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E-mail is route for direct mail


November 11, 2001

Even before fears of anthrax prompted cutbacks in direct-mail campaigns, Jose Vargas was doing a brisk business sending out marketing pitches without envelopes or paper.

Over the past two years, he expanded his Miami-based direct e-mail start-up to 20 employees and set up offices in Latin America. Clients liked the ease of targeted e-mail and its relatively low cost.

But since October, since anthrax spores began appearing in U.S. mail rooms, Vargas has more business than he could imagine. Sales are growing so fast that he's moving to bigger offices and expects his payroll to jump to at least 100 employees by the end of next year, with more overseas offices, too.

"We can hardly keep up," said Vargas, a 25-year-old Venezuela native from the headquarters of his start-up, MailCreations.com. "I could spend all day and night at work on my e-mail."

Across the United States, and increasingly worldwide too, e-mail marketing is booming.

Jupiter Media Metrix Inc., a market researcher in New York, forecast mid-year that spending on e-mail marketing in the United States alone will rise nearly 80 percent next year to $1.8 billion and then jump fivefold again to $9.4 billion in 2006. And that was before anthrax made daily headlines.

While e-mail still represents less than 1 percent of direct marketing outlays, thousands of firms now use it to send out flyers, catalogs, and other promotional materials. Some marketers also use e-mail to notify clients that packages are soon to be delivered to their homes or businesses.

Florida International University just sent out its first direct e-mail pitch, targeting 50,000 prospects in South Florida for its new master's program in international business, said Lea Pacheco of FIU's graduate school of business.

"It's proven to be highly successful," she said, noting that 35 percent of recipients opened the e-mail, 5 percent clicked through to another Web page, and many applied online -- a high response rate compared to traditional mail.

Computer maker Hewlett-Packard also is an avid user, sending out e-mails to existing clients who have signed up to get data on new products or upgrades. The company from Palo Alto, Calif., even does e-mail marketing in Asian languages in the Pacific Rim, said Jupiter Media Metrix analyst Jared Blank.

The business works much like direct mail sent through the U.S. Postal Service, United Parcel Service or other delivery companies, relying on lists and databases with information on prospective clients. The lists might include names, ages, addresses, income, occupation, educational degrees and other data.

Marketers, such as universities and retailers, specify the kinds of clients they want to reach, and then send out agreed-upon materials to a targeted number of recipients, often through a direct e-mail firm or sometimes using their own in-house e-mail lists.

The industry distinguishes between two kinds of direct e-mail: opt-in or permission-based mail and spam. The reputable type is opt-in, whereby Internet users who have signed up to use certain Web sites agree to receive information on specific topics, such as airline ticket fares, or agree to have their names included in lists that may be rented out. E-mails sent without permission are called spam.

MailCreations.com said it works only with opt-in e-mail lists, because they offer a higher response rate for clients. Clients are billed based on volume of e-mails sent, with the first 10,000 costing perhaps 15 cents apiece and larger volumes costing less per e-mail, marketing manager Pilar Alvarez said.

The company monitors responses by checking how many are opened, how many are clicked through and how many prompt e-mail responses or phone calls.

"It's easier to track than traditional mail," Alvarez said. "And it's cheaper."

Postage alone for sending a letter bulk rate by U.S. mail costs roughly 18 cents. A catalog costs more based on weight, and sending mail overseas can be expensive. In contrast, it costs virtually nothing to send an e-mail whatever the size of the document and distance traveled, she said, pointing to MailCreation.com's growing e-mail business to Latin America.

In addition, marketers can get speedier feedback on e-mail marketing. Most companies get 80 percent to 90 percent of their responses on e-mails within 48 hours, so they can send out test samples with multiple messages and know which one works best for their whole list. "This is a major improvement over the response time for direct mail, which can take as long as several weeks," said Jupiter Media Metrix.

E-mail glut

To be sure, there's controversy over the trend. Some consumers feel they already get too much e-mail. Jupiter Media Metrix estimates the average e-mail user in the United States will get 1,466 unsolicited e-mail messages this year and more than 3,846 messages in 2006, both permission-based and spam. Some marketers fear a consumer backlash and a decline in response rates over time.

Plus, there's debate over the impact that Internet marketing may have on traditional direct mail, from jobs at catalog printers to U.S. Postal Service revenues. Some companies and workers may not easily shift from stuffing envelopes or other manual jobs to more computer-oriented, direct e-mail tasks.

Plenty of money and jobs are at stake.

The New York-based Direct Marketing Association estimates its industry will contribute $582 billion to the U.S. economy this year and provide 4 million-plus jobs at such varied businesses as print shops, photography studios and telemarketing operations. The group said direct marketing generated more than $1.7 trillion in sales last year, including $110 billion in catalog sales.

Indeed, the association is working with its nearly 5,000 member companies to bolster their core business of sending materials through the postal service and delivery companies. The group recently issued new guidelines for direct mail -- such as clearly identifying return addresses -- to distinguish their billions of pieces of correspondence yearly from the handful of letters that contained anthrax.

Marketers say there's no doubt that direct-mail will dominate the decades-old direct marketing for years to come, just as traditional bricks-and-mortar stores sell far more than Internet e-tailers do.

But starting from virtually nothing in the 1990s to top $9 billion in 2006, e-mail marketing surely is booming. That's why Vargas of MailCreations.com is forming alliances with direct e-mail counterparts in Asia and Europe, hoping to share lists and capitalize as e-mail grows worldwide.

Doreen Hemlock can be reached at dhemlock@sun-sentinel.com or 305-810-5009.

By Doreen Hemlock, Business Writer. Copyright © 2001, South Florida Sun-Sentinel


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