• by Gavin O'Malley  @mp_gavin, April 28, 2005

E-mail services provider Digital Impact Wednesday announced the launch of a transactional e-mail customization service called Message Effect. The initiative--the first since data management goliath Acxiom agreed to acquire Digital Impact for $140 million one month ago--is intended to tap the marketing potential of the order confirmations and billing statements that its clients send to customers.

Message Effect converts clients' plain text messages to smart HTML formats, inserts customer-specific information and offers, and provides clients with full tracking and reporting capabilities, according to Mary K. Marsden, general manager of transactional marketing at Digital Impact. "Importantly, the system requires no major changes to a client's existing infrastructure, no storage or replication of confidential information, and can be implemented quickly and easily by client IT departments," Marsden said.

Jupiter Research predicts that overall spending on e-mail marketing will continue to increase along with online ad spending overall. But, at the same time, most marketers say deliverability and content personalization issues continue to hinder the effectiveness of their e-mail campaigns. As a result, clients are expressing interest in transactional e-mails as an alternative online marketing channel, according to Jupiter Research analyst David Daniels.

"Transactional e-mails are a communication stream that haven't yet been utilized, but the potential is clear," said Daniels, who is currently preparing a report focused on transactional e-mail. "There's a strong client demand driving this trend, as we've found that 58 percent of marketers plan on outsourcing transactional e-mail."

Jupiter's upcoming research report, titled "Optimizing Transactional E-mail Messages," expects that marketers who include promotional offers on transactional messages can potentially generate upwards of $500,000 annually by doing so. The report cites the perceived promise of improved deliverability and measurement that transactional e-mails offer as the primary drivers for the channel's growth.

Transactional e-mail's value is bestowed by consumers who read them with great care, explained Kevin Johnson, senior vice president of products and marketing at Digital Impact.

Digital Impact is by no means the first e-mail service provider to offer transactional tools. Michael Della Penna, chief marketing officer of Bigfoot Interactive, said Bigfoot launched a similar product over two years ago.

Digital Impact sends about 1 billion permission-based e-mail marketing messages per quarter for clients like Hewlett-Packard and The Gap.