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Tech strategies: E-Mail Tiering Cannot Be Permitted

February 13, 2001

The Internet service providers and the large portals of the Web (Yahoo, AOL, etc.) have been the gorillas of the Internet. They largely have dominated where and how advertisers spend money and, for many, where they have lost money.

As direct marketers, you have to be careful that you do not follow like sheep. Direct marketers’ late cousins, the pure dot-com marketers, are falling off the cliff by just following what the ISPs and giant portals have dictated.

Direct/interactive marketers constitute the group most responsible for the development of e-mail as a medium and direct marketing channel. Now the most traditional concept of list ownership, which has been developed over the past 40 years, is being threatened.

A story that was published in the Jan. 29 edition of iMarketing News carried the headline "Jupiter Says Marketers Will Pay to Send E-Mail." A similar story also came across Reuters with the title "Promotional E-Mails New Revenue Stream for ISPs." The titles may have been different, but the stories were the same: Jupiter Research, New York, had issued another of its reports about online spending and Internet advertising.

According to the Reuters story, "Promotional e-mail delivery will become a new revenue stream for large Internet media networks, Internet service providers and Web-mail providers. Currently, Internet media networks and ISPs are searching for ways to diversify their revenue base as they are hit with a decline in advertising spending."

The story went on to say, "The research firm thinks the current free delivery of promotional e-mail will evolve into a tier-based scenario that forces marketers to refine and focus their e-mail strategies.

"Among the tiers will be one that offers profiled delivery of e-mails based on individual usage behavior. Another tier would allow the delivery of e-mails into inboxes with different fonts or icons to break through the clutter, and another would allow for standard delivery direct to the primary inbox for marketers." The fourth tier would be for basic bulk e-mail, the story said.

For those who would believe or subscribe to that report and its conclusions, here is a surprise: Companies are already paying for the use of e-mail lists. They are compensating the organizations that have opted the consumers or executives in to their lists after a visit or purchase.

Those lists are the good will of the various list owners.

The long and short of the reported story is that Internet advertising dollars went down for ISPs and large portals, and they are looking for another source of major revenue. But it cannot and should not come from charging additional fees for the receipt of e-mail, which has always been part of their basic services.

The ISPs have the right to charge fair and competitive fees for their delivery services, but they have no business in the business of sifting through the information they deliver. It would be similar to the superintendent or the concierge of an apartment building sifting through an individual’s mail simply because he rents an apartment in a building.

Jupiter has not really thought out this proposition. It talks about certain characteristics and it has created tiers. Each of these would be worth a different price to a marketer. Where are they getting this information, who gave them permission and what is their legitimate right? These issues were fought out 15 years ago with the large credit clearinghouses where consumers had no choice but to give data for their mortgages. The companies that truly own information and can use it legitimately are the direct/interactive marketers, magazines and Web marketers that have asked permission and have given benefits to their customers in return for the use of that information.

What Jupiter, and possibly the ISPs, do not understand is that direct marketing is a medium where files are built and used successfully based on buying habits, average unit of sales, frequency and recency as variables. These elements, not how many times a person logs in to get to the next tier, will make for a successful marketplace.

Another Reuters article, from Jan. 22, reported, "Compaq Computer Corp. and Yahoo Inc. on Monday said they had entered into a multiyear agreement under which Compaq will be a preferred provider of technology to Yahoo and will advertise its computers on the Internet media giant’s Web sites."

Under Jupiter’s concept, Dell, Gateway, Micron and IBM might as well forget about e-mailing people who have requested information. A deal is a deal. Except the name does not belong to Yahoo.

What if AOL (now AOL Time Warner) does not want to receive an e-mail through its system from Newsweek, or will it get the "fourth tier?"

Will Schwab get fair treatment from an ISP with a deal from Ameritrade or E*Trade? Where do catalogs and newsletters fit into a medium that is a key expanding channel for them?

The ISPs and portals face challenges, but their revenue stream should not be at the direct marketers’ expense.

People will opt for a straightforward e-mail service that allows for the free flow of correspondence.

A delivery service has the right to charge a fee that is fair and competitive. It does not have the right to censor communication or to tier it.

Roy Schwedelson is CEO of Worldata Inc. and co-founder of WebConnect, both in Boca Raton, FL


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