E-mail ad distributors dance with dollars

June 18, 2001

Take another bow, Michael Flatley. You and the cast and crew of "Riverdance" have helped Jaffer Ali figure out how to make millions online: the Laff A Day e-mail list.

It's not that Irish step-dancers are the butt of jokes circulated to Ali's e-mail distribution list. Instead, video sales in America of the wildly popular globetrotting dance production padded Ali's pockets. He, his sister and their cousin hawked the videos through just about every medium imaginable, but what really worked for them was e-mail—a lot of it.

When the trio watched video sales shoot up after advertising in a couple of e-mail newsletters, they decided to buy three distribution lists of their own. Ali dispatched the "Quote of the Day." His sister, Anisa, dished out daily recipes, and their cousin, Tom Zegar, sent jokes because it was decided that he had the best sense of humor.

"We were playing around with this stuff with no idea what we were doing," Ali said. "Then it really hit us: E-mail advertising was the answer."

The threesome launched PennMedia in 1999 and watched their Mokena company turn a profit after only three months, Ali said. The company now owns 80 e-mail publications and sells advertising for more than 800 others.

The messages are sent to 62 million e-mail addresses. According to PennMedia's research, that translates into roughly 36.5 million people who have signed up to receive regular messages about everything from bass fishing, Bible verses, UFO sightings and soap operas.

In these tough economic times, PennMedia's reach is enough to make marketers operating on shoestring budgets salivate—and give the nation's largest advertising outlets some serious competition. Ad spending in all media fell 5.2 percent to $22.6 billion in the first quarter of this year compared with the same period in 2000, according to media ad-tracker CMR of New York. The company does not track Internet ad spending, which includes banner ads and e-mail.

Ali said PennMedia is on track to generate $30 million in revenue this year, doubling last year's sales.

"When dollars are scarce, advertisers look for opportunities to better target their audience," said George Shababb, CMR senior vice president. "They want accountability, and they want to measure what the return on their investment is. E-mail is very, very measurable."

And people are clearly using it. According to a poll conducted by the Pew Internet & American Life Project between March and August of 2000, e-mail is the lowest common denominator of online use and the most popular.

On any given day, people are more likely to send e-mail than buy something, conduct research or read the news.

"It is the Internet's killer application and will be for years to come," Ali said. "E-mail ads work because people ask for them and can look at them on their own time. The numbers show that banner ads [on Web sites] are ineffective because people surf the Web for a purpose and aren't interested in letting something divert their attention away from what they're looking for."

Intel, Microsoft, Nabisco and Xerox are among the companies using PennMedia to wiggle promotional ads into e-mail in-boxes every day. At only $10 per 1,000 e-mails, it's a much cheaper strategy than placing ads in newspapers, magazines and television. Another big plus: Results are immediate and often give advertisers enough information for follow-up marketing.

Take Xerox for example. The company advertised a promotional give-away program, www.freecolorprinters.com, through PennMedia and told those who clicked through to the Web site that their ticket to the free offer was an e-mail address. Thousands gladly provided the information, handing Xerox an opportunity to contact them again in the future.

"With e-mail, marketing becomes something more than some strange science of numbers and guessing," said Heidi Schuman, marketing manager of the Xerox program.

For more on Jaffer Ali and PennMedia, visit Chicagotribune.com/tech.