Their Time Has Come

JUDGING BY the amount of e-mail being sent, traditional mailers and their list companies can stop preparing for the future. The future is here.

The percentage of e-mail names in the average house file is “somewhere between 10% and 30%. And that’s doubled in the last year,” says Michelle Feit, president of the Edith Roman-affiliated Internet marketing company ePostDirect, Pearl River, NY.

Initially, e-mail was mostly the province of high-tech mailers-thus, they used lists like the Webmasters files offered by NY-based NetCreations’ PostMasterDirect. com, and the 20 or so computer publications lists from IDG Communications List Services. But today, mailers with direct marketing pedigrees as timeworn as Fingerhut and Rodale Press Inc. are also testing e-mail files for customer contact and prospecting.

Fingerhut, Minnetonka, MN, is sending e-mail to 100,000 names per week. The names are from outside lists, and from each of Fingerhut’s three sites: (www.finger hut.com, www.andysgarage.com and www.thehut. com).

Rodale found, in a recent customer-satisfaction survey pitting e-mail against paper mail and telephone service, that “e-mail scored almost as high as the phone,” says Ed Fones, vice president/general manager for Men’s Health magazine, which is leading the e-mail charge at Rodale, Emmaus, PA.

Responding to DMers’ demands, a list field that included a handful of companies in 1996 now is filling up with many of the big-league companies and a plethora of Internet players, all jostling for position.

In the last couple of months, for example, Stamford, CT-based ALC of New England was launched as a full-service e-mail list management and brokerage firm. Millard Group Inc., Peterborough, NH, started an interactive division. And Acxiom/Direct Media, Greenwich, CT, is about to announce E@Base, the first co-op-type e-mail database.

The 10-million-name E@Base is not a database to be used for prospecting. Rather, it’s set up to append data to existing house files.

Mailers will contribute a minimum of 200,000 house-file entries each. E@Base will produce postal names and addresses in exchange for e-mail addresses, or e-mail addresses for postal names and addresses. Contributions are anonymous. Participants will be paid a 40% royalty on all net names matched to either their postal or e-mail address. They may subject their house files to the demographic and psychographic information from Acxiom’s InfoBase system (which contains data from 95% of U.S. households), so that they may profile and target their customers.

All lists contributed must be the opt-in type. Plans call for E@Base to start with 10 million names, including 1 million from Acxiom’s online CatalogLink response list.

The service will allow mailers to break out selections from e-mail files the way they do with traditional lists.

“E-mail can actually get you a lot closer to one-to-one marketing in terms of reaching your own customers based on their behavior and purchasing characteristics,” says Reggie Brady, business unit leader for interactive services at Acxiom, who is spearheading the project.

There is “a crying need for this in the marketplace,” she adds. “Companies want to build a relationship with their customers, but they are just starting to collect e-mail addresses. This is a way to jump-start them.”

It is also a way to address a couple of other nagging issues. E-mail lists are expensive, and there aren’t a lot to be had at any price. List professionals have identified a maximum of 300 opt-in files on the market. Feit has discovered 1,000 opt-ins from the universe of Internet-compiled, online newsletter, consumer, business-to-business and subscriber lists.

Whatever the total, surprisingly few are managed by list companies: In addition to IDG’s 20 lists, ePostDirect has seven; ALC of New England, seven; Worldata in Boca Raton, FL, 13; and Venture Communications International Inc. of New York has eight. The remainder are divvied up among other list firms, Internet list compilers and other entities.

The point, says Feit, is that e-mail lists are nowhere near as valuable as postal lists-yet.

“Even if there are 1,000 [e-mail lists], there are 30,000 postal lists,” she points out. “There’s not enough competition in terms of lists and prices.”

Rodale’s Fones acknowledges that the high prices are discouraging. “At $200 to $250 per 1,000, response rates are lower than normal direct mail and the pay-up is also lower than direct mail,” he says. “When you put a $250 price tag on it, it really weighs down the benefits.”

Deb Goldstein, president of IDG Communications List Services in Boston, whose experience is in business-to-business campaigns, agrees that “the list and the transmission costs are higher, by a good 30% or 40%.” But, “from a campaign perspective, e-mail marketing is less expensive. The response rate is 3% to 4% higher and response rates come in quicker, so you can analyze quicker. So long as the response justifies the cost, then it’s a fair price,” she maintains.

One tactic that seems to increase response is embedding a URL in an e-mail message to drive a prospect effortlessly to a Web site, then promising free shipping if the individual orders online. Also successful are loyalty programs such as birthday clubs that send the customer an e-mail when it’s time to buy a birthday gift for a loved one.

Nevertheless, few owners rent our their e-mail lists, so the prospecting universe is limited. When possible, it pays to aim for recency or interest.

“If you’re selling camping gear and you can’t find buyers, you can at least find people who are interested in travel,” explains Frank Quaranta, director of new product and system development at Millard Interactive.

Such lists are a gamble, Quaranta admits. “But print and production costs of a catalog are a big chunk of costs,” he adds. “With an Internet catalog, you’re taking a big chunk out of your costs. By doing so, your response rate can be lower and you can still make money on the same order.”

Fingerhut has received “minuscule” negative feedback with its outside-list Web site tests, according to Willy Doyle, general manager of electronic commerce at the cataloger. That’s because e-mail customers have this attitude: “Give me something that means something to me and I’m happy to get it, but load up my mailbox with stuff I don’t care about and I’m not happy,” Doyle says.

Privacy Concerns By all accounts, online consumers are hypersensitive to privacy. Fones sent out two subscription direct mail tests in which he asked for e-mail names. “Just asking depressed response by 20%,” he reports.

List companies guard against consumer outrage by marketing only lists of people who have agreed to be included and are offered a chance to opt out in the header and footer of every e-mail message. Moreover, the opt-out language should be clear, obvious, presented on an early screen and “the question should be asked directly,” says IDG’s Goldstein.

“If a person has asked to be removed from a file, respect it, because otherwise it’s not going to be worth the trouble,” warns Worldata CEO Roy Schwedelson. “For the first time, the we’re going to be in partnership with consumers and get from them the information they want and types of products they respond to.”

Ease of response and a strong offer work as well online as they do offline, say experts. Men’s Health, for example, sent a Valentine’s Day reminder to subscribers, with a link to its co-branded flowers site. “I think we sold more on Valentine’s Day this year than we did in the whole 12 months last year,” Fones says.

In the warp-speed e-mail world, where a pioneer is someone who started three years ago and a visionary predicts events next month, Acxiom may not dominate the arena for long. “Most list managers, like us, are working with companies to create e-mail lists as well as mailing lists,” points out Venture Communications International president Richard Baumer. “Then we can create two revenue streams.”

Along with the unique methods that must be applied to this medium, says Todd Love, director of new business development at ALC of New England, a central lesson is: “Methodologies of traditional direct marketing are extremely applicable.”