.com): Outsourced messaging solutions for the enterprise and opt-in list management. Clients: Colgate-Palmolive, MLB.com, Sony, Red Lobster.

CheetahMail (www.cheetahmail.com): Technology provider and campaign management for personalized delivery, rich media email, and dynamic content creation. Clients: Discovery Channel, BloomingdaleÕs, J.C. Penny.

Doubleclick (www.doubleclick.com): Makers of DARTMail technology platform for permission-based deployment, tracking, optimization, and consulting services. Clients: Sony, Procter & Gamble, FedEx.

Dynamics Direct (www.dynamicsdirect.com): Maker of Dynamic Messenger technology for large-scale, high-volume deployments, especially involving integration with existing CRM databases. Clients: Intel, Nokia, Cisco, Charles Schwab.

e-dialog (www.e-dialog.com): Dynamic content creation and personalized email delivery. Clients: Harvard Business School Publishing, NFL, MIT.

Equifax Marketing Services (www.equifaxmarketingservices.com) [formally 24/7 Mail]: Specializes in targeted postal and email lists, email address appending, list management & brokerage, registration solutions, data enhancement, list hygiene, and analytics.

FlashedMail (www.flashedmail.com): Rich media technology provider specifically for email creative. Clients: Universal Studios, Exxon/Mobile, Fredericks of Hollywood.

FreshAddress (www.freshaddress.com): Email list appending and hygiene, address validation and rental. Clients: Lancome, Brookstone, HooverÕs Online.

MindShare Design (www.mindsharedesign.com): Delivery and list management for high-volume message drops, dynamic content management, and advanced clickthrough tracking. Clients: New Line Cinema, MediaBin.

PostMasterDirect (www.postmasterdirect.com): The email group of NetCreations, offers double opt-in list management, rental (80,000 lists) gathered from 500 websites, and deployment. Clients: CNet, MSNBC.com.

Quris, Inc. (www.quris.com): Integrated email agency, from strategic consulting to creative design, data management, and analytics. Clients: Blockbuster, Discover Financial.

Singer Direct (www.singerdirect.com): List brokerage and management and cost per acquisition placements. Clients: Outpost.com, @Cooking.com.

Synergemail (www.synergemail.com): List rental and deployment off of a 50 million name database and email newsletters. Clients: Adobe, NetFlix, Chase, Bose.

TKL Interactive (www.tklinteractive.com): Integrated email services, including creative services, list management, and email appends. Clients: AmTrak, Lincoln-Mercury, Holland America.

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