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The

eMailMarketingReportTM

May 2001

www.emarketer.com

Table of Contents 3

Methodology 7

I Overview 9

A. What Is eMail Marketing? 10

B. Why Is eMail Marketing Effective? 10

II Market Revenues 27

A. Total Revenues 28

B. eMail Advertising Revenues 29

C. Other Revenues 33

III Corporate Penetration 39

IV eMail Users 47

A. Number and Growth of eMail Users 48

B. Number and Growth of eMail Boxes 51

C. User Profile 55

V eMail Volume 77

A. Total eMail Volume 78

B. Permission eMail 80

C. Spam 84

D. Volume per User 86

E. eMail Overload 91

©2001 eMarketer, Inc. Reproduction of information sourced as eMarketer is prohibited without prior, written permission.Note: all data in this report (other than that sourced as eMarketer) was obtained from published, publicly available information.

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The eMail Marketing Report


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VI Techniques & Strategies 95

A. Introduction: Objectives before Tactics 96

B. Customer Relationship eMail 100

C. Unsolicited Commercial eMail 101

D. Permission Marketing 105

E. Opt-In vs. Opt-Out 107

F. Outsourcing eMail Marketing Services 110

G. Opt-In eMailing Lists 111

H. Incentive-Based Programs 112

I. Presentation Formats: Text vs. HTML 113

J. Frequency and Timing of eMail Campaigns 118

K. Viral Marketing 120

L. Personalization 122

M. Integrating eMail within Marketing/Media Mix 132

N. eMail Newsletters 133

O. Rich Media/Enhanced Features 136

P. Wireless eMail 137

Index of Charts 141


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5


May 2001

Welcome to eMarketer

Dear Reader:

eMarketer’s fully updated and revised eMail Marketing Report ™ offers a comprehensive review oftrends, data and analysis on the practice of e-mail marketing.

Prepared by eMarketer analyst Jonathan Jackson, along with the eMarketer research team, thisreport is a valuable reference tool for understanding e-mail marketing developments, developingbusiness and marketing plans, creating presentations, answering vital, “need-to-know-now”questions and making informed decisions about online ventures.

The report covers the key aspects of e-mail marketing, including dollar size and growth,measurement and trends relating to the cost and effectiveness of e-mail ads, as well as usage patternsand attitudes toward e-mail among consumer and business users.

You will find quick answers to questions such as:■ What will the size of the e-mail marketing market be in the year 2003?■ What should you expect to spend for an e-mail marketing campaign?

And how can you measure ROI?■ What are the leading opt-in list categories?■ What are net users’ attitudes toward e-mail and e-mail advertising?■ How many people use e-mail today, and tomorrow?

Given the dearth of available information about global e-mail marketing, the report focuses primarilyon the United States. However, we have included information about e-mail outside the US whereverpossible.

If you have any questions or comments concerning eMarketer or any of the material in this report,please call, fax or e-mail us.

Jonathan JacksonSenior Analyst

Jonathan JacksonSenior Analyst, [email protected]

eMarketer, inc.821 BroadwayNew York, NY 10003T: 212.677.6300F: 212.777.1172

Reuse of information in this document, without prior authorization,is prohibited. If you would like to license this report for yourorganization, please contact David Iankelevich [email protected], or 212.677.6300 ext 213.

Written by Jonathan Jackson

Also contributing to this report:Rob Janes, researcherYael Marmon, researcherMustafa Sakarya, researcherTracy Tang, researcherMarius Meland, editorPascale Gabbey, copyeditorDana Hill, production artistTerry King, production artistJames Ku, production

Methodology 7

I Overview

II Market Revenues

III Corporate Penetration

IV eMail Users

V eMail Volume

VI Techniques & Strategies

Index of Charts


7


Methodology

Overview

Market Revenues

Corporate Penetration

eMail Users

eMail Volume

Techniques & Strategies

Index of Charts


8


8


Methodology:The eMarketer Difference

eMarketer research is founded on a simple philosophy of aggregation:

The key to approaching quantitative truth – particularly whenexamining the internet marketplace – is to consider data from as manyreputable sources as possible. No one has all the answers. But takentogether, multiple sources, coupled with healthy doses of commonsense and business intelligence, create a reasonably accurate picture.

eMarketer has no testing technique to protect, no research bias and noclients to please. The eMarketer research team begins each report byexamining research studies, surveys and reports from hundreds ofpublished, publicly available sources; we then filter, organize andsynthesize the information into tables and graphs. Finally, we present thecomparative source data along with our own analysis, estimates andprojections. As a result, each set of findings reflects the collected wisdom ofnumerous research firms and industry analysts. The benefits to our readersare threefold:

■ Information is more objective and comprehensive than that providedby any other single research source

■ Information is available in one place – easy to find, evaluate andcompare

■ Information can be quickly accessed to make intelligent, well-informedbusiness decisions

IMethodology

I Overview 9



II Market Revenues


IV eMail Users

V eMail Volume

VI Techniques & Srategies

Index of Charts


9



10


Methodology

Overview

Market Revenues


eMail Users

eMail Volume


Index of Charts

A.What Is eMail Marketing?eMail marketing refers to the use of text, HTML or multimedia messages,delivered directly into an end user’s e-mail inbox to achieve marketingobjectives.

eMarketer defines e-mail marketing as the delivery of electronicmessaging on an e-mail platform, specifically designed to: 1) generateawareness of a brand; 2) stimulate interest/preference for a product orservice; 3) provide the means to contact the advertiser for information or tomake a purchase; and/or 4) pursue customer relationship management orrelated marketing objectives.

eMarketer’s dollar estimates and projections for e-mail marketing reflectthis relatively broad definition.

eMarketer defines e-mail marketing revenues as monies received frompaid marketing messages (including ads, sponsorships, promotions,announcements, customer relationship management and retentioninitiatives) that are delivered via e-mail.

In addition to e-mail advertising products and services, e-mail marketingincludes spending on e-mail outsourcing solution providers, e-mailmanagement software, e-mail list hosting software or services, viralmarketing vehicles (e.g., branded webmail), e-mail commerce services,tools and technologies, and other spending related to customer relationshipe-mail, sometimes referred to as retention e-mail.

B.Why Is eMail Marketing Effective?

eMail Is UbiquitouseMail is the most popular online activity among internet users, in both thehome and the workplace. At 96.6 million, e-mail users outnumber webusers by 10% (87.9 million). Over 1 billion e-mail messages are sent daily inthe US alone, and the numbers are growing around the globe.

eMail has quickly become a part of people’s daily routine and an integralpart of business. The first thing most internet users do when they go onlineis check their e-mail. The majority of users also regard e-mail as a vital partof their daily communications with friends, family and co-workers.

A FloNetwork, Inc. survey found that 94% of consumers opt in forpermission-based e-mail. According to Forrester Research, 50% of theonline population will opt in to third-party opt-in lists.


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Methodology

Overview

Market Revenues


eMail Users

eMail Volume


Index of Charts

Push Beats PullResearch shows that web users are typically goal driven, tending to ignorebanner ads while they focus on the task at hand (unlike TV viewers whoprimarily watch to be entertained).

However, e-mail is more interactive, personal and intrusive than webads. It allows marketers to “get in front of” customers and prospects in amore concrete and forceful way. Recipients have to deal with e-mailmessages, even if it means eyeing the subject line and then pushing thedelete button. At the very least, e-mail marketers can be assured theiradvertising message “headlines” will be seen by particular prospects.

By using e-mail – especially HTML-formatted messages – marketers andcontent providers can stay “in front” of their customers. Instead of waitingfor a customer to visit, e-mail can be used to bring the site to the customer.In fact, HTML and rich e-mail technologies effectively push a webpage intoa user’s e-mail box.

People pay attention to their e-mail, and provided they don’t delete itunread, marketing messages are more likely to receive focusedconsideration than a banner ad. In fact, as many as 80% of banner ads areusually ignored, according to Wirthlin Worldwide.

eMail Cuts CostsOne of the most compelling benefits of e-mail marketing is improvedmarketing economies.

An April 1999 Forrester Research study of 47 marketing managers showedthat e-mail tied with affiliate programs was the most effective traffic-drivingtechnique for the money. eMail to opt-in lists were considered not aseffective as public relationship, television or outdoor advertising, but moreeffective than print media, radio, direct mail and banners. At the time, 77% ofmarketing managers surveyed used retention e-mail marketing comparedwith only 23% who used customer acquisition e-mail marketing.

Both unsolicited and permission-based e-mail can be significantlycheaper than traditional direct marketing methods, such as postal directmail and telemarketing programs.

Average Cost per Message in the US, 2001

Telemarketing $1.00–$3.00

Direct Mail $0.75–$2.00

Opt-in e-mail $0.20

Banner ad $0.05

Spam <$0.01

Source: eMarketer, 2001


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eMail Volume


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Jupiter Research shows a similar cost savings advantage of e-mail.

CPM (cost-per-thousand) is a standard metric used in the offline world forbuying and measuring media. Advertisers typically try to reach either thelargest possible general audience or the largest audience fitting a certain“targeted” demographics description. With the cost-per-thousand metric,the advertiser pays X dollars to reach – or make an impression on – 1,000people.

Today, the average CPM rate for banner ads, according to EngageAdKnowledge, is $33.64. Averages, however, mask extreme highs and lows,which tend to cancel each other out. In fact, CPMs range from a low of $1for a low-end, untargeted site, to $100 or more for an extremely targetedand highly desirable demographic.

However, these rate-card figures reflect “official” pricing – not the actualprices paid after the advertiser and site publisher have finished theirnegotiations. Rate-card prices are subject to substantial discounting. Fewadvertisers or publishers share this information, but industry expertsestimate that the typical CPM after discounting is in the range of $5 to $10for a run-of-site buy.

According to a recent Opt-in News report, the average cost-per-thousand(CPM) rate for direct e-mail is currently $210 — a drop from $240 in 2000and $250 in 1999. The report says that in 2000, the click-through-rate(CTR) was 4.8% for direct e-mail marketing networks (where the ad itself isbroadcast to opt-in or double opt-in e-mail recipients) and 2.6% for e-zine/newsletter marketing networks (where ad copy is placed in the body ofan opt-in or double opt-in e-mail publication).

eMail CPM and Banner Ad CPM Rates, 2001

Average e-mail CPM (opt-in) $200

Average e-mail CPM (sponsored ad) $60

Average banner CPM* $33.64

Effective banner CPM $3.50

Source: eMarketer; *Engage AdKnowledge, 2001

Direct Marketing Cost per Piece in the US, 1999

eMail $0.01–$0.25

Regular US mail $1.00–$2.00

Source: Jupiter Research, 1999


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eMail Volume


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Opt-in News says that financial “e-zines” (defined as online magazines, notnecessarily pure-play online publications) charge an average of $79 CPM —representing the category that charges the most. Family e-zines charge theleast with $11 CPM.

The report found that all e-mail marketing ad networks accept CPM as thestandard online campaign metric, and cost-per-click (CPC) is accepted byroughly one-half of advertisers.

eMail Offers Short Time to MarketMarketers benefit from e-mail’s short cycle time. According to JupiterResearch, 80% of e-mail marketing messages are responded to within 48hours, as compared with the 6- to 8-week period for traditional directmarketing methods.

CPM Rates for eMail Marketing Ad Networks, 1999-2001

1999 $250

2000 $240

2001 $210

Source: Opt-in News, 2001

eZine eMail Marketing Spending, 2001

Financial eZines $79

Business eZines $56

Technology eZines $44

Health & Fitness eZines $32

Entertainment eZines $21

Family eZines $11

Note: CPM (cost-per-thousand)Source: Opt-in News, 2001

Share of eMail Marketing Ad Networks AcceptingDifferent Payment Options in the US, 2001

CPM (cost-per-thousand) 100%

CPC (cost-per-click) 53%

CPA (cost-per-acquisition) 38%



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eMail Volume


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Digital Impact reports that around 85% of responses to an e-mail offer arereceived within the first 48 hours. The short time to market allowsmarketers to test multiple messages and adjust the offer, the creative end orthe segmentation for optimal results.

eMail Drives Site TrafficWhile a 1999 Forrester Research survey found 81% of online marketers usee-mail to drive traffic to their websites, research on e-mail’s ability to drivesite traffic is decidedly mixed.

A 1999 IMT Strategies survey found that only 1.2% of users surveyedsaid e-mail was the primary way they discovered new websites, ranking itlower than finding sites by accident, but slightly higher than banner ads.

How Internet Users Discover New Websites, 1999(as a % of users surveyed)

Search engines

46.0%

Word of mouth

20.3%

Random surfing

19.9%

Magazines

4.4%

By accident

2.1%

Newspapers

1.4%

Television

1.4%

eMail

1.2%

Banner ads

0.9%

Other

19.9%

Don’t know

0.7%

Source: IMT Strategies, 1999


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Methodology

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eMail Volume


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Surprisingly, 14% of respondents to a recent Ernst & Young survey saidthey access shopping sites by clicking on a URL received by an unsolicitede-mail. The respondents were not asked about permission-based e-mail.

eMail Strengthens Your BrandThere are millions of websites competing for users’ mind share, time andwallet. The harder it is to get noticed among the clutter, the more importantbranding becomes.

It is clear that e-mail marketing gets a better response than banner ads.But opt-in e-mail ads and other forms of permission e-mail (corporate andsponsored newsletters, website updates, order confirmations, personalizedthank-you notes, etc.) can also enhance brand equity in several ways.

As the ultimate “push” technology, e-mail is virtually impossible toignore. Branding can be achieved merely by having clearly labeled e-maildelivered to a subscribers’ inbox on a regular basis. The subject line, too,can be used for branding purposes. Capable of including company logosand other marketing images, HTML-formatted e-mail is often preferred bymarketers and publishers for its branding advantages over plain text.

Customer relationships are becoming an integral part, as well as anexpression, of the brand. Traditionally, branding messages have been one-way communications, from marketer to mass audience. With e-mail,branding is conducted and reinforced through two-way communicationsbetween the marketer and the customer, resulting in an individual brandingexperience for each customer prospect.

eMail Offers Higher Click-Through/Direct-ResponseRateseMail first attracted a lot of attention in interactive marketing circlesbecause of the remarkably high response rates it garnered, as the averagebanner ad’s click-through rate (CTR) fell below the 0.5% mark. Averages, ofcourse, can be misleading; e-mail CTRs vary widely depending on thenature of the offer, the target audience, the type and quality of the list, andskill of the campaign. Still, on average, e-mail outperforms all other media.

Yesterday: Today:

Marketer

Marketer

Customer

Customer


Brand Value = Customer Relationship


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eMail Volume


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Click-through rates also vary depending on whether it is a direct mail or asponsorship.

Based on the latest information, eMarketer believes that overuse has begunto reduce e-mail’s effectiveness – the CTR is now 3.2%, half of what it wasseveral months ago.

Mail and Banner Ad Click-Through Rates (CTR), 2001

Permission e-mail 3.2%

Direct e-mail 1.0%–1.5%

Banners 0.3%


eMail Marketing Ad Network CTR, 2000

Direct e-mail

4.8%

eZine/newsletter sponsorship2.6%

Highest company average

8.5%

Lowest company average0.9%



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eMail Users

eMail Volume


Index of Charts

Comparative Estimates: Average Opt-In eMail andBanner Ad Click-Through Rates in the US, 2001

IMT Strategies

16.4%

Tower Group

12.5%

1.0%

Lazard Freres

10.0%–15.0%

Aberdeen Group

10.0%–15.0%

1.0%–2.0%

24/7 Media

7%

1.0%–2.0%

eMarketer

3.2%

0.3%

Jupiter Research

5.0%–15.0%

0.6%

Winterberry Group

5.0%–15.0%

1.0%

Silicon Alley Reporter

3.0%–6.0%

1.0%–2.0%

Forrester Research

2.5%–10.0%

0.5%

FloNetwork

2.0%–20.0%

2.0%

Opt-in e-mail Banner ads

Source: eMarketer, 2001; various, as noted, 2000


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Methodology

Overview

Market Revenues


eMail Users

eMail Volume


Index of Charts

Response rates from in-house lists used for retention purposes are higherthan those for third-party opt-in lists used for acquisition. For example,Forrester Research’s e-mail marketing study found the average CTR for in-house lists was 10%, compared with only 3.5% for rented opt-in lists. Still,these rates are lower than those reported in an earlier Forrester study.

Similarly, IMT Strategies found the open rate of HTML messages was lowerfor campaigns aimed at new customers (39.4%) than for those aimed atexisting customers (58.0%).

Comparative Estimates: Average Click-Through Ratesof eMail Advertising, 2001

IMT Strategies 16.4%

Jupiter Research 15.0%

Tower Group 12.5%

Forrester Research (in-house list) 10.0%

NetCreations, Inc. 9.0%

YesMail.com 7.5%

24/7 Media 7.0%

eMarketer 3.2%

Jupiter Research (“low”) 5.0%

Forrester Research (rented opt-in list) 3.5%


Comparative Estimates: Click-Through Rates, by Listand Media Type, 2000

Sponsored e-mail

2.5%

Rented lists

3.5%

13.0%

In-house lists

10.0%

20.0%

Forrester Research IMT Strategies

Source: Forrester Research, January 2000; IMT Strategies, 1999


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Methodology

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eMail Users

eMail Volume


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The “open rate” of HTML-formatted e-mail messages can be determined bytracking server requests to load graphic images contained in the e-mailmessage. Each time an internet-connected recipient opens an HTML e-mail, hise-mail software makes contact with the server to download the graphic file.

While a 1999 study by IMT Strategies shows the overall average click-through rate among campaigns was 16.4%, slightly more than a third of allcampaigns had click-through rates above 20%. Furthermore, the rate variedconsiderably, depending on the audience, campaign objective and format.

eMail format and creative and campaign deployment also impact responserates. Generally, stand-alone opt-in e-mail ads receive a higher responserate than newsletter ads. Click-through rates on discussion lists are highlydependent on the frequency and relevancy of ads, according to Topica’sAriel Poler. Generally, however, you can expect discussion list responserates to be even lower than newsletters.

US Open Rate of HTML Messages by Acquisition vs.Retention, 1999

Acquisition 39.4%

Retention 58.0%

Total 51.0%


B2B

B2C

14.6%

18.6%


eMail Marketing Click-Through Rates in the US,by Audience, 1999

Click-Through Rates of eMail Messages in the US, byCampaign Objective, 1999

Leads 21.0%

Awareness 15.4%

Sales 14.1%

Other 15.2%



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eMail Creates SaleseMail campaigns, either directly or indirectly, can lead a prospect throughthe entire sales process culminating in an e-commerce transaction. Inaddition to directing the prospect to the advertiser’s website ortelemarketing call center, marketers can now enable recipients to conductthe actual transaction within the e-mail itself.

The 1999 IMT Strategies survey indicated that permission e-mail had anaverage conversion rate of 6.8%, but rates varied widely depending on thegoal of the e-mail campaign. Sales campaigns averaged 3%, according toIMT Strategies.

Response Rates and CPMs of eMail Media Worldwide,2000eMail media CPMs CTRs (great

campaigns)CTRs (goodcampaigns)

Opt-in lists $100-$300 10%+ 3%-8%

Newsletter(daily, weekly,monthly)

$5-$75 4%+ 1%-3%

Discussions(moderated &unmoderated)

$5-$25 Click-throughhighly

dependent onfrequency &relevancy of

ads

Click-throughhighly

dependenton frequency& relevancy

of ads

Source: Ariel Poler, 2000


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As previously discussed, campaigns targeted to in-house lists saw higherconversion rates (7.9%) than customer acquisition conversion rates (5.7%).

Forrester Research’s January 2000 e-mail marketing study suggested farlower conversion rates for both in-house and acquisition lists. For e-mailcampaigns directed at in-house lists, Forrester found an average post-clickpurchase rate of 2.5%. This is equivalent to a 0.25% top-line conversionrate. For campaigns targeting new customers, Forrester found an averagepost-click purchase rate of 2.0%, which is equivalent to a top-lineconversion rate of only 0.07%.

eMail Click-Through and Conversion Rates in the US,by Campaign Goal, 1999

Lead generation/data collection

21%

14%

Awareness15%

7%

Other15%

4%

Sales14%

3%

Total16%

7%

Click-through Conversion

Note: Conversion rates are top-line, not post-clickSource: IMT Strategies, 1999

US Conversion Rates for Sales by Retention andAcquisition, 1999

Aquisition

2.6%

5.7%

Rentention

4.1%

7.9%

Conversion to sales Conversion to all objectives

Source: IMT Strategies Web Survey of eMarketers, 1999


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According to Forrester Research, 10% of recipients of a typical in-house e-mail campaign click through, and 2.5% of those that click through make apurchase. This indicates an average top-line sales conversion rate of 0.25%,suggesting that e-mail is 4 to 15 times more likely to generate a sale than abanner ad, according to Forrester data.

More than two-thirds (68%) of online users participating in an ArthurAndersen online panel said e-mails led to a purchase occasionally, and 17%said e-mails led to a purchase more often than not.

Comparative Estimates: US eMail MarketingConversion Rates, 1999

Forrester Research

0.25%

0.07%

0.02%

IMT Strategies

4.10%

2.60%

In-house list Rented list Sponsored eMail

Source: Forrester Research, 2000; IMT Strategies, 1999

How Often Online Shoppers Say eAdvertisementsTrigger a Purchase, 2000

Always 1%

Almost always 3%

More often than not 13%

Occasionally 68%

Never 15%

Source: Knowledge Systems & Research, Inc.; Arthur Andersen, 2000


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eMail Offers TargetingNo marketing communications medium exists that is more targetable,customizable and flexible than e-mail.

That is why e-mail is revolutionizing direct marketing. eMail directmarketing, when done correctly, can overcome the limitations oftraditional direct marketing by offering limitless targeting ability atpennies per e-mail and allowing marketers to have a one-to-oneconversation with each of their customers.

With proper targeting, tracking tools and a carefully built opt-in list, e-mail can be highly personalized to the needs of individual customers.Messages sent on behalf of companies from messaging solution providerscan be targeted and customized using sophisticated database marketingtechniques. The technology can capture and track individual responsesthroughout the campaign, “learn” more about customers from response andpurchase behavior, and refine customer profiles for future communications.

Marketers can create campaigns that use automatic sequences of e-maildelivered according to schedule or whether or not an action was taken.These programs and services provide tools for quickly measuringperformance and results, allowing modifications as the campaignprogresses.

Packaged e-mail-marketing software and outsourced e-mail-marketingservices leverage customer and CRM databases, allowing companies tocreate and send highly targeted and customized e-mail campaigns formaximum response.

For personalizing messages, these programs not only use standard mailmerge operations, but can also make all or part of the entire content ofmarketing messages conditional on some database attribute, such as theinterests, transactional behavior or personal characteristics of list members.

Dynamically assembled e-mail based on past purchase and responseprofiles promise to bring marketers closer than ever before to one-to-onemarketing capability.

eMail Is MeasurableThere are a variety of tracking tools that can be used to measure theperformance and results of an e-mail marketing campaign.

Some of the metrics that can be tracked and measured include:■ Click-through rate (CTR) ■ Unsubscribe/Remove requests■ Invalid e-mail addresses■ Buy rate (combination of cookies and unique links required)■ Previous history (buying patterns and other historical data)■ Pass-along rates■ Transactional data on list-by-list and name-by-name basis■ Page views


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■ Return on investment per action point■ Campaign response rate■ Customer acquisition cost■ Open rate (HTML-based messages)■ Length of visit■ Depth of visit■ Repeat visits■ Time to close■ Lifetime value of account

Individual tracking is usually accomplished by including a uniquecustomer ID in the hyperlink in each e-mail. When the recipient clicks onthis link, a record is written into the response database. Combining thisresponse data with individual transaction history allows companies tobegin building predictive models for future behavior.

Marketers can receive the results of their marketing campaigns withinhours, allowing changes to be made that could increase the effectiveness oftheir future direct marketing efforts. The cycle times for traditional directmail campaigns, by contrast, are measured in weeks.

eMail marketing programs also make it possible to quickly sample andtest a mailing. At little cost and effort, marketers can test virtually endlessversions of copy and promotional messages. The detailed response and ROI(return on investment) information make it easy to quickly modify e-mailcampaigns for optimal results.

Currently, there are four common methods to measure ROI for web ande-mail campaigns.

Online Advertising ROI: Four Common Methods, 2001ROI type Symbol Definition

Advertising-to-salesratio

A/S Total cost of web/e-mailadvertising divided byonline sales during the

same period

Click-through rate CTR Calculated by dividing thenumber of click-throughs by

the number of adimpressions or e-mails

served

Cost-per-lead CPL Advertiser pays based onhow many consumers

participate in a contest orfill out a literature request

form

Cost-per-sales CPS Advertiser pays based onhow many consumers

actually buy something as adirect result of the banner

ad or e-mail



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As a cost-effective way to reach highly targeted customers, e-mail directmarketing can dramatically improve a marketer’s return on investment.

According to IMT Strategies, the conversion cost of a permission e-mailad can be as low as $1.13 for customer retention objectives and $20.00 forcustomer acquisition objectives.

However, Forrester Research suggests that e-mail offers a higher ROI thanbanner ads and traditional direct mail only for customer retention andcross- and up-selling existing customers.

According to Forrester Research, the average cost per sale for an e-mailcampaign sent to an in-house list is only $2, compared to $286 forcampaigns using rented lists and $465 for those using sponsored e-mailvehicles such as newsletters and discussion lists.

Interestingly, Forrester’s calculations show direct mail has a significantlyhigher conversion rate than e-mail, including e-mail sent to an in-house list.This raises an important issue. Many analysts and vendors compare e-mail’sclick-through rates to what really is direct mail’s conversion rate. Sincenobody knows how many people open the envelope and read the marketingmessage, it is misleading to compare e-mail’s CTR, or what turns out to be apost-click purchase rate, with direct mail’s buy or conversion rate.

US Cost Effectiveness of eMail Compared with OtherTarget Marketing Vehicles, 1999

Type Conversioncost in-

house list(retention)

Conversioncost third-

partyProspect

List(acquisition)

Web banners – $100.00

Direct mail $26.66 $50.00

Permissione-mail

$1.13 $20.00



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eMail Improves Customer RelationshipsPermission-based e-mail is arguably one of the most cost-effective andefficient ways for businesses to create and build relationships with theircustomers. It is quickly becoming a competitive necessity as well.

As noted, companies are increasingly competing on the basis ofcustomer relationships and personalized marketing tactics. Becausecustomer service is a focal point for developing and managing customerrelationships, the strategic importance of customer service has risendramatically.

Indeed, improved customer service is often ranked as the most popularway the internet is being used for competitive advantage. Customer-serviceexecutives hope to use the power of the internet to provide enhanced,differentiated customer service that will help lure and retain customers.

eMail response management systems, e-mail auto-responders, and directe-mail are among the tools currently employed for internet-based customerservice.

IIMethodology

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II Market Revenues 27





IV eMail Users

V eMail Volume


Index of Charts


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A.Total RevenuesTotal e-mail marketing spending in the US in 2000 was just over $1 billion,including $496 million spent on e-mail ads. By year-end 2003, USbusinesses (and other organizations) will spend almost $4.6 billion,including $2.2 billion on e-mail advertising expenditures.

eMail advertising’s share of total e-mail marketing expenditures will growto 48.2% by 2003, up from 45.8% in 2000.

Comparative EstimateseMarketer’s total e-mail marketing estimates are higher than estimatesfrom other research firms, primarily because eMarketer includes more typesof spending in both its e-mail advertising category and other e-mailmarketing spending.

Forrester Research and Jupiter Research break out e-mail marketingspending into two broad categories: customer acquisition services(comparable to a subset of our e-mail advertising category) and customerretention. Jupiter further breaks retention e-mail down into sponsorednewsletters and other retention e-mail.

eMail Marketing Spending in the US, 1999-2003 (inmillions)

eMail advertising

Other e-mail marketing/products/services

Total e-mail marketing spending

1999

$179

$242

$422

2000

$496

$589

$1,084

2001

$927

$1,148

$2,074

2002

$1,558

$1,707

$3,265

2003

$2,199

$2,359

$4,558


Comparative Estimates: eMail Marketing Spending inthe US, 1999-2005 (in millions)

1999 2000 2001 2002 2003 2004 2005

eMarketer $422 $1,084 $2,074 $3,265 $4,558 – –

Jupiter Research $160 $600 $1,300 $2,100 $3,500 $5,200 $7,400

Forrester Research $156 $643 $1,291 $2,325 $3,758 $4,770 –

Lazard Frères $100 – – – – – $2,500



29


Methodology

Overview

Market Revenues


eMail Users

eMail Volume


Index of Charts

eMarketer’s “other” e-mail spending category includes, but is not limitedto, dollars spent on customer retention e-mail activities. eMarketerconsiders sponsorships an acquisition tool.

Both research firms predict the majority of e-mail marketing dollarsspent over the next 4 to 5 years will be allocated to retention services.

B. eMail Advertising RevenueseMail advertising will grow from 7% of online advertising dollars in 2000to over 14% in 2003.

US companies spent $496 million on e-mail advertising – or customeracquisition services — in 2000 and this will increase to $2.2 billion by 2003.

eMail Advertising Spending in the US, 1999-2003 (as a% of total e-advertising spending)

1999

5.0%

2000

7.0%

2001

12.2%

2002

15.1%

2003

14.3%

10

20


eMail Advertising Spending in the US, 1999-2003 (inmillions)

1999 $179

2000 $496

2001 $927

2002 $1,558

2003 $2,199



30


Methodology

Overview

Market Revenues


eMail Users

eMail Volume


Index of Charts

eMail advertising revenue includes dollars spent:■ To sponsor or buy advertising space in an independently published

e-mail newsletter or discussion list■ To rent lists from an opt-in marketing network or other e-mail list

aggregator – including incentive-based and loyalty programs — inorder to deliver targeted marketing messages to users who have optedto receive commercial messages about topics that interest them

■ To send marketing messages to third-party customer/in-house e-maillists by either renting the list outright or entering into a co-marketingarrangement (aka endorsed e-mail) with the list owner who sends themessage on the marketer’s behalf

■ For the delivery of unsolicited commercial e-mail (UCE) marketingmessages, also known as spam

eMail Advertising Spending and Total eAdvertisingSpending in the US, 1998-2003 (in millions)

1998

$1,700

$53

1999

$3,600

$179

2000

$7,100

$496

2001

$7,600

$927

2002

$10,300

$1,558

2003

$15,400

$2,199

Total online ad dollars eMail ad dollars



31


Methodology

Overview

Market Revenues


eMail Users

eMail Volume


Index of Charts

eMarketer further breaks down e-mail advertising into opt-in e-mail (listrentals and co-marketing deals), sponsored lists (newsletters anddiscussion) and unsolicited e-mails (spam).

Comparative EstimatesForrester’s estimate for opt-in list spending in 2003 is in line witheMarketer’s, while Jupiter’s is considerably lower.

eMail Advertising Spending in the US, by Category,1999-2003 (in millions)

1999 2000 2001 2002 2003

Opt-in $90.5 $321.8 $655.7 $952.6 $1,133.5

Sponsored $50.4 $125.7 $221.3 $557.3 $1,020.1

Unsolicited $38.6 $48.3 $49.8 $48.2 $45.3

Total $179.4 $495.7 $926.9 $1,558.2 $2,198.9


Comparative Estimates: US eMail Spending on Opt-IneMail Lists for Customer Acquisition, 2003 (in millions)

eMarketer $1,134

Forrester Research $1,065

Jupiter Research $600


US eMail Acquisition Services Revenue, 1999-2004 (inmillions)

1999 $79

2000 $219

2001 $285

2002 $647

2003 $1,065

2004 $1,607

Source: Forrester Research, 2000


32


Methodology

Overview

Market Revenues


eMail Users

eMail Volume


Index of Charts

eMail Ad Dollars in PerspectiveeMail-based advertising is expected to grow by a magnitude of 12 between1999 and 2003.

Looking ahead to 2003, projected e-mail ad revenues of $2.2 billion willstill be a relatively small percentage (only 5.5%) of traditional direct mailad spending, which is expected to slip to $40 billion because of thecannibalization from internet and e-mail advertising.

eMail will result in a 1 million ton loss of envelopes, according tomanagement consultancy Boston Consulting Group. Demand for forms andfine papers will also be negatively impacted. The Envelope ManufacturersAssociation expects letter-sized envelopes, which currently account foronly 8% of the market, to peak in 3 years.

Spending on eMail Acquisition Services and SponsoredNewsletters in the US, 1999-2005

1999 2000 2001 2002 2003 2004 2005

Acquisition $50 $200 $300 $400 $600 $800 $1,000

Sponsored $30 $100 $300 $500 $900 $1,400 $2,100

Total $80 $300 $600 $900 $1,500 $2,200 $3,100


US eMail Advertising and Traditional Direct MailSpending, 2003 (in millions)

eMail $2,199

Traditional direct mail $40,000

Source: eMarketer, 2001; The Myers Group, 1999

Comparative Estimates: eMail Cannibalization ofTraditional Direct Mail Spending, by 2004

Forrester Research 17.5%

Jupiter Research* 13%

The Myers Group 8%

Note: *By 2005Source: The Myers Group, 1999; various, as noted, 2000


33


Methodology

Overview

Market Revenues


eMail Users

eMail Volume


Index of Charts

C. Other RevenuesIn addition to e-mail advertising, e-mail marketing includes spending on e-mail outsourcing solution providers, e-mail management software, e-maillist hosting software or services, viral marketing vehicles (e.g., brandedwebmail), e-mail commerce services, tools and technologies, and spendingrelated to customer relationship e-mail, often referred to as retention e-mail by other research firms.

eMarketer predicts this category will grow from $589 million at the endof 2000 to $2.4 billion by the end of 2003.

Beyond advertising, e-mail outsourcing and related software, e-mailmarketing will capture additional dollars as the lines between marketing,sales and customer service continue to blur. This will add pressure to therole of e-mail in customer relationship management. Accordingly,companies will invest heavily in a customer service and CRM systems thatcontain robust e-mail features. Use of e-mail to retain customers willbecome increasingly popular and, in fact, essential, for competitiveadvantage.

In addition, the line between e-mail client and browser is blurring.Increasingly, functionality will migrate to the inbox, along with spendingon advertising, sales and customer support.

US Permission-Based eMail Marketing Spending onRetention, 1999-2003 (in millions)

1999 $242

2000 $589

2001 $1,148

2002 $1,707

2003 $2,359



34


Methodology

Overview

Market Revenues


eMail Users

eMail Volume


Index of Charts

Comparative Estimates: US Permission-Based eMailMarketing Spending, by Category, 2000 (in millions)

eMarketer

$448*

$589

$1,037

Jupiter Research

$300

$300

$600

Forrester Research

$219

$424

$643

eMail advertising and acquisition Retention/Other Total

Note: *Excludes spending on unsolicited e-mailSource: eMarketer, 2001; various, as noted, 2000

Comparative Estimates: Permission-Based eMailMarketing Spending, by Category, 2003 (in millions)

eMarketer

$2,154*

$2,359

$4,513

Jupiter Research

$1,500

$2,000

$3,500

Forrester Research

$1,065

$2,693

$3,758

eMail ad/acquistion Retentions/Other Total

Note: *Excludes spending on unsolicited e-mailSource: eMarketer, 2001; various, as noted, 2000


35


Methodology

Overview

Market Revenues


eMail Users

eMail Volume


Index of Charts

Overall, e-mail spending will soar from 5% of online advertising to 22%, or$4.8 billion, by 2004, according to Forrester Research. This projectionreflects the belief that more effective e-mail advertising will continue todraw dollars away from other forms of online advertising, especially thebanner ad.

eMail Retention Services Revenues, 1999-2004

1999 $77

2000 $424

2001 $1,006

2002 $1,678

2003 $2,693

2004 $3,163

Source: Forrester Research, January 2000

eMail Acquisition and Retention Services, 1999-2004(as a % of total e-mail marketing service revenues)

1999

50.6%

49.4%

2000

34.1%

65.9%

2001

22.1%

77.9%

2002

27.8%

72.2%

2003

28.3%

71.7%

2004

33.7%

66.3%

Acquisition services Retention services



36


Methodology

Overview

Market Revenues


eMail Users

eMail Volume


Index of Charts

Jupiter projects retention e-mail will account for $6.3 billion in e-mailmarketing spending (88% of the 268 billion commercial messages sent toconsumers by 2005).

Based on its 1999 e-mail marketing study, IMT Strategies estimates thatby 2001, marketers will spend $1 billion on e-mail advertising andassociated marketing costs, including targeting, delivery and campaign-marketing software, service bureaus, permission list brokers, e-mail listsponsorships, creative development, media buying, data cleansing andother related activities.

eMail Retention, Sponsored and Acquisition Services,1999-2005 (as a % of total marketing e-mail spending)

1999

50.0%

18.8%

31.3%

2000

50.0%

16.7%

33.3%

2001

53.8%

23.1%

23.1%

2002

57.1%

28.8%

19.0%

2003

57.1%

25.7%

17.1%

2004

57.7%

26.9%

15.4%

2005

58.1%

28.4%

13.5%

Retention Sponsored Acquisition

Source: Jupiter Research, January 2000


37


Methodology

Overview

Market Revenues


eMail Users

eMail Volume


Index of Charts

Lazard Frères & Co. reports that e-mail marketing is expected to grow from$100 million in 1999 to $2.9 billion in 2005.

Spending on e-mail response systems by US companies will jump fromjust over $100 million in 1999 to about $400 million by 2001, according toThe Yankee Group.

IIIMethodology

I Overview

II Market Revenues

III Corporate Penetration 39

IV eMail Users

V eMail Volume


Index of Charts


39



40


Methodology

Overview

Market Revenues


eMail Users

eMail Volume


Index of Charts

eMail’s popularity as a marketing tool has exploded since the end of 1999.To online publishers, retailers, financial service providers and catalogersstruggling to achieve profitability, opt-in e-mail is especially attractive dueto its reach, relatively low cost and proven effectiveness.

Companies Sending Marketing eMail, 2001About.com Continental Airlines –

America Online CountrywideHome

Omaha Steaks

AmericanExpress

Loans Outpost.com

AT&TInteractive

Dell Computer Reader's Digest

Banana Republic Drugstore.com RobertsonStephens

Barnes & Noble eBay Slate Magazine

Blockbuster Video

Bertelsmann Online

Entrepreneur Magazine Sony Music

BMG Direct

Fingerhut

The ChildrensPlace

BMG Entertainment

Forbes

The Economist

Buy.com

Hewlett Packard

The Financial Times

CNET

Home Box Office

The Gap

Capital One

Internet.com

The Sharper Image

CBS Sportsline

Intuit

TheStreet.com

CDNow

J. Crew

Tower Records

Charles Schwab & Company

Lillian Vernon

Tribune Media Service

Cisco

LinkExchange

USA Today

CitiGroup

Macy's

Victoria's Secret

Clinique

MasterCard

Wineshopper

CMP Media

Microsoft

Wired Magazine

CMPnet

MSNBC

World Wrestling Federation

Compaq –

OfficeMax.com

–



41


Methodology

Overview

Market Revenues


eMail Users

eMail Volume


Index of Charts

According to the Direct Marketing Association’s State of the InteractiveMarketing Industry Report: 2000, 59% of direct marketers have e-mailmarketing capability. Among DMA members, 79% have an in-house e-maillist. Of those, 88% maintain in-house and 22% rent opt-in e-mail lists.

Comparative Estimates: US Companies Using eMailMarketing, 2000

Direct Marketing Association (1) 62%

eMarketer (2) 61%

Catalog Age (3) 59%

Quicken.com 59%

Forrester Research 58%

Gruppo, Levey & Co. (4) 40%

Note: (1) Among direct marketers; (2) Among medium- to large-sizedcompanies; (3) Among catalog firms; (4) Measuring % who have usede-mail advertising Source: eMarketer, 2001; various, as noted, 2000

Don'tknow1%

Have anin-housee-mail list76%

Don't havean in-housee-mail list23%

Source: Direct Marketing Association (DMA), 2000

US Companies with In-House eMail Lists, 2000


42


Methodology

Overview

Market Revenues


eMail Users

eMail Volume


Index of Charts

And according to Direct Magazine, the number of companies using e-mailas a marketing tool is on the rise.

According to a Catalog Age survey of online catalogers, 59% of them usede-mail promotions in 2000, up from 48% in 1999. Nearly all respondentssay they capture e-mail addresses, and more than half (53%) e-mail theircustomers special offers, up from 38% in 1999. The survey also finds thatmore respondents (86%) are e-mailing their customers order confirmations,up from 82% doing this a year earlier.

Top Direct Marketing Methods Used in the US, 2000

Direct Mail (excludes catalogs) 70%

eMail to customers 46%

Catalogs 39%

Outbound telemarketing 32%

eMail to prospects 26%

Source: Direct Magazine Reader Survey, December 2000

How US Direct Marketers Use In-House eMail Listsand Cost, 2000Actively use e-mail lists 80%

Maintain e-mail lists in-house 88%

Rent permission-based e-mail lists 22%

Anticipate using e-mail marketing in 2001 13%

Cost of e-mail communication to a customer $2

Cost of direct mail/catalog to a customer $18

Source: Direct Marketing Association (DMA), 2000


43


Methodology

Overview

Market Revenues


eMail Users

eMail Volume


Index of Charts

According to ActivMedia Research, half of consumable product websites andat least one-third of other types of websites send e-mail marketing messages.

According to an informal survey by Intuit’s personal finance website,Quicken.com, three out of five (59%) companies have employed e-mailadvertising. Companies from financial services, telecommunications and e-commerce industries that advertise online were included in the survey.

How US Online Catalogers Use eMail, 1999 & 2000

Collect e-mail from registered users

97%

99%

eMail customers order confirmation82%

86%

Use e-mail promotions

48%

59%

eMail customers special offerings

38%

53%

1999 2000

Source: iMerchant/Catalog Age, June 2000

Type of Sites That Send Marketing eMail, 2000

Consumable products 50%

Personal interests 45%

Computers & electronics 43%

Fashion & style 43%

Collectibles & hobbies 41%

Toys, games & entertainment 38%

Investments 38%

Office supplies 37%

Travel & entertainment 32%

Source: ActivMedia Research, 2000


44


Methodology

Overview

Market Revenues


eMail Users

eMail Volume


Index of Charts

eMail, including personalized and event-driven customer communications,will play a bigger role in CRM (customer relationship management). A 2001AMR Research study found that e-mail is one of the top CRM deployments.

A study from Jupiter Media Metrix found that e-mail is a CRM tool thatcompanies can’t live without.

According to Forrester Research, e-mail marketing managers plan to tripletheir e-mail spending between 1999 and 2004.

Leading CRM Deployments in the US, 2001

Contact center deployments 73%

eMail response management applications 54%

Web-based self-service 41%

Sales force automation 37%

Source: AMR Research, 2001

Customer Service Capabilities ConsideredIndispensable by US Companies, 2000

eMail 76%

Listed phone number 65%

FAQ 53%

Chat 21%

Call-back button 11%

Source: Jupiter Media Metrix, 2000

eMail Marketing Spending by US Companies, 1999 &2004 (in thousands)

1999

$240

$144

$290

2004

$720

$950

$600

All companies Traditional companies Internet pure plays



45


Methodology

Overview

Market Revenues


eMail Users

eMail Volume


Index of Charts

Marketers and publishers are not the only ones finding e-mail marketingand messaging irresistible. Political organizations, civic and communitygroups, and other non-profit organizations are using e-mail to organizeand inform members, as well as to raise funds. eMarketer expects thepractice of e-mail messaging to be widely adopted throughout local, stateand even federal levels of government, once spam, privacy and otherregulator issues are worked out.

Security is also becoming a major issue. Two-thirds of major US firmsnow do some type of in-house electronic surveillance, and 27% of all firmssurveyed monitor e-mail, according to an April 2000 report from theAmerican Management Association.

Despite the global reach of the world wide web, the vast majority ofcompanies still behave as though they did business solely within theirborders. A survey by WorldLingo reveals that more than 90% of the world’slargest companies do not respond to foreign-language e-mail.

No response orwrong languageresponse91%

Correctresponses9%

Source: WorldLingo, 2001

Companies Worldwide Sending Foreign LanguageeMail Responses, 2001

IVMethodology

I Overview

II Market Revenues


IV eMail Users 47



C. User Profile 55

V eMail Volume


Index of Charts


47



48


Methodology

Overview

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eMail Users

eMail Volume


Index of Charts

A. Number and Growth of eMail UsersBy the end of 2001, there will be 110 million e-mail users aged 14 and olderin the US. Users will account for 49.2% of the total population of adultsand teens (14+).

According to a recent Harris Poll, sending or receiving e-mail is far andaway the most popular internet activity.

Non e-mail users113.4 (50.8%)

eMail users110.0 (49.2%)

Note: Total US population aged 14 and over = 223.4 millionSource: eMarketer, 2001

US eMail Users, Aged 14+, 2001 (in millions and asa % of adult population)

How Often US Internet Users Send or Receive eMail,2001

Very often/often/sometimes

Very often

35%

Often

39%

Sometimes

15%

Rarely

4%

Never

6% 89%

Source: Harris Poll, February 2001

US Online Adults Participating Monthly, 1998-Q1 2000

1998

86%

86%

1999

90%

88%

Q1 2000

94%

89%

eMail Surf the web

Source: Cyber Dialogue, 2000


49


Methodology

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eMail Users

eMail Volume


Index of Charts

Forrester Research puts the number of e-mailers at 115 million in 2000,growing to 135 million by 2001.

United Messaging estimates that 75% of workers and 45% of non-workers were using e-mail in the US at the end of 2000, representing 58%of the population.

IMT Strategies estimates that 53.4% of e-mailers in the US are “personal”users as compared with 46.6% who are “professional” users. IMT says mostpersonal users (98.3%) use e-mail primarily through a personal e-mail orISP account; the majority of professional users (57.9%) use e-mailprimarily through a professional account.

Comparative Estimates: US eMail Users, 2001 (inmillions)

Forrester Research

115.0

United Messaging

110.0

Electronic Messaging Association

108.3

eMarketer

111.0

Pew Research Center

98.6

Source: eMarketer, Pew Research Center, 2001; various, as noted, 2000

Professional users46.6%

Personal users53.4%


US eMail Users, Professional and Personal, 2000


50


Methodology

Overview

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eMail Users

eMail Volume


Index of Charts

International Data Corp. (IDC) estimates that business e-mail usageoutweighs personal usage.

Datamonitor estimates there were 200 million e-mail users worldwide in1999, and that by 2002, there will be 250 million users.

Multiple eMail AccountseMail users increasingly have multiple e-mail addresses or e-mail accounts.On average, the typical e-mail user in the US has 2.2 accounts. This numberwill grow over the next several years. More internet users will availthemselves of the free web-based e-mail services as a way to help managethe torrent of e-mail they receive, as well as to protect their privacy byusing multiple e-mail addresses for different purposes.

Just one out of four (24%) internet users surveyed by Impulse Researchreported having only one e-mail account. Impulse Research’s CyberPulseonline panel members averaged 2.8 accounts each.

United Messaging estimates that the average US e-mail user has 2.5mailboxes:

■ One at work■ One on a webmail service■ One-half of an ISP e-mail account

United Messaging estimates that the average corporate e-mail user hasaround 1.5 mailboxes, and the average household using e-mail has 4mailboxes.

Business and Consumer eMail Users in the US andCanada, 2000-2005 (in millions)

2000

124

80

2001

145

106

2003

184

143

2005

209

181

Business Consumer

Source: International Data Corp., 2000


51


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Overview

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eMail Users

eMail Volume


Index of Charts

It is unknown how many of these free webmail accounts lie dormant afterthey are created. eMarketer estimates that as many as 50% of webmailaccounts in the US are currently unused.

B. Number and Growth of eMail BoxesAccording to the Year-End 2000 Mailbox Report from United Messaging,the total number of e-mail boxes soared in 2000, up more than 60% fromthe end of 1999 to 891.1 million mailboxes worldwide at the end of 2000.

Comparative Estimates: eMail Accounts per User,2000

United Messaging (Households) 4.0

Impulse 2.8

eMarketer 2.2

EMMS 1.8

United Messaging 1.5


eMail Boxes in the US and Worldwide, 1999 & 2000 (inmillions)

1999

281.5

251.7

533.2

2000

439.6

451.5

891.1

US Elsewhere Total

Source: United Messaging, 2001


52


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These e-mail boxes are broken out as follows:

Other findings from the United Messaging study include:■ 75% of all workers and 45% of consumers use e-mail, representing

58% of the total population■ The US, which has only 5% of the world’s workers, has almost 50% of

the corporate messaging seats

The Kelsey Group estimates the number of e-mail boxes will grow to 1.9billion by 2005.

The Aberdeen Group estimates the number of electronic mailboxes willgrow to 600 million by 2003.

Webmail31%

LAN mail1%

ISP & VAN26%

Wirelesse-mail4%

Host2%

Client/server22%

CorporateSMTP14%

Source: United Messaging, 2001

Type of eMail Boxes Worldwide, 2000

US and Worldwide eMail Boxes, 2000-2005 (in millions)

2000

247205

452

2001

302260

562

2003

392356

748

2005

469514

983

2

6

10

US & Canada Rest of World Total



53


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Webmail is as popular outside the US as inside. Most of the leadingwebmail providers report that their signups are about half and half US andinternational. United Messaging expects that 60% or 70% of the newsignups will soon be international.

The plethora of free e-mail options and the frequent job switches broughtabout by the dot bombed economy makes keeping someone’s e-mailaddress current a logistical nightmare.

A recent study by NFO Worldwide showed that e-mail addresses changefor a variety of reasons:

Consumer and Business eMail Boxes, 1998-2002 (inmillions)

1998 1999 2000 2001 2002

Total 145 182 212 239 264

Consumer 62 82 93 102 112

Consumer as % of total 42.8% 45.1% 43.9% 42.7% 42.4%

Business 83 100 119 137 152

Business as % of total 57.2% 54.9% 56.1% 57.3% 57.6%


US Internet Users' Reasons for Changing Their eMailAddress, 2000

Change in ISP

57%

Privacy reasons

29%

Change in job/school

26%

Better eMail features

17%

Internet-related activities

16%

To avoid spam eMail

16%

Got tired of eMail address

6%

Source: NPD WorldGroup/Return Path Inc., 2001


54


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On the bright side, the same study showed that many consumers neverchange their e-mail address:

However, unlike offline marketers, who can rely on change of addressservices like the NCOA (the National Change of Address list organized bythe US Postal Service), e-mail marketers are at the mercy of the consumer.Usually, unless a consumer takes the time to inform a marketer of his newaddress, many e-mail lists can be riddled with dead addresses.

The implications for online marketers are manifest. Advertising on e-mail newsletters is bought and sold on the basis of CPM (cost perthousand). Marketers must have some confidence that the e-mail list theyare renting or the newsletter they are sponsoring is actually reaching acertain number of people. The more “bounces,” or undeliverable e-mails,that are returned, the less valuable that e-mail list becomes. In theirdefense, list owners can honestly say that there is not presently a totallyfoolproof way to address this difficulty.

Trying to alleviate, if not solve, this problem are several companieswhich specialize in tracking down new e-mail addresses. The companyReturn Path, for example, offers an e-mail change of address service that ithas dubbed, not surprisingly, ECOA (eMail Change of Address). Consumersare asked to sign up at the Return Path site and register their e-mailaddresses. Then, when they change e-mail address, they can inform thosecompanies that use the Return Path service of their new address. Making abig deal of privacy, which is a key concern among personal and business e-mail users, Return Path stresses that the entire service is permission based.That is, no one will ever be advised of the new e-mail address unless theconsumer gives permission.

Another company, ActiveNames, offers a downloadable technology thatallows consumers to inform their contacts of a new e-mail address. This issomewhat more ambitious in that it actually requires consumers to installan application on their computer for this purpose. On the other hand, itdoes work automatically. That is, a window pops up when ActiveNamessenses that someone is trying to send an e-mail to the old address and willautomatically prompt the user to update their e-mail address.

US Internet Users' Reasons for Never Changing TheireMail Address, 2000

Too many people to update 36%

Process too time consuming 17%

Too many businesses to update 10%

Don’t know how to change eMail address 6%

Source: NPD WorldGroup/Return Path Inc., 2001


55


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Index of Charts

The clear implication is that online marketers have the added burden ofstaying on top of an ever-changing target. While offline marketers are wellversed in tracking down their prey, the online world is too disparate andfast moving to have the same level of confidence. The bottom line is that e-mail marketers should keep their pitches interesting and not abuse theprivilege if they want consumers to stay in touch.

C. User ProfileAs the internet continues to penetrate homes and offices in America, thedemographic profile of the typical US web user is gradually approachingthat of the general population. For now, however, differences persist.Internet users are, on average, better educated and wealthier than thetypical American. Differences in race and gender are less pronounced.

Demographic Profile of the Average US Inhabitant andthe Average Internet User, 2000 US Inhabitant (1) US Internet User (2)

Age (median) 36.5 years old 33 years old

Gender (mode) Female (51%) Female (49%) Male (49%) Male (51%)

Race (mode) White (74%) White (76%) Black (12%) Black (9%) Hispanic (10%) Hispanic (8%) Asian (4%) Asian (6%) Native American (1%) Native American (<1%)

Household Income $42,000 $57,000

Education College grad (22%) College grad (41%)

Occupation Managerial/ Managerial/ professional (31%) professional (36%)

Note: Does not add up to 100% because 5-2 million people are categorizedas "unspecified"Source: (1) US Census Bureau, 2000; (2) eMarketer, 2001


56


Methodology

Overview

Market Revenues


eMail Users

eMail Volume


Index of Charts

IncomeA September 1999 Harris Poll shows that the likelihood of an individualusing e-mail rises markedly as his or her household income increases.

GenderAltogether, 54% of respondents to a 1999 IMT Strategies Customer OpinionSurvey were women, 46% were men, indicating that more women use e-mail than men.

Indeed, as more women come online, the balance of e-mail users appearsto be shifting towards women. Women represent 49% of those using e-mailfor more than a year, but they account for 66% of those using e-mail for ayear or less.

US Individual eMail Use, by Household Income, 1999

50%

70%

Source: The Harris Poll, September 1999

<= $15,001- $25,001- $35,001- $50,001- >$75,000$15,000 $25,000 $35,000 $50,000 $75,000

21%

30%

26%

37%

54%

66%

US eMail Adoption, by Gender, 1999

0-6 months30%

70%

7-12 months37%

63%

1-2 years

50%

50%

2+ years51%

49%

Male Female



57


Methodology

Overview

Market Revenues


eMail Users

eMail Volume


Index of Charts

Why People Use eMailMost internet users value e-mail highly, consider it indispensable, andoften cite it as their main reason to go online in the first place. The need ordesire to communicate with family, friends, associates, and even strangerswith similar interests, is universal.

People like e-mail for its efficiency, ability to stay in touch with familyand friends, and because it makes it easier to say frank, even unpleasantthings.

Nearly three out of four online consumers regard e-mail as essentialcompared with only half who feel the same way about the rest of theinternet.

According to Pew Research Center, many Americans incorporate e-mailinto their daily routines. Seven in ten e-mail users say they look forward tochecking their e-mail, the survey found. Four in ten say checking e-mail isone of the first things they do after getting up in the morning. A similarnumber report it as one of the last things they do before going to bed.

Most internet users think e-mail is better than sending and receivingmail the traditional way, according to a Fast Company-Roper StarchWorldwide survey.

How US Users Rate the Importance of eMail and theInternet, 1999

eMail is essential

74%

Using the internet (other than e-mail) is essential

50%

Source: Jupiter Research; NFO Interactive, 1999

Better 86%

Will never usee-mail 1%

Same 12% Worse 2%

Source: Fast Company-Roper Starch Worldwide, 1999

How US Consumers Rate eMail Vs Traditional Mail, 1999


58


Methodology

Overview

Market Revenues


eMail Users

eMail Volume


Index of Charts

Note that the Fast Company-Roper Starch poll used an AOL subscriber baseto sample 1,035 employed, college-educated visitors to AOL’s OpinionPlace. Although the respondents were randomly selected and resultsweighed to account for average age and gender of online population, thesurvey is still skewed toward avid net users.

A 1999 survey of more than 1,000 wired Americans, conducted byAmericanGreetings.com, indicates that about 75% of US residents have apreference for e-mail over the regular US mail, and 34% would rather e-mail than use the telephone.

However, a 2000 Zogby poll found that Americans still prefer using thetelephone to any other form of communication, besides speaking face-to-face, that is.

Of the 1,202 adults surveyed nationwide, nearly three in four (72.5%)chose talking on the phone as their favorite method of staying in touch.eMail was the second most popular method, preferred by 16.6% ofrespondents.

Many e-mail users say they communicate more often with friends andfamily now that they can do so via the internet, according to Pew ResearchCenter. A Pew study found internet tools in general, and e-mail inparticular, broaden users’ social worlds.

How US Consumers Prefer to Communicate, 2000

Telephone

72.5%

eMail

16.6%

Letter/Mail

7.7%

Instant Messaging

1.7%

Faxing

0.2%

Other

1.0%

Not sure

0.3%

Source: Reuters/Zogby, June 2000


59


Methodology

Overview

Market Revenues


eMail Users

eMail Volume


Index of Charts

Time Spent Online and on eMaileMarketer estimates that the average active user is online for just over anhour per day, or 7.5 hours per week, up from 6.7 hours in 1999.

In 1999, PricewaterhouseCoopers estimated that 35% of online time isspent on e-mail. This would indicate that the average net user spends 2.6hours each week on e-mail.

According to Jupiter, however, online users spend 91% of their timesending and receiving e-mail.

An interesting study by a team of researchers from Carnegie MellonUniversity found that households used e-mail during 48.9% and the webduring only 25.5% of their internet sessions during their first year online.When both e-mail and the web were used, participants accessed their e-mail first 75% of the time.

Other findings from the study include:■ Users were three to five times more likely to repeatedly send e-mail to

the same addresses than to repeatedly visit the same websites■ 78% of heavy e-mail users continued to log onto the internet after a

year, compared with only 60% of light e-mail users■ While both the number of e-mail messages participants sent and the

websites they visited declined after their first 6 months, the declinewas steeper for the web and for e-mail

Average Time Spent Online among Active US InternetUsers, 2000

Hours per day 1.1

Hours per week 7.5

Hours per month 30.0


US Internet Usage Habits: eMail vs. Web, 2000Type Total % of Avg. Session Sessions Sessions Length (in minutes)

eMail only 21,080 31.8% 34.3

eMail then web 8,485 12.8% 74.1

Web then e-mail 2,842 4.3% 96.0

Web only 14,060 21.2% 40.0

No e-mail or web* 19,916 30.0% 18.4

Note: *Includes those in which participants logged on but had no new e-mail,used an internet service other than e-mail or the web, such as FTP, or whose network connections failedSource: "Information and Communication: Alternative Uses of the Internetin Households," by Kraut, Mukhopadhyay, Szczypula, Kiesler and Scherlis. Carnegie Mellon University, 2000


60


Methodology

Overview

Market Revenues


eMail Users

eMail Volume


Index of Charts

According to Cyber Dialogue, today’s online adult will spend 5.3% of therest of his or her life online, with e-mail taking up between 9 and 10months of a typical lifetime.

Researchers have also found a correlation between gender and age whenit comes to how much time users spend online and on e-mail. Women inthe Carnegie Mellon University study, for instance, used e-mailsignificantly more and the web significantly less than men. Compared withadults, teenagers were heavier users of both e-mail and the web, the studyconcluded. While men will spend more time online than women (26.1months vs. 21 months), women will use e-mail more than men (9.9 monthsvs. 8.8 months), according to Cyber Dialogue.

A Eudora survey found that 67% of Eudora users reported using e-mailfor at least 30 minutes each day, including 19% who say they used e-mail 2or more hours each day.

In 1999, according to Jupiter Research, 70% of internet users in the USaccessed e-mail from home at least once a day, including 35% who accessedtheir e-mail many times each day. Another 25% of internet users accessed e-mail from home at least once per week. By 2003, the research firm predictsthat a full 85% of users will access e-mail from home on a daily basis.

30 minor less33%

30 min–1 hour27%

1–2 hours21%

2–4 hours9%

More than4 hours

10%

Source: Eudora Download Survey, June 2000

Time Eudora Users Spend on eMail per Day, 2000

eMail Accessed from Homes in the US, 1999-2003 (as a% of internet users)

1999 2000 2001 2002 2003

At least daily 35% 35% 33% 32% 29%

Many times per week 17% 14% 12% 11% 10%

Weekly or less 8% 7% 6% 5% 5%

Many times per day 35% 40% 45% 52% 56%

Note: Does not include business e-mailSource: Jupiter Research, December 1999


61


Methodology

Overview

Market Revenues


eMail Users

eMail Volume


Index of Charts

Of the 1,410 respondents to the Spam Recycling Center’s eMail User Survey,93% report checking their mail at least daily, including 43% who check itmore than once a day and 36% who check it more than five times a day.Note that respondents to this survey had to have found their way to theSpam Recycling Center, which is a vocal anti-spam advocate, andtherefore, the results are probably skewed toward heavy internet users.

According to Forrester, 88% of internet users rank e-mail as their mostfrequent online activity.

Impact of Gender on eMail Use and AttitudesResearch shows differences in how men and women use and perceive e-mail.

■ Most women (58%) use e-mail primarily through a personal accountvs. 47% of men. Women are nearly as likely as men to use primarily awork account, but fewer women than men use e-mail both personallyand in their job (IMT Strategies)

■ Women are slightly more likely than men to receive a heavier volumeof messages, accounting for 53% of those receiving more than 50 e-mails per week (IMT Strategies)

■ Women are slightly more likely to get no commercial e-mail of anykind (19% say they get no commercial e-mail vs. 11% of men), butthose who get commercial e-mail receive about the same percentageof permission vs. spam messages (IMT Strategies)

■ Women are much more inclined to check only one e-mail address:58% of women check only one vs. 44% of men (IMT Strategies)

■ Women are more conscientious than men about checking e-mail, with81% of women regularly checking their e-mail boxes compared with70% of men (PC Data Online)

■ However, a Greenfield Online Survey commissioned by pogo.comfound that men are twice as likely (10%) to check their e-mail morethan 15 times a day compared to women (5%)

How Often US Users Check Their eMail, 2000

Less than once a week 0.6%

Once/Twice a week 1.1%

2-5 times a week 5.2%

Once a day 13.5%

More than once a day 43.4%

More than 5 times a day 36.1%

Source: Spam Recycling Center eMail User Survey, 2000


62


Methodology

Overview

Market Revenues


eMail Users

eMail Volume


Index of Charts

■ More men receive HTML-formatted e-mail (57%) than do women(48%), and men are also much more likely to have a web-based e-mailaccount: 40% of men vs. 31% of women (IMT Strategies)

■ Women become attached to e-mail early in their online life. 65% ofwomen who started online in the past year say they would miss e-mail, compared to 55% of novice men (Pew Internet & American LifeProject May 2000 Poll)

■ Women are more likely than men to feel that e-mail has helped theirrelationships with family members and friends, and are moreappreciative of e-mail’s qualities (Pew Internet & American LifeProject May 2000 Poll)

■ 57% of women (vs. 44% of men) who e-mail family say they find e-mail very useful for communicating with family members (PewInternet & American Life Project May 2000 Poll)

Usage PatternsA poll of almost 9,000 readers by USA Today in March 1999 found that themajority of users accepted the need for online advertising on websites as asource of revenue. However, respondents expressed a preference for adsthat download quickly and that do not clutter the page.

One-quarter of respondents from Arthur Andersen’s Online User Panelsay that internet advertising influences purchasing decisions, according toKnowledge Systems & Research, Inc.

According to Impulse Research, 54% of its online panel report havingresponded to an e-mail ad, with almost half of those saying they havebought a product or service after responding to the ad.

US Online Consumers Who Say Advertising InfluencesTheir Purchase Decisions, 2000

Strongly agree 3%

Agree 24%

Neither agree nor disagree 45%

Disagree 20%

Strongly disagree 8%

Source: Knowledge Systems & Research, Inc., June 2000


63


Methodology

Overview

Market Revenues


eMail Users

eMail Volume


Index of Charts

Attitudes and Usage PatternsPermission e-mail marketing rose from the ashes of spam. The highannoyance factor of unsolicited e-mail, as well as the invasion of privacycomplaints surrounding spam, gave impetus to the safer, more consumer-controlled environment of permission e-mail.

Over one-third of online users have a positive impression of permissionmarketing, according to Knowledge Systems & Research, which conducteda survey from Arthur Andersen’s Online User Panel.

The majority of e-mail users surveyed by IMT Strategies felt permission e-mail marketing was “good” marketing, and only 5% thought itcheapened a company’s image.

Very positive

Positive

Neutral

Negative

Very negative

6%

30%

41%

16%

7%

Source: Knowledge Systems & Research, June 2000

How US Internet Users View Permission Marketing, 2000

Good marketing58%

Indifferent14%

An invasionof privacy12%

Superiorcustomerservice11%

Cheapens acompany’simage5%


US User Attitudes toward Permission Marketing, 1999


64


Methodology

Overview

Market Revenues


eMail Users

eMail Volume


Index of Charts

IMT Strategies’ research shows that users know and appreciate thedifference between permission e-mail and spam.

Over half of respondents (52%) in the IMT Strategies survey felt positivelyabout permission e-mail, compared with 14% who felt negatively about it.Spam, in contrast, was viewed negatively by 80% of e-mail users.

How US Internet Users React to PermissionMarketing and Spam, 1999

Eager to read

10%

4%

Curious to read

56%

11%

Indifferent

16%

6%

Open the message but somewhat annoyed

27%

26%

Delete without reading

6%

59%

Offended by the invasion of privacy

1%

6%

Permission marketing Spam


How US Internet Users View Permission Marketingand Spam, 1999

Positive

52%

5%

Neutral

31%

14%

Negative

14%

80%

Permission eMail Spam



65


Methodology

Overview

Market Revenues


eMail Users

eMail Volume


Index of Charts

FloNetwork, Inc., a leading e-mail marketing outsourcer, released results ofan NFO Interactive consumer survey it had commissioned that foundpermission-based e-mail was the channel of choice for receiving marketingmessages. The survey found 73% of all internet purchasers said thatpermission-based e-mail is their most preferred way to learn about newproducts, services and promotions from online merchants, far outrankingtraditional channels like TV, print, direct mail, telemarketing and direct sales.

Nearly 6 in 10 online buyers surveyed said permission-based e-mail washow they usually find out about new products, services and promotionsoffered by their favorite online merchants. Permission-based e-mail wascited two times more than banner ads and 11 times more than magazinesand TV combined, according to FloNetwork. The company said thatpermission-based e-mail surpasses all other customer notification methods,including traditional mail, as the preferred way for online buyers to learnabout new products and services.

Nearly three-quarters (73%) of online buyers said their preferred way oflearning about new products is e-mail offered by online merchants. Thosewho purchase from the same online merchant on more than one occasionare even more likely to prefer permission-based e-mail (75% vs. 61%) thanone-time buyers.

How US Consumers Find Out About New Products,Services or Promotions, 2000

Visit website

76%

Permission-based eMail

58%

A friend

34%

Banner ad

30%

Regular mail

29%

Unsolicited eMail

12%

Search engines

3%

Magazines

3%

TV

2%

Source: FloNetwork, Inc., 2000


66


Methodology

Overview

Market Revenues


eMail Users

eMail Volume


Index of Charts

Snail mail stalwart Pitney Bowes conducted a study recently, suggestingthat consumers still prefer regular mail over e-mail. A survey of consumerswho receive both e-mail and postal mail (approximately 500 respondents)revealed the following:

■ 93% said they prefer traditional mail when receiving financialdocuments and information

■ 73% expressed a preference for regular mail for productannouncements and promotional mailings

■ 76% consider regular mail more secure than e-mail■ 62% indicated that getting and opening their regular mail is faster

than retrieving their e-mail, and■ 66% reported that unsolicited e-mails are never read, as compared

with only 26% for regular mail

It is worth noting that Pitney Bowes, which sells postal mail services tobusinesses, does have an interest in maintaining the volume of regularmail.

According to IMT Strategies, 86% of all e-mail users give their e-mailaddress for permission e-mail relationships. Male users, high-volume usersand professional users were more likely to have done so.

How US Consumers Prefer to Be Contacted by OnlineMerchant, 2000

Permission-based eMail

73%

Regular mail

21%

Unsolicited eMail

4%

Don’t know

3%

In-person sales call

<1%

Telemarketing

0%

Source: FloNetwork, Inc., 2000


67


Methodology

Overview

Market Revenues


eMail Users

eMail Volume


Index of Charts

According to a Primary Knowledge/Greenfield Online survey, 76% ofrespondents would provide additional personal information in exchangefor participation in incentive programs. And 73% said they would do so formembers-only discounts.

Not surprisingly, e-mail users responded more frequently to permission e-mail than to spam. Over half (54%) of e-mail users said they neverresponded to spam, compared with only 22% who said they neverresponded to permission e-mail.

All eMail Users

Male eMail Users

Female eMail Users

High-volume eMail Users*

Low-volume eMail Users**

Professional eMail Users

86%

90%

82%

92%

81%

91%

Personal eMail Users 81%

Note:*High-volume users receive 50 or more messages per week **Low-volume users receive 20 or fewer messages per weekSource: IMT Strategies, 1999

US Internet Users Who Have Signed Up for PermissioneMail, 1999

Incentive programs like “miles” or “points”

Members-only discounts

Giveaways and sweepstakes

Coupons

76%

73%

62%

54%

Source: Primary Knowledge/Greenfield Online, 1999

US Internet Users Who Provide Personal Data forIncentive Programs, 1999


68


Methodology

Overview

Market Revenues


eMail Users

eMail Volume


Index of Charts

Nearly three-quarters (71%) of users have clicked on a website promoted bypermission e-mail with some frequency. Users who have signed up forpermission e-mail are more likely to do so.

How Often US Internet Users Reply to PermissioneMail and to Spam, 1999

Often

Several times

A few times

Once

Never

2%

6%

23%

16%

54%

14%

21%

35%

7%

22%

Permission e-mailUnsolicited offers


US Users Who Have Clicked on a Website Promotedby Permission eMail, 1999

All eMail users

78%

71%

eMail users who have signed up for permission e-mail

91%

82%

Male eMail users

84%

77%

Female eMail users

73%

66%

Professional eMail users

82%

75%

Personal eMail users

74%

67%

Clicked at least once Clicked more than once



69


Methodology

Overview

Market Revenues


eMail Users

eMail Volume


Index of Charts

User Attitudes toward SpamInternet users are far less tolerant of aggressive marketing tacticscommonly accepted with traditional direct mail.

The Pew Internet & American Life Project March 2000 Poll found thatunwanted e-mail was a problem for about a third of e-mail users (an earlierPew study found 45% of internet users were frustrated by spam). Over one-third (37%) of internet users report that getting a lot of spam or unwantede-mails is a problem, compared with 63% of users who said it was not aproblem. Similar to Gartner Group’s 1999 findings, however, the researchfound that those with the most experience on the internet are more likely tocomplain about too many unwanted e-mails: 41% of users who have beenonline a year or longer complain about spam, compared with 20% of thosewho have been online for less than 6 months.

37%

41%

29%

Spam is not a problem

Internet users

Spam is a problem

Constitutes sales solicitations

Those who say it is a problem

Makes it difficult to find wanted e-mail

Takes too much time to sort through

Constitutes e-mail from people with whom I don’t want to speak

Comes from people on messaging boards or those who “Reply to All”

17%

7%

Source: Pew Internet and American Life Project, May 2000

How US Internet Users View Marketing eMail, 2000

63%

70%


70


Methodology

Overview

Market Revenues


eMail Users

eMail Volume


Index of Charts

Gartner Group found that the vast majority of internet users were unhappywith spam, with 83% saying they disliked it either somewhat or a lot.

IMT Strategies also found negative attitudes about spam running high.

In this instance, spam was defined as “messages that appear to be sent inbulk to masses of e-mail users, not personalized to you, with a promotionaloffer that you believe you never signed up to receive.”

A survey of 1,200 online panel members commissioned by the CoalitionAgainst Unsolicited Commercial eMail (CAUCE), found that internet usersobjected strongly to unsolicited commercial e-mail.

On average, panel members said they receive 24 e-mail messages per dayand consider 39% of those to be spam, a much higher proportion than IMTStrategies found (10%). Over 40% of the panel members who receive spamsaid they refused to do business with companies that send spam. More thanone-third went so far as to open an alternative e-mail address to avoid spam.

Neutral14%

Like ita lot 1%

Dislike it a lot63%

Like itsomewhat

2%

Source: Gartner Group, 1999

How US Internet Users Regard Spam, 1999

Dislike it somewhat20%

No response/opinion1%

Verypositively

2%

Verynegatively64%

Somewhatnegatively16%

Neutral14%

Somewhatpositively3%


How US Internet Users Regard Spam, 1999


71


Methodology

Overview

Market Revenues


eMail Users

eMail Volume


Index of Charts

Most internet users dislike spam because it is time consuming or seen as aninvasion of privacy.

According to IMT Strategies, women indicate a higher sensitivity towardspotential online invasion of privacy and trust:

■ 18% of women agreed with the statement “I don’t ever give out my e-mail address; I don’t trust any [marketers],” compared with 10% of men

■ 71% of women agree that spam is “an unacceptable invasion ofprivacy,” compared with 56% of men

■ Women are much more inclined to support legislation against spam,with 82% supporting such legislation compared with 60% of men

■ Perhaps as a result of their greater caution, women receive somewhatless spam than men: 56% of women say they get spammed, comparedwith 71% of men

US User Attitudes toward Spam, 1999

eMail that is considered spam

39%

Like receiving unsolicited e-mail from companies they already dobusiness with

50%

Dislike receiving e-mail from companies they don’t know

70%

Object to e-mail from companies they have never heard of

81%

Opened alternate e-mail address to avoid spam

35%

Source: Survey.com, 1999, as commisioned by the Coalition AgainstUnsolicited Commercial eMail (CAUCE)


72


Methodology

Overview

Market Revenues


eMail Users

eMail Volume


Index of Charts

When asked if they ever had purchased anything advertised in anunsolicited commercial e-mail, only 2.4% in Spam Recycling Center’seMail User Survey had done so.

By contrast, 14% of consumers in an Ernst & Young survey said they willactually go to a site listed in an unsolicited e-mail.

Respondents to the Spam Recycling Center’s eMail User Survey seem toassociate spam with e-commerce participation. This could pose a problemfor permission-based e-mail marketers, as it suggests a predisposition toregard e-mail marketing as spam, even when messages are sent after arelationship has been established.

Primary Reasons Why US Internet Users Dislike Spam,1999

Time it takes

42%

Invasion of privacy

32%

Offensive

15%

Obscures my mail

5%

Bad for kids

2%

Costly

1%

No specific reason

3%

Source: Gartner Group, 1999

Have not95.2%

Have2.4%

Don’t know2.3%


US eMail Users Who Have Purchased ProductsAdvertised through Spam, 2000


73


Methodology

Overview

Market Revenues


eMail Users

eMail Volume


Index of Charts

When asked to indicate how they believed spammers had obtained their e-mail address, the most popular explanation from respondents was that thespammer had gotten it from an e-commerce site used by the respondent.Nearly three-quarters (71.6%) of respondents said it was “very likely” or“somewhat likely” that their address was obtained in this way.

When asked about their level of support for legislative proposals underconsideration in Congress, more than two-thirds (68%) said they supporteda law that makes spamming a crime and requires government enforcement,84% said they supported a law that makes spamming only a civil violation,allowing ISPs to sue spammers for trespassing on their networks, and justunder half (49%) said they supported a law, enforced by the Federal TradeCommission, which allows spamming but creates penalties for the use ofinaccurate headers, misleading subject lines, fraudulent content or failing tohonor “unsubscribe” requests. (Readers should note the heavy anti-spambias of the Spam Recycling Center and its self-selecting survey participants.)

How US Internet Users Think Spammers Obtain eMailAddresses, 2000

Harvested from personal or business website

36.8%

Harvested from newsgroup or chatroom posting

39.9%

Obtained from an e-commerce site you've used

71.6%

Source: Spam Recycling Center eMail User Survey, May 2000

How US Internet Users View Spam Legislation, 2000Law creatingpenalties forinaccurate,misleading,

fraudulent content

Stronglysupport

33.0%

Likely tosupport

16.0%

No opinion 6.1%

Likely not tosupport

18.4%

Strongly will notsupport

Law makingspamming a

crime

41.6%

26.7%

6.2%

17.5%

7.9%

Law makingspamming a

civilviolation

57.7%

26.7%

4.3%

6.7%

4.6% 26.5%



74


Methodology

Overview

Market Revenues


eMail Users

eMail Volume


Index of Charts

The House Energy and Commerce Committee recently gave unanimousapproval to a bill that would regulate spam. The proposed legislation wouldgive internet users the right to remove their names from spammers’ e-maillists. Spammers would be required to notify all recipients of this right andinclude a valid return e-mail address in their messages. Companies that failto comply would face civil and criminal penalties of $500 for eachviolation, up to $50,000.

When asked “How do you feel junk e-mail should be regulated,” almosthalf of Survey.com’s online panel think ISPs should be required to providee-mail filtering.

Findings by Jupiter Research suggest that e-mail users would rather avoidgovernmental regulation. In fact, only 3% of respondents to a March 1999survey wanted unsolicited e-mail to be regulated by the government.Instead, users wanted a technological solution.

Outlaw fake-origin addresses

Require senders to include valid contact information

Allow domain owners to refuse to accept junk e-mail

Require honoring of opt-out requests

Require standard subject forms to identify message types

Require ISPs to provide e-mail filtering

78%

76%

67%

55%

47%

43%

Source: Survey.com, 1999

How US Internet Users Think Spam Should BeRegulated, 1999


75


Methodology

Overview

Market Revenues


eMail Users

eMail Volume


Index of Charts

According to Cyber Dialogue, 95% of internet users have receivedunsolicited e-mail, and 74% who have received such messages took actionto be removed from the offending senders’ e-mail list.

Filtered bytechnology you

can manage fromyour PC

38%

Bannedoutright

27%

Regulated by the government3%

Don’t know5%

Not affected in any way4%

Filtered by yourISP to specificationsof your choosing23%

Source: Jupiter Research/NFO Interactive, 1999

Preferred Solutions to Spam among US Internet Users,1999

Actions Taken against Spam by US eMail Users, 1999

eMailed sender to be removed from e-mail list

74%

Contacted the company

16%

Contacted an internet advocacy group

9%

Reported the sender to a consumer organization

8%

None of the above

18%


V

Methodology

I Overview

II Market Revenues


IV eMail Users

V eMail Volume 77


B. Permission eMail 80

C. Spam 84




Index of Charts


77



78


Methodology

Overview

Market Revenues


eMail Users

eMail Volume


Index of Charts

A.Total eMail VolumeeMail is now the closest thing web marketers have to a “killer app” and isby far the dominant internet application as measured by percent of usersand total message volume online. eMail is already used much morefrequently than traditional mail.

eMail volume in the US grew to 536.3 billion in 2000, an increase of over66% over 1999.

According to Forrester Research, by 2003 the number of marketing e-mailswill equal the volume of direct mail forwarded by the US Postal Service,and by 2004 the average household will receive nine pieces of marketing e-mail per day.

About 28%, or $17 billion,

of the Postal Service’s

annual revenue comes

from bill payments sent

by mail.

According to the London

Internet Exchange, there

are 360,000 e-mails sent

every second in Britain.

Per Year

Per Day

536.30206.42

1.470.57

US eMail and Postal Letters Delivered, 2000 (in billions)

Postal LetterseMail

Source: eMarketer, 2001; postal letters extrapolated from US Postal Service1999 data

eMail Message Volume in the US, 1999-2003 (inbillions)

1999

394.2

2000

536.3

2001

677.1

2002

840.1

2003

1,035.1

3

9

15



79


Methodology

Overview

Market Revenues


eMail Users

eMail Volume


Index of Charts

According to Jupiter Research, 191 billion consumer e-mails will be sent inthe US in 2000.

On a global scale, Aberdeen Group estimates out-bound e-mail volumewill reach 4.8 trillion by 2003, up from 809 billion in 1998.

According to International Data Corp. (IDC), 9.7 billion e-mail messageswere sent daily worldwide in 2000, up 64% from 5.9 billion in 1999. IDCalso predicts that the number of e-mails sent annually in Western Europewill be 1.6 trillion in 2005, up from 511 billion in 2000.

eMails Sent per Day Worldwide and in North America,2000-2005 (in billions)

2000

6.13.6

9.7

2001

8.75.7

14.4

2003

13.7

10.2

23.9

2005

18.016.6

34.6

20

40

US & Canada Rest of World Total



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B. Permission eMailPermission-based commercial e-mail message volume will jump to over100 billion messages in 2001, accounting for almost 15% of total volume.

As a new marketing tactic and publishing platform, permission-based e-mail has grown rapidly since 1997. It will continue to grow at a faster ratethan US e-mail volume overall.

Permission eMail Message Volume in the US,1999-2003 (in billions and as a % of total)

1999

40.1 (10.2%)

2000

64.1 (12.0%)

2001

101.2 (14.9%)

2002

159.1 (18.9%)

2003

227.0 (21.9%)

50

150

250


US Annual Growth of Permission eMail and TotaleMail Volume, 2000–200365

45

2003200220012000

42.7%36.1%

26.2%24.1% 23.2%

60.1%57.8%

57.2%


Permission-based e-mail Total e-mail


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Comparative EstimatesEstimates of permission mail volume in the US by other research firms aresignificantly lower than eMarketer’s. Jupiter Research, which tracks onlyconsumer e-mail volume, estimates that online consumers received a totalof 17 billion permission-based messages in 2000, a figure the companyprojects will rise to 38.3 billion by 2005.

Forrester Research projections include volume produced through rented opt-in lists intended for customer acquisition and in-house lists used for retentionpurposes. Forrester estimates that 16.9 billion such messages were sent in 2000.The research firm predicts that number will rise to 21.0 billion by 2004.

Winterberry Group claims there were about 10 billion permission-basedcommercial e-mail distributed in 1998, and estimates that 500 billion willbe sent worldwide by 2003.

Comparative Estimates: Distribution of Permission-Based Commercial eMail, 2000 (in billions)

eMarketer 64.4

Jupiter Research (1) 17.0

Forrester Research (2) 16.9

Note: (1) Business e-mail is not included; (2) Sponsored lists not includedSource: eMarketer, 2001; various, as noted, 2000

Comparative Estimates: Distribution of Permission-Based Commercial eMail, 2003 (in billions)

eMarketer 226.7

Jupiter Research (1) 153.0

Forrester Research (2) 152.0

Note: (1) Business e-mail is not included; (2) Sponsored lists not includedSource: eMarketer, 2001; various, as noted, 2000

US Distribution of Permission-Based CommercialeMail, 1999-2005 (in billions)

1999 4.3

2000 17.0

2001 43.0

2002 85.0

2003 153.0

2004 249.0

2005 383.0

Source: Jupiter Research, April 2000


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Permission eMail Volume by TypeThe share of permission e-mail volume will shift considerably by the end ofthis year, with in-house mailings rising to one-quarter of total permissionmessages sent.

By 2003, in-house lists will account for 45% of all permission e-mails sent.

US Distribution of Marketing eMail, 1999-2004 (inbillions)

1999 3.5

2000 16.9

2001 47.5

2002 88.5

2003 152.4

2004 210.0


US Permission eMail Volume, by Type, 2000 (inbillions)

Sponsored 45.7 (71%)

In-house 16.1 (4%)

Rented opt-in 2.6 (25%)


US Permission eMail Volume, by Type, 2003 (inbillions)

Sponsored 102.0 (45%)

In-house 102.0 (45%)

Rented opt-in 22.7 (10%)



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Comparative SourcesThe following charts break down by type comparative estimates ofpermission e-mails sent.

Comparative Estimates: US Permission eMail Volume,by Type, 2000 (in billions)

Sponsored

45.7

5.0*

In-house

16.9

11.0

15.4

Rented opt-in

2.8

1.0

1.5

Total

64.4

17.0

16.9

eMarketer Jupiter Research Forrester Research

Note: *Includes only newsletters sent by content and commerce sitesSource: eMarketer, 2001; various, as noted, 2000

Comparative Estimates: US Permission eMail Volume,by Type, 2003 (in billions)Sponsored

102.0

47.0*

In-house102.0

95.0

134.6

Rented opt-in22.7

11.0

17.8

Total226.7

153.0

152.4

eMarketer Jupiter Research Forrester Research

Note: Includes only newsletters sent by content and commerce sitesSource: eMarketer, 2001


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Jupiter Research projects that 11 billion retention-related direct e-mailmessages were sent to consumers in 2000. That number will grow to 27billion this year and to 236 billion by 2005, according to Jupiter. Theresearch company also estimates there were 1 billion e-mail messages sentsoliciting new customers in 2000. That number will grow to 32 billion by2005, Jupiter predicts.

Jupiter estimates that about 90% of commercial e-mails will be retentionbased through 2005, with about half as sponsored e-mail messages. It isunclear why Jupiter categorized sponsored e-mail messages such asnewsletters in the retention slot.

Jupiter projects that the average number of commercial e-mail messagesthat online consumers receive per year will increase from 40 in 1999 toover 1,600 in 2005. Non-marketing and personal correspondence will morethan double from approximately 1,750 in 1999 to almost 4,000 in 2005,according to Jupiter.

Forrester predicts that in 2004, marketers will send out nearly 210 billione-mail solicitations, with 66% sent to in-house lists and 33% sent tocustomer acquisition lists.

C. SpamIn 2000, 53.6 billion unsolicited e-mail messages were received. That figurewill rise to 62.3 billion by year-end 2001 and to 75.6 billion by 2003.

By 2005, more than one-

third (40%) of all

electronic bills will be

sent via e-mail, according

to Killen & Associates Inc.

This is up from 18% in

1998. Overall, Killen

expects the electronic

billing market to grow

from $1.5 billion today to

$34 billion by 2005.

Commercial eMail Messages Sent per Year in the US,1999–2005 1999 2000 2001 2002 2003 2004 2005

Retention 2.8 11.0 27.0 54.0 95.0 154.0 236.0

Sponsored* 1.3 5.0 13.0 25.0 47.0 76.0 115.0

Acquisition 0.24 1.0 3.0 6.0 11.0 19.0 32.0

Total 3.0 12.0 30.0 60.0 106.0 173.0 268.0

Note: Sponsored e-mails are included in the numbers for retention-basedSource: Jupiter Research, 2000

Unsolicited eMail Messages Received in the US,1999-2003 (in billions)

1999 38.6

2000 53.6

2001 62.3

2002 68.9

2003 75.6



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With more e-mail addresses to harvest each year (as the number of userswith 2 or more years of internet experience rises), eMarketer estimates thatspammers increased output by nearly 15 billion messages in 2000.

Although the absolute number of unsolicited messages will increase overthe forecast period, it will decline as a percent of commercial messages andtotal e-mail received. Technology, consumer backlash, peer pressure fromthe ISP and business communities, and regulatory and legal developmentswill all serve to constrain spam activity, as will the increasing availabilityof legitimate opt-in vehicles.

More than 70% of respondents to a May 2000 Spam Recycling Centersurvey said they receive more than 10 unsolicited e-mails per week, withnearly 20% claiming they receive 50 or more. Readers should note thatSRC’s survey participants were self-selected, and as visitors to an anti-spam site, which hosted the survey, they demonstrate a keen awareness,and one may presume, an acute dislike, of spam.

Male internet users receive an average of 15.8 “junk” e-mails in a typicalweek while women receive 10.7, according to the Yankelovich 2000MONITOR. Of the same group, 69% agree that they get too much junk e-mail – up 11% since 1999. Of all those surveyed, 44% consider unsolicitede-mails for the purposes of selling products and services to be seriousviolations of privacy.

Unsolicited eMail Message Volume in the US,1999-2003 (as a % of commercial and total e-mail)

1999 2000 2001 2002 2003

As a % ofcommercial

49.2% 45.7% 38.2% 30.3% 25.0%

As a % oftotal

9.8% 10.0% 9.2% 8.2% 7.3%


Average Number of Unsolicited eMails Received perWeek in the US, 2000

None 2.7%

1-10 25.7%

11-25 31.6%

25-50 21.3%

50 or more 18.7%

Source: Spam Recycling Center eMail User Survey, May 2000


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A study undertaken for the European Commission found that internetsubscribers worldwide are unwittingly paying an estimated 10 billion euros($9.36 billion) a year in connection costs just to receive “junk” e-mails.

Statistics compiled by SpamCop, an anti-spam service, show that of thefive ISPs receiving the most spam complaints, three are in the United States.

The Direct Marketing Association (DMA) supports ideas such asoutlawing phony return addresses and forbidding companies to keepsending mail to individuals who have asked to be removed from lists – butsays it worries about creating too restrictive an environment for marketers.It should be noted that 91% of DMA members responding to a survey saidthey do not send commercial e-mail and, in fact, 63% report that they havenot even considered doing so.

One recent development in spam technology is the pixel tag or web bug.By inserting a link into an image in the e-mail, spammers can track whoopens an e-mail and when. Another variation of this is known as e-mailwiretapping. By embedding Java script into an image, it is possible to trackwhat has been written when the message is forwarded with comments toother recipients. Apart from the obvious invasion of privacy, this is alsoanother way spammers can harvest e-mail addresses. Needless to say,privacy advocates are livid.

D.Volume per UserAmericans receive an average of 15.2 e-mail messages per day, and 106.4messages per week. Thanks to the rapid uptake of permission-based e-mailmarketing and the astounding proliferation of other e-mail lists, the averageuser receives more than twice as many e-mail messages as he or she sends out.

Estimates for the average number of e-mails received per day and per weekare extremely disparate, ranging from 1.7 to 36 per day and from 11.8 to180 per week.

The US Postal Service

delivers an average of 24

pieces of mail per

household every week, or

1,248 pieces annually.

Average Number of eMails Received by US Users perDay and Week, 2001

Day 15.2

Week 106.4



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Comparative Estimates: Average Number of eMailsReceived by US Users per Day and Week, 2001

Ferris Research (office workers)

36.0

180.0

Impulse Research Corp.

31.0

217.0

Survey.com

24.0

168.0

eMarketer

15.2

106.4

Electronic Messaging Assoc. (home users)

14.0

96.0

Pew Research*

13.1

IMT Strategies

12.0

54.0

Jupiter Research Center (home users)

4.9

34.3

NetValue**

1.7

11.8

Day Week

Note: *eMarketer extrapolation based on Pew Research Center's estimateof e-mail messages sent on typical day; ** Extrapolation based onmessages typically received per monthSource: eMarketer, 2001; various, as noted, 2000


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Forrester projects that the number of marketing e-mails will equal thevolume of direct mail by 2003, and by 2004, the average household willreceive 9 pieces of marketing e-mail per day.

The Pew Internet & American Life Project March 2000 Poll tracked howmany messages online consumers send on a typical day.

Gartner Group estimates that the average business user spends 4 hours perday creating, reading and forwarding e-mails, and 90 minutes per dayorganizing their e-mail, including such tasks as filing and deleting.

eMarketer expects the average number of daily messages to graduallyincrease over the next several years as e-mail becomes more integral toeveryday personal and commercial communications. However, thecombination of filtering software and the influx of low-volume users willconstrain average growth.

1999 2005

Non-commercial/personal1,750 (97.7%)

Non-commercial/personal4,000 (71.4%)

Commer-cial e-mail

40 (2.3%)

Commer-cial e-mail

1,600 (28.6%)

Source: Jupiter Research, May 2000

Commercial and Non-Commercial eMails Received byUS Users per Year, 1999 & 2005

Total = 1,790 Total = 5,600

2

1 e-mail

No e-mails

3

4

5–10

11–20

>20

15%

11%

12%

15%

7%

24%

9%

6%

Source: Pew Internet & American Life Project's March 2000 Poll

eMail Messages Sent by Consumers per Day, 2000


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Jupiter Research projects that the number of messages US online consumerswill receive per day will more than triple to 15.3 by 2005, from 4.9 in 1999.

Average Number of Permission-Based eMails ReceivedAmericans receive an average of 12.8 permission e-mail messages perweek, and have received about 664 by year-end 2000.

By 2003, Americans will receive an average of 31 permission e-mails perweek, including those from companies/websites they have relationshipswith, opt-in lists, and sponsored newsletters and discussion groups.

eMails Received per Day by US Users, 1999-2003

1999

13.8

2000

15.2

2001

16.7

2002

18.4

2003

20.2

5

15

25


Average Permission eMails Received by US Users perDay/Week/Year, 2000Day 1.8

Week 12.8

Year 663.9


Average Permission eMails Received by US Users perDay/Week/Year, 2003Day 4.4

Week 31.1

Year 1,617.6



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eMail Volume


Index of Charts

According to Jupiter Research, US online consumers will receive an averageof 1,612 commercial e-mail messages in 2005, a 40-fold increase from the40 messages the research firm estimated that consumers received in 1999.

Knowledge Systems & Research’s Arthur Andersen Online Panel surveyfound that nearly two-thirds of online users say that they regularly receivee-mail from an online shopping site. Only 9% of users said they did notreceive e-mail messages from websites of any kind. In other words, 91% ofrespondents say they receive commercial e-mails.

Commercial eMails Received by US Users per Day,2005Year 1,612.0

Week 30.8

Day 4.4


40

300

800

1999

2001

2003

2005 1,600


Home Marketing eMail Messages Received per US Userper Year, 1999–2005

eMail Messages Received from Websites in the US,2000

Online Shopping 65%

Travel 44%

News and information 41%

Investing 26%

Business 19%

Other* 33%

None of the above 9%

Note: * Multiple responses allowedSource: Knowledge Systems & Research, Inc., June 2000


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Three in ten online users receive more than 20 marketing e-mail messagesper week, according to Knowledge Systems. Overall, 44% of respondentsreceived between 11 and 50 marketing messages a week, and 11 % receivedmore than 50.

E. eMail OverloadeMail use is surging because it is convenient, saves time and facilitatescommunication between friends, family, co-workers and clients. However,e-mail can also be inconvenient in that, along with other newcommunications technologies that keep us constantly on call, it interruptsand disrupts our workday.

eMailers feel they are wasting time managing the flood of e-mail theyreceive, much of it either unsolicited commercial messages or subscription-based messages that pile up much like a week’s worth of newspapers on thefront porch while you’re away on vacation. Overall, e-mail has introduceda new complexity into our business and personal lives.

While new communications technologies have given people the tools towork, shop and communicate almost anywhere and at anytime, therelentless innovations are also further eroding the boundary between workand home.

While work is increasingly seeping into the home, more workers aredragging their home lives into work, the study suggests. As a result, morecompanies are monitoring employees’ internet use to limit groceryshopping, online banking and stock market trading.

Marketing eMail Messages Received by US Users perWeek, 2000

None 3%

1-10 42%

11-20 28%

21-50 16%

51-75 5%

76 or more 6%



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As length of e-mail usage increases, e-mail users are more likely to feelthey receive too much mail. IMT Strategies found the probability of thisattitude begins to spike up after just the first year of usage.

Pew Research Center reports that 70% of those who feel inundated byunwanted e-mail say that the offending messages are sales andsolicitations, 17% say the e-mails are from other people they don’t care tohear from as much, and 7% say the unwanted e-mails come from list-servs.Of those who receive lots of unwanted messages, 41% say that the volumeof undesired messages is such a hassle that they find it hard to get to the e-mails that matter most to them, and 29% of users complain that dealingwith messages takes up a lot of their time.

The problem of e-mail overload is not so much with unsolicitedcommercial e-mail, as it is with permission-based e-mail. With the recentsurge of e-mail marketing, internet users are already starting to get e-mailmarketing fatigue.

According to Arthur Andersen’s Internet Marketing Survey, 54% ofsurveyed users would like to see less internet business advertising viabroadcast e-mails, and 42% would like less via personalized e-mail.

US User Attitudes toward eMail, 1999 (as a % of e-mailusers who say...)

They cannot do without e-mail 70%

eMail makes them more efficient 60%

They waste 1 hour/day responding or deleting irrelevant mail 94%

Source: Newsweek, 1999

US Users Who feel They Receive "Too Much" eMail, byLength of Time Online, 1999

5%6%

26%

46%

30%

50%


7-12 Mo. 13-24 Mo. > 2 yrs.0-6 Mo.


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eMail Volume


Index of Charts

Only 8% said they wanted more broadcast e-mails, and 15% wanted morepersonalized e-mails.

Regardless of the level of interest in actually receiving the mail, nearly half(48%) of the respondents said that an e-mail marketing message wouldoccasionally persuade them to visit a site. Almost 70% said it wouldoccasionally lead them to make a purchase online.

US Consumer Interest in Receiving Advertising, byType of Advertising, 2000

TV ads

31%

17%

Newspaper ads

29%

10%

Banner ads on website

20%

39%

Personalized eMail

15%

42%

Radio ads

15%

15%

Broadcast eMail

8%

54%

None of the above

39%

15%

More Less


VI

Methodology

I Overview

II Market Revenues


IV eMail Users

V eMail Volume

VI Techniques & Strategies 95













M. Integrating eMail within Marketing 132




Index of Charts


95



96


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Overview

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eMail Volume


Index of Charts

A. Introduction: Objectives before TacticseMail marketing takes many forms and can be employed to meet multipleobjectives. We will explore the most popular e-mail formats and techniquesin this chapter.

But before looking at tactics and strategies, marketers should firstestablish clear, measurable objectives for using e-mail. eMail marketing isperhaps the most easily targeted, measurable marketing tool ever invented.To fully capitalize on and exploit the medium, it is imperative thatmarketers evaluate their goals and establish an appropriate strategy beforelaunching a campaign or program, then identify, track and measure allrelevant results.

Like web advertising, e-mail advertising can reach customers at allpoints in the sales cycle.

Marketers are using e-mail as a strategic tool to increase sales, create,maintain and analyze customer relationships, develop long-term customerloyalty, and establish new revenue opportunities.

Acquisition vs. Retention ObjectivesBased on broad marketing objectives, e-mail marketing campaigns can bebroken into two categories: customer retention and customer acquisition.Customer retention campaigns target a company’s in-house list, aiming toretain customers, convert prospects and generate repeat sales bydeveloping customer relationships and customer loyalty. Customeracquisition campaigns seek to convert strangers into permission or salesrelationships.


CustomerBuilding

Relationship

Awareness/Branding

InformationGathering

Purchase

Fulfillment

Post-SalesSupport

eAdvertising Can Reach the Consumer at All Pointsin the Sales Cycle


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More than half of the e-mail marketing campaigns studied in IMT Strategies’1999 e-mail marketing survey were for the purpose of customer retention.

Nearly two-thirds of the e-mail budgets of 50 companies surveyed byForrester in 1999 were for the purpose of retention.

Comparative Estimates: US eMail MarketingSpending, Acquisition vs. Retention, 2000

eMarketer

43.2% 56.8%

Forrester Research

34.1% 65.9%

Jupiter Research (1)

50.0% 50.0%

Acquisition Retention

Source: eMarketer, 2001; Forrester Research, 2000; Jupiter Research, 1999

Retention57%

Acquisition43%


US eMail Campaigns, by Objective, 1999


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Forrester predicts that e-mail budgets will triple by 2004.

According to Jupiter Media Metrix, 65% of companies are spendingbetween 1% and 5% of their marketing budgets on e-mail marketing.

There are several reasons why companies are focusing the bulk of their e-mail efforts on customer retention instead of acquisition:

■ Online companies are shifting their focus from attracting newcustomers to retaining customers they already have. Attractingcustomers on the web is expensive. Given high acquisition costs, e-tailers are closely scrutinizing how they can retain customers throughrelationship management once they have roped them in as buyers.

■ Anti-spam sentiment and the fear of being perceived as a “spammer”makes mailing to an in-house list a safer bet.

Retention64%

Acquisition36%

Note: Based on interviews with e-mail marketing managers from 22traditional companies and 28 internet pure playsSource: Forrester Research, January 2000

US eMail Marketing Budgets: Acquisition vs. Retention,1999

eMail Marketing Budgets in the US, 2004Online

marketingbudget

Annualspen-ding1999

Annualspen-ding2004

% ofeMail

budgetfor

acqui-sition

% ofeMail

budgetfor

reten-tion

eMailstaff

(FTEs)

Allcompanies

5% $240,000 $720,000 36% 64% 1.5

Traditionalcompanies

5% $144,000 $950,000 12% 88% 1.0

Internetpureplays

7% $290,000 $600,000 55% 45% 1.8



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■ eMail marketing is better at maintaining and nurturing existingcustomers than it is at acquiring new ones. Not only do in-house listsgenerate better response than lists purchased from third-party opt-inlists, but they are less expensive, are more cost effective, and offersignificantly higher ROI.

At an average of 6 cents per message, e-mailing to an in-house list is only afraction of the cost of mailing to a rented list, which typically charges 20cents per address.

IMT Strategies identified eight models of permission e-mail marketing.These models fall into two categories, determined by whether the primarymarketing objective is customer retention or customer acquisition.

Advocacy marketing (friend referral), customer relationship e-mail andspam were the three most common forms of e-mail marketing in 1999,according to IMT Strategies.

US eMail Marketing Models, 1999Acquisition Retention

Permission list marketing Customer relationship e-mail

Sponsored newsletter Corporate newsletter

Sponsored discussion list Reminder service

Advocacy marketing (friend referral)

Partner co-marketing



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B. Customer Relationship eMailAccording to IMT Strategies, of all the e-mail marketing models, marketershave the most experience with customer relationship e-mail, and it is alsothe model marketers placed the highest priority on for the future (anaverage rating of 2.7 out of 3 priority points).

As Laurence Jones of MessageMedia tirelessly points out, messagingtechnology today enables companies to create what he calls powerfulmoments of truth when a customer can experience a product, service orbrand. When e-mail is used to make each point of customer contact apositive experience, customer loyalty is the result.

While list building and outbound messaging are important, Jones and othere-mail retention and relationship proponents say it is only the beginning.

Opportunities for customer relationship e-mail include:■ Newsletters■ Newsflashes■ New product or service announcements■ New product availability■ Promotional discount offers to existing or potential customers■ The ability to forward promotions designed for customer acquisition

(referral/viral marketing)■ Traditional direct marketing campaigns■ Transactions■ Order confirmations■ Personalized thank-you messages■ Shipping status■ Bill fulfillment■ Customer service■ Marketing and technical support for products and services

US eMail Marketing Priorities, by Model Type, 1999

CRE 2.7

Partners 2.0

Corporate newsletter 1.9

Reminder 1.9

Advocacy 1.8

PLM 1.4

Sponsored newsletter 1.4

Discussion list 1.0

UCE 0



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■ Alerts, reminders (replenishment notification)■ Expiration notices■ Change of service notifications■ Customer surveys

Key to CRM e-mail is to build customer relationships through value-addedmessaging. Amazon, for instance delivers personalized e-mailrecommendations, reviews, articles and interviews to customers who opt infor these services. Amazon also allows a customer to create a personalizedwish list of books that he would like to receive as gifts, which is then sentto selected friends or family members. The company also e-mails customersspecial coupons for its new categories of merchandise.

C. Unsolicited Commercial eMailDirect e-mail marketing can be separated into two broad categories:unsolicited commercial e-mail (UCE), commonly referred to as “spam” andpermission e-mail, also known as opt-in e-mail. UCE is usually transmittedin mass quantities to large lists of unqualified e-mail addresses. Aseveryone knows, spam is frowned upon, not only because it is consideredbad netiquette, but also because it is bad marketing and can even get thespammer into legal trouble. As a result, marketers have turned topermission-based direct e-mail.

Spam lists are databases of e-mail addresses gathered from internetnewsgroups, chat rooms, websites and member directories without therecipients’ knowledge or consent. They are extremely inexpensive toacquire, costing less than $1 for 1,000 addresses.

A survey of 13,000 e-mail users, conducted by the Gartner Group in1999, indicated that more than 90% of internet users receive junk e-mail atleast once a week, a probability that increases to 96% for those internetusers who have had an e-mail address for at least 4 years. The longer usersstay with a particular ISP, the more spam he or she is likely to receive.


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While spam lists are inexpensive to rent, and seem to garner decentresponses (relative to banners, as indicated by IMT Strategies surveyfindings and other research), the hostile reaction spamming can generatecan be very costly to a marketer’s reputation and brand. Spamming canalso result in attacks on the marketer’s corporate mail server by thetransmission of large volumes of angry e-mail messages.

In some cases, spam marketers have been disconnected from theirinternet service provider or had their transmissions blocked.

Spam is the number one source of customer complaints, according to ISPs,resulting in the emergence of numerous anti-spam groups that monitor andpress for legislation:

■ Coalition Against Unsolicited Commercial Email (CAUCE) and its affiliates■ Internet Service Providers Consortium (ISP/C)■ Center for Democracy and Technology on privacy concerns■ Voters Telecommunications Watch on unsolicited commercial e-mail■ Netizens Against Gratuitous Spamming (Fight Junk eMail)■ Spam Recycling Center (SRC)■ Forum for Responsible and Ethical eMail (FREE)■ Mail Abuse Prevention System (MAPS)

The SRC collects spam contributed by e-mail users around the world andforwards it to both the Federal Trade Commission and to anti-spamtechnology developers to help them develop solutions aimed at stoppingspam. In just over a year, the SRC collected over three million unsolicitedcommercial e-mails.

The FTC believes that the proliferation of deceptive unsolicited commerciale-mail is a threat to consumer confidence in online commerce. In particular,the agency is concerned about the widespread use of UCE to disseminate falseand misleading claims about products and services sold on the internet.

UBE (Unsolicited Bulk eMail) 74%

UCE (Unsolicited Commercial eMail) 72%

Chain letters 44%

Duplicate postings 22%

Pop-up ads 18%

Virus warnings 11%

Banner ads 10%

Jokes 6%

ISP product/service information 6%

Note: Multiple responses allowedSource: Gartner Group, 1999

US eMail Users' Definition of Spam, 1999 (as a % ofall e-mail users)


103


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Based on its annual eMail Users Survey, the Spam Recycling Centerconcluded that consumers believe that participating in e-commerce willgenerate spam. Nearly three-quarters (72%) of respondents believe it is atleast “somewhat likely” that spammers obtained their e-mail address froman e-commerce site, the survey revealed. This belief, combined withconsumers’ strong negative feelings toward spam, threatens to slow thegrowth of e-commerce, according to the anti-spam organization.

The Gartner Group reports that one of every three internet users receives6 to 20 spam e-mail messages per week. Money-making schemes, adult adsand software offers were the most frequently received bulk e-mail.

The concept of permission marketing has lowered the threshold oftolerance for spam, and broadened its definition. According to CliffKurtzman, CEO of the Tenegra Corporation, spam includes:

■ Unsolicited advertisements distributed via e-mail, whether or not theyare mailed in mass volume

■ An unsolicited mass e-mailing, whether it’s commercial or not■ An out-of-context mail list, newsgroup or forum posting■ Using mail lists, newsgroups or forum postings in a manner that is

beyond the volume or frequency that readers have signed up for■ Any opt-out mailing, even if opt-out instructions are included

Anti-Spam Movement Broadens Its MissionThe MAPS (Mail Abuse Prevention System) RBL (Realtime Blackhole List) isa list of networks considered friendly, or at least neutral, to spammers whouse these networks either to originate or relay spam. MAPS RBL identifiesand denies access to such networks to the part of the internet that theycontrol. Dozens of other network owners subscribe to the MAPS RBL sothey too can deny “spammers” access to their network.

What Most Commonly Seen UCEs Advertise, 2000Chain letters

Pyramid schemes (including Multilevel Marketing, or MLM)

Other “Get Rich Quick” or “Make Money Fast” (MMF) schemes

Offers of phone sex lines and ads for pornographic websites

Offers of software for collecting e-mail addresses and sending UCE

Stock offerings for unknown start-up corporations

Quack health products and remedies

Pirated software (e.g. “Warez”)

Source: Coalition Against Unsolicited Commercial Email , 2000


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The RBL includes 3,200 internet protocol addresses and is used by morethan 20,000 subscribers.

MAPS and other anti-spam activists consider spam to be theft of service.The original focus of the RBL when it began operations in mid-1997 was onidentifying the sources of dedicated, professional spammers. More recently,it is focusing on unsolicited bulk e-mail (UBE) from the Fortune 500,claiming it is more important to stop these “legitimate and respectedbusinesses that have stumbled into the spamming business” than it is tochallenge UBE promoting multi-level marketing schemes.

The Mail Abuse Prevention System compiles a list of “spammers.” Here’show groups and individuals get “blackholed” by MAPS:

■ By sending spam directly to internet users■ By “relaying,” or allowing spam, even unwittingly, to be sent through

a group’s mail server computer■ By providing support services to spammers, such as hosting webpages

promoted by spam, spam distribution software or credit cardprocessing for spammers

Here are some common e-mail marketing practices that make marketerseligible for being listing on the RBL:

■ Directing advertising to a customer before they have given explicitpermission to do so

■ Using an opt-out strategy■ Using a mailing list that lacks a subscription confirmation step

(double opt-in)

On average, about 5% of unsolicited commercial e-mail results in removalrequests, according to the Direct eMail Advertising Association. This figureis not much higher than the unsubscribe rates of permission-based e-mailcampaigns, which typically fall in the less than 1% to 4% range. (However,unsubscribe rates above 2% usually indicate a problem.)

Of course, the MAPS definition of spam and its attitude towards mass e-mailing dramatically conflicts with the DMA’s anti-spam position. Inresponse to the spam problem, the DMA launched its e-mail preferenceservice (www.e-mps.org), a website through which internet users can opt-out of unsolicited commercial e-mail from the organization’s 4,600members. Users must enter each e-mail address they want to exclude fromtheir inboxes individually. The service is designed to help consumers “cutdown on the amount of unsolicited commercial e-mail” they receive intheir e-mail inboxes. The DMA hopes the service quells the push for anti-spam legislation by giving individuals who don’t want to receive UCE away to opt out, while preserving marketers’ ability to find new customers.

Double opt-in requires

that e-mail addresses

cannot be added to a

mailing list unless the e-

mail user signs up and

then later confirms their

intention via e-mail.


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Some people think spam will never disappear because it is cheap and itworks. There are a lot of companies devoted to making it easy for people tosend spam. These companies, often operating out of a living room, canmake $30,000 a month.

D. Permission MarketingThe overwhelmingly negative reaction to unsolicited commercial e-mail andthe declining response rates of banner ads have forced advertisers to find anew strategy. Permission-based e-mail marketing programs serve as analternative to both. Permission marketing has also gained favor as apowerful tool for building customer relationships based on trust and loyalty.

Permission – or opt-in – e-mail marketing involves e-mail users grantingtheir permission for companies to send them advertisements and othercommercial messages via e-mail. Opt-in e-mail is currently used togenerate leads, increase sales, retain, cross sell and up sell customers, aswell as build site traffic.

Companies are either building their own in-house permission-based e-mail lists by inviting their website visitors to register and subscribe to an e-mail update or newsletter, or by renting third-party opt-in e-mail lists.

US companies have rapidly adopted opt-in e-mail for both customeracquisition and retention purposes. Internet retailers, software companies,magazine publishers, direct marketers, financial services and onlinepublishers have all found opt-in attractive. Indeed, offering an e-mailnewsletter or notification service is now de rigueur, and it is difficult tofind a major website that does not ask visitors to subscribe to such a list.

A common technique is to offer website visitors a free newsletter thatcontains special offers or product and service updates. As visitors “opt-in” forthese newsletters, publishers and marketers begin to build their permission or“opt-in” e-mail list, which they can use for other marketing purposes.

The basic premise behind permission marketing, a term and conceptcoined by Seth Godin, is that the rules of advertising have changed due totoday’s media clutter. Consumers are far more likely to purposely ignoreyour message than remember it, according to Godin, making permissionmore important than impact.

According to Godin, there are three basic precepts to permissionmarketing: the message has to be anticipated, personal and relevant.

The internet is the perfect medium for permission marketing because it isnot only much easier to get consumers’ permission via the internet, it ismuch easier to collect data about consumers, including their interests andpreferences.


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Permission e-mail players include opt-in e-mail list brokers and networks,independent list managers, traditional list brokers, incentive-basedsubscriber lists (reward/loyalty programs), banner advertising networks, e-mail newsletter networks, website owners with their own permission e-maillists, internet portals, and permission e-mail marketing outsourcers.

Seth Godin’s Five Basic Rules of PermissionMarketing, 1999Permission must be granted; it cannot be presumed. Buying a mailinglabel for a direct marketing campaign is not permission - it’s spam, and itwill likely be ignored.

Consumers grant permission only if they perceive that there’s somethingin it for them. And you’ve got about only 2 seconds to communicate whatthat something is.

Once you get permission, you must take care of it. If you cross a boundaryor do something that offends the consumer, he/she can instantly revokethe permission.

You can’t transfer permission from marketer to marketer. Remember, ifyou’re dating someone, you can’t just give someone else authority to go onthe date in your place.

Measuring permission is the first step to forging a stronger relationship. Ifyou track permission levels instead of reach or hits, you’re far more likelyto build this incredibly valuable asset.

Source: Seth Godin, 1999

Selected Permission eMail Marketing Vendors in theUS, 2001Opt-in lists Incentive &

loyalty programsPermission e-mail

outsourcers

PostMasterDirectYesMail.comBulletMailTarg-itE-target24/7 MailChooseYourMail

MyPointsSmallBiz SavingsClub Freeshop

NetcentivesCoolSavings

MessageMediaDigital Impact

BigFoot InteractiveFloNetworkNetcentives

Responsys.com24/7 Exactis

eMail newsletternetworks

Inbound/outbounde-mail

managementsoftware

List hosting andmanagement

software

Penn Media24/7 MailEngage Media eMailDoubleClick DART MailAdvertising.com

Brightware Inc.eGain

CommunicationseSupport Now

Kana

ListProcL-SoftLyris

MajordomoSparkLIST



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E. Opt-In vs. Opt-Out“Opt-in” and “opt-out” are concepts that have been developed to identifytwo kinds of privacy mechanisms adapted to permission e-mail.

The opt-out method of e-mail marketing involves giving consumers theoption of not receiving promotional messages after they’ve alreadyreceived a message. Under this system, messages can be sent until anindividual asks that they not be (i.e., the individual “opts out”).

The practice of requiring a prospect to click or unclick a checkbox on awebpage in order to avoid receiving e-mail is known as negative opt-inand passive consent. Under this scenario, if no action is taken, marketersassume that permission has been granted to add the individuals to theirmailing list.

With the opt-in method, consumers don’t receive a promotional messageunless they have checked a box and have actively agreed to receive suchmessages. Under this system, e-mail cannot be sent unless the individualhas expressly given permission.

Like all modes of online advertising, targeting and anticipating customerexpectations are key. Opt-in e-mail is the vehicle of choice, since therecipient’s consent provides a valuable way of profiling the recipient andtargeting the ad. According to a Jupiter Research study, 33% of consumersignore e-mail from unfamiliar parties. Without opt-in, advertisers may besending ads to a larger but less qualified list, or worse, have their adsperceived as spam.

A new study from Opt-in News shows that opt-in is the most frequentlyused method of customer acquisition.

Opt-in54%

Opt-out32%

Doubleopt-in14%

Source: Opt-in News’ Co-Registration Study, 2001

Methods of Acquisition Used by US Marketers, 2001


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Not surprisingly, e-mail users also have a marked preference for the opt-inmethod.

The debate over opt-in versus opt-out is not new, but it has become morecontentious of late. Many e-mail marketers and those in the anti-spamcommunity believe that any e-mail relationship that is not opt-in is spam.But many marketers reject this interpretation, arguing that sendingmessages not explicitly asked for is acceptable as long as they are relevantand people can easily opt out.

Opt-in79%

No opinion7%Opt-out

14%


US eMail User Preferences, Opt-In vs. Opt-Out, 1999

Problems with Opt-Out Method Experienced by USeMail Users, 2000

No, I have not had this problem

47%

Yes, but they do not affect my likelihood of purchasing from thatmerchant

5%

Yes, and I am less likely to purchase from that merchant again

20%

Yes, and I will never purchase from that merchant again

28%

Source: BizRate.com, 2000


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IMT Strategies found that over one-third of the marketers it surveyedfavored an opt-out policy, although none said that they preferred their e-mail marketing partners to use an opt-out policy.

eMail users overwhelmingly prefer opt-in versus opt-out e-mail, accordingto IMT Strategies, although opt-out proponents insist that the practice doesnot result in higher unsubscribe rates. Still, opt-out has become markedlyless acceptable and its use is declining.

One of the challenges with permission e-mail is the thin line betweenopt-out e-mail and spam. (Recall that even opt-in e-mail can be perceivedas spam if it is received more than expected and is not relevant.) Ifmarketers or websites take too broad a reading of a customer’s permission,the line between opt-in e-mail and spam can be blurred. Often permissiongiven in one instance can be abused in another context. If marketers use ane-mail address to sell unrelated and unsolicited products, or if thecustomer’s e-mail address is sold to other marketers, this can constitutespam, even if the customer originally gave permission.

Opt-in48%

Opt-out35%

No strongopinion

17%


Marketer Preference for Opt-In and Opt-Out Policy, 1999


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F. Outsourcing eMail Marketing ServicesForrester Research found that marketers who outsource the delivery and listmanagement of their e-mail have higher conversion rates than those that keepe-mail operations in house. The expertise these outsourcers provide is criticalfor creating detailed, sales-oriented reporting systems that allow marketers toimprove targeting and make more effective segmentation strategies.

While click-through rates for companies that outsource were only slightlybetter than for companies that don’t (10% versus 9%), purchase rates weresignificantly higher (6.0% versus 1.4%).

Leading e-mail marketing outsourcers include MessageMedia, DigitalImpact, FloNetwork and 24/7 Exactis.

These companies are sending millions of messages per month on behalfof hundreds of clients. The clients, in turn, pay them $0.01 to $0.25 cents(although $0.02 to $0.06 cents is the typical range), for each e-mailmessage delivered.

US eMail Functions Outsourced, 1999 (as a % of alle-mail functions)

Delivery 57%

List management 51%

Creative 20%

List purchasing 10%

Data analysis 8%


Purchase Rate

Click-through rate

1.4%

9.0%

6.0%

10.0%

How eMail Outsourcing Affects Click-Through andPurchase Rates, 1999

Companies that OutsourceCompanies that Don’t Outsource



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G. Opt-In eMailing ListsOpt-in e-mail networks and list brokers allow both consumer and businesse-mail users to select which kind of commercial offers they want to receive.Many of these are incentive-based services offering loyalty currencies.

Opt-in services usually send the message on behalf of the marketer,without providing them with their customers’ e-mail address.

Leading opt-in e-mail networks and brokers include PostMasterDirect,YesMail.com, E-target, MyPoints and 24/7 Mail.

Top opt-in list categories include music, entertainment, internet,computer software, computer hardware, sports and recreation, travel andleisure, and shopping, according to YesMail and E-target.

Opt-in networks, as well as e-mail marketing outsourcers, increasinglyoffer web-based campaign management, allowing marketers to analyzecampaign results and refine their messages and target audiences as thecampaign progresses.

Networks, like NetCreations’ PostMasterDirect, compile addresses ofpeople who sign up to receive promotional offers related to specificinterests that they identify. Members are given an opportunity to removethemselves from the lists each time they receive a mailing.

As of April 2001, NetCreations had more than 23 million e-mailaddresses in its PostMasterDirect database. NetCreations manages opt-in e-mail lists for more than 380 third-party websites including internet.com,About.com, LuckySurf.com, CNET and FortuneCity.com. Altogether,NetCreations claims it has conducted marketing campaigns on behalf ofmore than 2,000 direct marketing clients.

Like other opt-in brokers, NetCreations boasts response rates of between5% and 15%, the same range it claimed last year.

YesMail.com, another leading opt-in network, has a membership basethat now surpasses 16 million users, and is expanding at a rate of morethan 1 million new members per month, or 35,000 people per day.

eMail Co-Op DatabaseseMail co-op databases are designed to help marketers grow their in-houselists, and their increasing popularity means more e-mail will be sent tousers’ inboxes.

Digital Impact launched one of the first cooperative e-mail marketingservices, called Email Exchange Network (EMX). Through EMX, DigitalImpacts’ clients have access to millions of online consumers. Companiespartner up to send co-branded, theme-based e-mails that contain offersfrom each participant.

Worldata launched its e-mail co-op WorldataExchange.com. Websitesrecruit consumers to sign up through their websites. For each memberrecruited, marketers may extract two new names from the database fortheir e-mail marketing efforts.

NetCreations has also introduced an e-mail co-op.


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H. Incentive-Based ProgramseMail direct marketing services are now a staple offering of web-basedloyalty programs like Netcentives and MyPoints.

Rewards programs generally earn fees from advertisers based on thenumber of offers delivered to its members, the number of qualifiedresponses generated, and/or the number of transactions. These rewardprograms integrate targeted e-mail and web-based direct marketing offerswith online loyalty programs.

CoolSavings’ opt-in e-mail services consistently yield 5% to 15%response rates for advertisers, according to the company.

According to Knowledge Systems & Research, Inc., 60% of US internetusers participate in some kind of online loyalty program, including 42%who say they participate in such loyalty programs on online shopping sites.Rewards or free gifts and discounts were the most appealing aspects ofloyalty programs, according to the study.

Many loyalty solution providers have a private label or co-brandedoffering in addition to selling access to their opt-in subscriber base throughtheir direct e-mail marketing service. Virtually all of them have a web-based product, in addition to their e-mail opt-in offering.

Rewards orfree gifts31%

Discountedpurchase28%

Special considerationin purchasing

7%

Bettercustomerservice6%

Nothing28%

Source: Knowledge Systems & Research, Inc./Arthur Andersen, June 2000

Loyalty Programs Most Appreciated By US InternetUsers, 2000


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For example, MyPoints integrates targeted e-mail and web-based offerswith incentive points. Consumers opt in at www.mypoints.com by fillingout a detailed online survey of their interests. Once enrolled, members earnrewards points by interacting with the program’s sponsors, includingreading and responding to e-mail, visiting websites, participating in polls,dining out through MyPoints Dining!, and making purchases throughMyPoints Shopping!. MyPoints has more than 50 brand-name rewardsproviders, including Barnes & Noble and Macys.

Promotions.com’s PromoMail offers a suite of products and services thatintegrate promotions into targeted e-mail messages. They include opt-inlists, opt-in newsletters (Daily Reminder, Weekly Update and Affinity) and aprivate label promotions solution designed to boost e-mail response rates.

I. Presentation Formats:Text vs. HTMLAccording to Forrester, personalized HTML-enabled e-mail will becomeintegral to the online marketing process, helping increase sales and drivingtraffic to websites.

HTML mail is essentially a webpage sent straight to e-mail inboxes,complete with images and formatted text. Most of the major e-mail clientsnow support this technology.

Currently, companies typically offer subscribers the choice of receivinge-mail in text or HTML, or utilize HTML capabilities when possible.“Sniffing,” or format-sensing technology recognizes whether or not arecipient’s e-mail client software can read HTML. Users who can receiveHTML are then automatically sent messages that include graphics andother multimedia elements. Others are sent a plain text message.

Web content sites are particularly enthusiastic about HTML newslettersbecause they create an opportunity to extend the site’s reach from the webto the more private (and potentially personalized) space of the e-mail box.HTML newsletters also create new advertising opportunities, drive traffic tothe site and strengthen the relationship between the site and visitors.Instead of waiting for prospects and customers to visit their sites, marketerscan “push” the site to them. HTML allows advertisers to present their brandright in the e-mail. With HTML messages, advertisers will also knowwhether and when a message was opened.

eMarketer estimates approximately 60% of e-mail users in the US wereable to receive HTML e-mail by the end of 1999. It is worth noting that notall of those that can access HTML messages necessarily want to receivethem that way. However, estimates from other researchers are lower andrange from 45% (Netcentives) to 70% (FloNetwork).


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Some analysts estimate that one-third of subscription-based broadcast e-mail is currently sent in HTML, although the ratio can vary as much as 70%from one mailing list to another. Some newsletters, of course, are offeredonly in HTML, while others are offered only in text.

According to Digital Impact, nearly 40% of the people who receive e-mail from retailers subscribe to America Online and use its proprietary e-mail software. Messages targeted to AOL subscribers should be in plain textor formatted in rich-text format (with HREF Tags) that provide color, avariety of font sizes and clickable text.

Netcentives’ Post Communications says the ratio of recipients who canreceive HTML is entirely client dependent. However, the company providedeMarketer with a typical campaign format breakout.

Comparative Estimates: US eMail Users Who CanReceive HTML eMail, 2000

FloNetwork, Inc.* 70%

eMarketer 60%

Jupiter Reserach 60%

RadicalMail 60%

Engage 60%

Netcentives 45%–50%

Note: *Online consumersSource: eMarketer, 2001; various, as noted, 2000

eMail Format Ratios for Typical US Campaign, 2000HTML 45%–50%

AOL 20%–25%

Plain text 30%–35%

Source: Netcentives’ Post Communications, 2000

Text only39%

HTML only2%

Both50%

Neither9%

Source: ClickZ’s Delivering on Email Conference, April 2000

eMail Format Deployed by ClickZ eMail ConferenceAttendees in the US, 2000


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Finally, Opt-in News says that text-format ads dominate the e-mailadvertising space — 66% of direct e-mail campaigns were in text formatand 34% were in HTML or another form of rich media.

There is still insufficient quantitative research about the relativeeffectiveness of plain text versus HTML e-mail, although anecdotal evidencesuggests that HTML e-mail campaigns get 2 to 3 times higher response ratesthan plain text. Both Jupiter and Forrester contend that HTML e-maildoubles the response rate. Digital Impact claims response rates for messagessent in optimized text (clickable text) can increase by over 90% whencompared with plain text, and by as much as 250% for HTML e-mails.

However, according to the response data IMT Strategies examined frome-marketers, HTML messages did not generate significantly more click-throughs or conversions. While click-through rates were slightly higher onaverage for HTML campaigns (18.4%) than text (15.6%), conversion rateswere within a single percentage point of each other: HTML at 7.5% versustext at 6.6%. Bounce rates (i.e., undeliverable e-mail), interestingly, werenotably higher for text campaigns (8.5%) than for HTML (5.1%), butunsubscribe rates were higher for HTML (3.7%) than for text (2.7%).

Netcentives’ Post Communications points out that HTML response rateperformance compared to text is dependent on the client as well as on therelevancy of the content of the e-mail – not just the format that the content isdelivered in. Some clients see very similar CTRs between the two formats,while others see their response rates more than double when e-mail isformatted with HTML. On average, however, Post Communications estimatesthat the response rate is about 50% higher with HTML than with plain text.

HTML34%

Text66%


Text vs. HTML Used in eMail Campaigns, 2000


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Research data also indicate that the majority of e-mail recipients prefersimple text to fancy colors and graphics. Moreover, heavy users of theinternet are predisposed to text. More than half (52.5%) of all respondents toIMT Strategies’ 1999 survey report having actually received an HTML e-mail.

According to Forrester, 10% of e-mail recipients click through to thesender’s webpage, and about 2.5% of those customers make a purchaseduring the visit.

Response Rates by Format, 1999

Click through

18.4%

15.6%

Conversion

7.5%

6.6%

Bounce

5.1%

8.5%

Unsubscribe

3.7%

2.7%

HTML response rates Text response rates


Have receivedHTML e-mail52.5%

Never receivedHTML e-mail47.5%


US eMail Users Who Have Received HTML eMail, 1999


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However, of those who have received at least one HTML e-mail, only 36.1% saythey would like to receive more. The more experience a user has, the less likelyit is that he or she would like to receive more e-mail in the HTML format.

Age is also a factor in user attitudes toward HTML e-mail; younger e-mailusers like HTML e-mail more than older users.

The higher response rates seen with HTML e-mail may be attributed to thenovelty of the vehicle. Similar to banner ads and new forms of rich media,eMarketer expects the response rate to drop over time.

The most important point for marketers is that recipients should alwayshave a choice of formats, at least for the time being.

US Users Who Want to Receive More HTML eMail, byLength of eMail Use, 1999

Use e-mail 0-6 months 63.3%

Use e-mail 3+ years 32.2%

Average 36.1%


US Users Who Want to Receive More HTML eMail, byAge, 1999

18-30 48.6%

31-50 35.9%

51-70 20.6%



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J. Frequency and Timing of eMailCampaignsOn average, according to Forrester Research, companies send 2 e-mails permonth to their in-house list; internet pure plays tend to send more (averageof 3).

Michele Slack, senior analyst at Jupiter Research, says twice a month andno more than once a week is acceptable.

According to Kathryn Grant of Sharper Image, sending e-mail every 2weeks off-season and once a week during holidays is very effective.Unsubscribe rates go up if there is an increase in frequency.

The rule of thumb seems to be to send no more than one a week. Butallowing customers to select frequency of mailings is a growing practice.Lands’ End lets its customers choose whether they want to receive weekly,semi-monthly or monthly newsletters.

According to FloNetwork nearly one-third of online consumers said theywould like to receive permission-based e-mail once a week. However, another30% said they would like to receive it at least a couple of times a week.

A survey conducted by Iconocast seems to suggest that, by and large,e-mail marketers are adhering to the principle that less is more.

Volume of Permission eMails US Consumers WouldAccept from a Source, 2000

Daily 12%

Couple times a week 18%

Once a week 31%

Every other week 10%

Once a month 18%

Less than once a month 6%

Don't know 5%

Note: Respondents are those who send/receive e-mail at least once perweek and receive e-mail newsletters, alerts and promotionsSource: FloNetwork, Inc./NFO Interactive, June 2000


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The day of the week is also very important. Tuesday and Wednesday aregenerally considered the best days to send an e-mail campaign. Generally,mid-week deployment is recommended. And mid-morning or right afterlunch is the best time to have an e-mail arrive in somebody’s inbox.Sending e-mail after 3 p.m. should be avoided. Monday should be avoidedbecause people are catching up with the weekend’s mail and are deletinganything that does not appear essential. And Friday should be avoidedbecause people are wrapping things up for the week and are in a hurry toleave. Weekends, it is believed, are reserved for more social e-mailing.

According to Lee Troxler, Creative Director of eMarketing Messages,standalone e-mail ads work best going out on Monday morning, withperformance degrading as the week goes on. The opposite is true with adsin e-mail newsletters, which work best on Fridays.

Promotional eMails Sent by Selected US Marketers ona Monthly Basis, 2000-2001eMailer December 2000 January 2001 February 2001

1-800-FLOWERS.COM 3 3 3

800.com 5 2 2

Amazon.com 1 1 1

AvantGo 1 1 1

BananaRepublic.com 4 4 3

Barnes & Noble.com 5 2 2

Bigstep.com 2 2 2

Citibank 1 1 1

ClickRewards 5 2 2

DVDinsider.com 4 5 4

Egghead 2 4 4

Frontgate 2 1 1

FTD.COM 2 1 2

fusionOne 7 3 1

IGive.com 5 4 2

Microsoft 5 3 2

MSN 9 4 4

NetFlix – – 9

Outpost.com 5 5 5

Sears.com – 7 4

Victoria's Secret 2 3 4

Williams-Sonoma 2 1 0

wine.com 5 4 5

Source: Iconocast, March 2001


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K.Viral MarketingSo-called viral marketing (also referred to as “affinity,” “advocacy” or“referral” marketing) has become a popular tactic online because it is bothcheap and highly effective. Essentially, viral marketing entails getting thecustomer to spread your message or product, leveraging the network effectof the web.

The most well-known example of viral marketing is Hotmail, a free e-mail service provider (now owned by Microsoft) that tags every one of itse-mail users’ messages with its own offer. With a paltry $500,000marketing budget, Hotmail signed up 12 million accounts in less than ayear – and the customers did most of the work.

ICQ, the real-time chat service owned by America Online, is anotherexample of what Iconocast refers to as “harnessing the evangelical zeal ofcustomers” to achieve tremendous ROI.

Other companies cited as examples of successful viral marketing includeeGroups, Amazon.com and GeoCities.

Such referral-based marketing programs, in which customers spread themarketing message amongst themselves, are highly efficient.

According to a December 1999 Jupiter Research study, viral marketing isthe most popular tactic used by online firms, as 80% claim they use someform of it. Jupiter also claims that of people who receive viral messages,81% pass them on to at least one other person. Nearly half, or 49%, pass themessage on to two or more persons.

With messages from internet companies getting lost in the ad clutter, viralmarketing offers websites an alternative method for generating publicityand traffic. According to a 1999 Jupiter report:

■ 24% of consumers say they learn about new sites via magazine andnewspaper ads

■ 18% cite television ads■ 57% say that word of mouth or viral marketing is their main source of

information about new sites

According to Jupiter Research, 5% to 15% of people who receive viralmessages click through or follow the links.

Forrester Research found that 56% of online users say they find outabout websites they visit through viral marketing.

Viral Marketing:

Structuring your business

so that customers bring

in their friends, who in

turn recruit their friends,

and so on (Internet World)


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Permission e-mail outsourcers are getting in on the trends. Digital Impactintroduced Forward to a Friend, an application designed to help marketersexpand their e-mail lists. The application allows marketers to deliver e-mailoffers to customers who can easily forward them to as many as 20 friends.Customers who receive Forward to a Friend e-mails then have the ability tosubscribe to the e-mail list. Forward to a Friend also allows marketers totrack e-mail campaign results from their original list of recipients all theway through to forwarded e-mails at the individual level.

Viral marketing is not without controversy or risk. Fogdog Sports andIkea attracted unwanted attention when their viral marketing efforts werecompared to spam. Fogdog’s Draft-a-Friend program involved rewardingcustomers for turning over their friends’ e-mail addresses to the company.The more names a customer offered, the higher the value of the reward.Ikea offered savings of up to $75 if shoppers sent 10 friends an onlinepostcard announcing a new store opening.

Search engines

Link from another site

Viral marketing

Television

Guess the URL

Radio

80%

59%

56%

48%

22%

19%

Note: Multiple responses accepted Source: Forrester Research, June 2000

How US Surfers Discover Websites They Visit, 2000

Merchandise deals and promotions

Social/political messages and petitions

Warnings and advisories (e.g. about scams/viruses/etc.)

None of these

12.3%

12.6%

26.8%

48.3%

Source: Vault.com's E-mail Behavior in the Workplace Survey, May 2000

Type of Viral Marketing Message Most Likely to BePassed On in the US Workplace, 2000Which type of viral marketing message are you most likely to pass on?


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Marketer enthusiasm has led to the increase of incentive-based viralmarketing, where customers receive products, services or cash as a rewardfor passing on a company’s message.

Of course, like anything else on the internet, viral marketing will becomeincreasingly ineffective as more marketers use the technique.

Companies, such as Qbiquity, have emerged that provide thetechnological infrastructure and strategic planning for launching, runningand optimizing word-of-mouth marketing plans.

L. PersonalizationWith personalized e-mail, each message is customized using preferencesand other data stored in the customer database. The ability to personalizemessages can transform the perception of advertising as something that isintrusive into something that adds value and is even welcomed by webconsumers.

The shift from traditional demographic segmentation to more sophisticatedpersonalization will make e-mail marketing increasingly powerful.

With retention e-mail, companies can use the information it hascollected about the customer to reduce the costs of customer support, createfollow-on sales, and build lifetime relationships with customers.

What Is Personal Relationship Marketing?Personal relationship marketing leverages the power of word-of-mouth tohelp companies acquire and retain more qualified customers. Personalrecommendations have been shown to be a highly effective marketingchannel, especially in the online world. People are more likely to listen toand act on their friends' recommendation than any other source ofinformation including online advertising, promotions or even news.

Source: Qbiquity, 2000

What Is Personalization and How Does It Work?Personalization is a set of techniques and technologies used to anticipatecustomer or prospect needs and provide them with a more valuableexperience on your site or in your e-mail communications. The personallyrelevant content, functionality and navigation of personalized webpagesand e-mails can provide promise to increase the perceived value of thecontent companies offer customers, and, thereby, enhance customerrelationships. According to Matt Chadsey, former senior project managerof Luminant Worldwide Corporation, there are three general levels ofpersonalization

1. Allow users to customize experience on a website by selectingfrom a series of templates and content options

2. Use of data-mining techniques to provide information andrecommendations based on user's behavior or the behavior of a profilegroup

3. Advanced personalization engines combine user profiling, tracking anddynamic content to anticipate and prioritize the information andfunctionality that users want most during their visits.

Source: Matt Chadsey, 2001


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International Data Corp. claims that 60% of the leading e-commerce sitesalready have some form of personalization in place. ActivMedia agreedthat nearly two-thirds of consumer and B2B e-retailers collect andmaintain user or customer data at their websites.

The information that is most often collected and retained is e-mail address,name and offline contact information, according to ActivMedia.

Personify’s Proactive for Email product lets e-commerce sites launch e-mailmarketing campaigns that match actual and predicted customer behaviorto targeted e-mail offers. Digital Impact, MessageMedia and Netcentive’sPost Communications use Personify’s technology to provide clients withthis capability.

Marketers hope that highly personalized e-mail content and productofferings will counter the e-mail response erosion due to the overwhelmingpopularity of e-mail marketing.

Collect data65%

Do notcollect data35%


Consumer and B2B eRetailers Who Collect Customer Data at Their Websites, 1999

79%

90%

94%

50%

41%

33%

22%

22%

Source: ActivMedia Research 1999

Data Collected by Consumer Marketers, 1999

Webpage visit data

Other pers. info

Credit card numbers

Prospect/inquiry names

Past purchasing history

Offline contact info

Customer names

eMail address


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There is tangible evidence that the investment in personalization enginespays off relatively quickly, often in as little as 6 months. Personalization, or“suggestive selling,” Jupiter Media Metrix posits, could contribute 34% of aweb marketer’s sales revenue within the first year of implementation.

International Data Corp. reports that users visit personalized websites 2to 4 times more often than they do non-personalized sites.

Engage claims that viewers are 50% more likely to click on web adspicked by its profiling technique than on ads placed to fit a page’s content.

Netcentives’ Post Communications sees an 8% greater click-through ratewith targeted messaging compared to untargeted e-mail messages.

Cyber Dialogue contends that personalization was the most effective wayto grow repeat traffic and relationships with customers. However, the studycautioned that under-delivering a personalized experience (compared tocustomer expectations) can be a brand killer. (Readers should note thatCyber Dialogue, as a CRM solutions provider, has an interest in promotingpersonalization.)

According to an internet marketing survey conducted by KnowledgeSystems & Research, Inc., 80% of online users in the US have providedpersonal information. On average, respondents have provided personalinformation to 12 sites (median of 5) in order to receive personalizedinformation. In return for providing personal information, KSR reports, onlineusers expect better pricing, no junk mail, removal from lists if requested,confidentiality, free gifts, good service and personalized information.

What Websites US Internet Users Say They HaveGiven Personal Information, 2000

Online shopping 56%

Travel 40%

News & Information 26%

Investing 20%

Business 16%

Other 18%

None of the above 20%

Source: Knowledge Systems & Research, Inc./ Arthur Andersen, June 2000


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The biggest potential obstacle to the growth of personalization, of course, isthe privacy issue. About half (49%) of internet consumers think sharinginformation invades their privacy, according to a Cyber Dialogue survey.

A study by the Center for Democracy and Technology found that themajority of respondents (86%) said they avoid giving out personalinformation online, and 60% claim they will not purchase online becauseof privacy concerns. The survey also indicated that 97% of online userswant to know an e-tailer’s privacy policy before interacting with a site.

A 1999 survey from Opinion Research and DoubleClick (obviously aninterested party in the controversy) indicated that 68% of people werewilling to give out some form of personal information, but only 51% wouldbe willing to give out information on online purchases. Another 53% werewilling to give out the information that advertisers really want: thecombination of website visits and online and offline purchases.

Why US Internet Users Like Website Personalization,2000

Deliver more relevant content

71%

"Remember" preferences and interests, based on user input

65%

Automatically "learn" user's interest based on visits to the site

43%

Deliver more relevant marketing messages

38%


Types of Information Internet Users Are Willing toDivulge, 1999

Some form of information

68%

Website visits

58%

Online purchases

51%

Offline purchases

53%

Offline and online purchases

52%

Combination of the visits, online and offline purchases

53%

Source: Opinion Research/ DoubleClick, November 1999


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A May survey conducted by Knowledge Systems & Research found thatonly one-third of online consumers were uncomfortable sharing personalinformation online.

However, consumers expressed general concern about their privacy whenshopping or browsing online.

How US Internet Users Feel About Sharing PersonalInformation Online, 2000

Very uncomfortable

Neither

Very comfortable

Somewhat uncomfortable

Somewhat comfortable

4%

9%

12%

28%

43%

Source: Knowledge Systems & Research, May 2000

Extremelyconcerned15%

Not at allconcerned6%

Somewhatconcerned50%

Veryconcerned29%


US Internet Users’ Concerns about Privacy WhenShopping or Browsing Online, 2000


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Two-thirds said they were very likely to share their personal e-mail address(although only one-third felt that way about their business e-mail address).Consumers said they were far less likely to share other personal contactinformation.

20%

17%

8%

33%

23%

2%

Home address

Home phone number

Credit card number

Business e-mail address

Business phone number

Social security number

65%

59%

66%

35%

42%

16%

15%

66%

Personal e-mail address

33%1%

24%

25%

32%

35%

82%

Types of Information US Internet Users Are Willingto Divulge, 2000

Not at all likelySomewhat likelyVery likely

Source: Arthur Andersen, 2000


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However, for the vast majority of respondents, discounts and free shippingoffers were likely to change their willingness to share such information.Personalized newsletters and e-mails were less likely to serve as anincentive.

How Incentives Affect Internet Users' Willingness toShare Personal Information, 2000

Discount purchase

26%

50%

24%

Free shipping

26%

50%

24%

Drawings for cash/prizes

38%

47%

15%

Coupon for future purchases

38%

48%

14%

Personalized newsletters and e-mails

45%

47%

8%

Not at all likely Somewhat likely Very likely



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Cyber Dialogue found that most consumers were willing to provide siteswith many kinds of personal information, including name and level ofeducation, as well as their special interests.

FloNetwork’s survey showed that the majority of online consumers (55%)were willing to part with personal information in exchange for morepersonalized services or offers, provided there was a clear privacy policy.Furthermore, more consumers who had purchased products online withinthe past 3 months were willing to reveal such information, compared toonly 40% of consumers who had not purchased during that period. And67% of those who purchased 4 or more products in the past 3 months werewilling to exchange more personal information for increasedpersonalization.

Type of Information US Consumers Are Willing toProvide Site, 1997 & 1999

Name

88%

67%

Level of education

88%

90%

Age

86%

89%

Short survey about my attitudes towards the internet

85%

87%

Hobbies/Special interests

83%

90%

Household income

59%

44%

Salary

41%

29%

Credit card number

13%

4%

1999 1997



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And Cyber Dialogue found that consumers were willing to have websitesshare their personal information – including which products they buy onthe site – with other sites in return for customized content.

A survey by the Personalization Consortium last March found that 58% ofusers won’t give any personal data to a website that doesn’t post its privacystatement.

Information Acceptable for a Website to Share withOther Sites in Return for Customized Content, 2000

Promotions I respond to

56%

What ads I click on to

52%

A short survey about my attitudes concerning the internet

50%

Products I buy on the site

48%

My hobbies/special interests

47%

My age

41%

My level of education

39%

My name

30%

My mailing address

17%

My household income

14%

My salary

13%

My credit card number

1%

None of the above

29%



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According to Forrester Research, 50% of online consumers want thegovernment to regulate online privacy.

As DoubleClick found out, personalization based on personal profiling isa minefield. The company ran into a hornet’s nest of controversy when itannounced its plans to link data collected about generic purchasing andviewing habits on the web with the actual identities of the surfers throughthe Abacus Direct database of consumer purchasing habits. While this stepflows inexorably from the logic of targeting and personalization it was notreceived well by the public.

Partly as a result, there are more than half a dozen bills pending on theissue of consumer online privacy and profiling.

In an effort to forestall legislation, online marketers negotiated aproposal with the FTC on how to handle such information and activity.

Linking information gathered from both on- and offline sources is theultimate aim of web advertising. Whether web surfers will agree to thisremains to be seen. Ad networks like DoubleClick and 24/7 Media believethey can build segregated databases and still create significant value, but tosome extent, they are putting on a brave face until the situation evolvesand is resolved.

Web surfers have strong feelings about which situations areinappropriate to ask for personal information. A majority of 71% feel it isinappropriate to ask for personal information every time they visit a site,and 70% feel it is inappropriate to ask for information when they inquireabout products.

Some advertisers are hoping they can trade free services or cash forpersonal information. Several companies want to be the first to presentconsumes with a Faustian bargain: “Give us your personal information andwe’ll pay you for it.”

Other companies propose to give members full control over theirpersonal profile and enable them to shop in a way that is invisible tomerchants and advertisers.

Several state anti-spam

laws have been struck

down by the courts,

either for improperly

restricting free speech or

for trying to regulate

interstate commerce.

When Not to Ask for Personal Information, Accordingto US Internet Users, 1999

Every time site is visited 71%

Inquiring about products 70%

Requesting information from a site 61%

Making a purchase 28%

Conducting transaction 24%



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M. Integrating eMail withinMarketing/Media MixAs e-commerce grows, a deeper understanding is evolving of how to usethe web as part of an integrated advertising campaign. Advertisers arerealizing that while the internet may be a better medium for targetingdirect response and maintaining relationships with customers, traditionalmedia continues to excel at building brand awareness and namerecognition. In the same way, e-mail marketers will find they can boost e-mail campaign response by using traditional media, including direct mailand telemarketing to raise awareness of pending offers, for example.

A Jupiter Research/NFO Interactive survey found that 49% of onlineconsumers surveyed said that they were more likely to respond to an e-mailmarketing message if they had seen an ad or commercial for the companyor product recently.

Advertisers are relying on offline advertising to brand and drawcustomers to their websites. Once on the site, advertisers can use theinternet and e-mail to provide deep targeted information to inform, provethe value of their product and make a sale.

Traditional media each have a role in an integrated marketing campaign.TV, for example, still provides the largest reach.

To build a major online brand today, companies still have to do it theold-fashioned way, through television, radio and print. Acquiring mindshare is expensive.

Many traditional catalog companies are leading the way in integratingadvertising – making clicks, bricks and catalogs work together. Williams-Sonoma, for instance, linked its store gift registry to its website, allowingbrides to see who has bought what in real time. Conversely, e-commercesites are investing in print catalogs.

eMail marketing involves great opportunity as well as significant risk.Risks include privacy violations, e-mail saturation and consumer ire whenthe line between permission and spam is unwittingly crossed.

There is also the risk of tarnished brand and corporate reputation simplyby being lumped in with spammers, who include pornography peddlers andget-rich-quick hustlers.


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N. eMail NewslettersThe growth of e-mail newsletters has been exponential. Penn Media, the800-pound gorilla of online newsletters, recently announced that it hadover 50 million subscribers to their various newsletter offerings. That’s a lotof news and a lot of exposure.

Naturally, free enterprise being what it is, nobody should actually expectto get a “free” newsletter that’s really free. After all, these newsletters aredesigned as vehicles to establish and maintain customer relationships.Invariably, there’s going to be some advertising thrown in for goodmeasure. And studies suggest that that’s a smart marketing idea.

Overall, newsletters fall under the rubric of Customer RelationshipManagement or CRM. While CRM newsletters are indeed marketingvehicles, the best ones contain information of perceived value about apertinent topic. As a customer communications tool, e-newsletters areunparalleled. They can be distributed at a very low cost, they drivesubscribers back to websites to learn more about a particular topic, and, ofcourse, they can generate revenues through paid advertising.

Newsletters often have other advantages. If the news is particularlymemorable, the newsletter is often forwarded to other people by therecipient, thereby garnering additional exposures to the advertisements.Moreover, some e-newsletters are printed and saved, guaranteeingadditional exposure.

The potential drawback to e-newsletters is that it does limit creativeoptions. Many e-mail newsletters are text only and the advertising spaceavailable is limited to a certain number of lines and characters. But an all-text ad that is saved and forwarded is often preferred to a highly styledHTML e-mail ad that gets deleted before you can say spam.

Finally, e-mail newsletters provide marketers with targeted exposure ona regular basis. While consumers may understandably become annoyedwith frequent e-mail ads, a weekly newsletter they’ve asked to receive facesno such resistance. Indeed, a weekly or even daily e-newsletter is oftenwelcomed by the recipient. The key is to provide subscribers with genuinevalue and not simply a transparent advertising vehicle.

According to a recent Clientize survey, 41.4% of Folio: 500 magazines inthe US that have websites publish e-mail newsletters. The study also foundthat 42% of the publications with e-newsletters experience article click-through rates of 20% or greater.


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Clientize questioned 207 Folio: 500 magazines (44 magazine publishers) inFebruary 2001 and found that 36% believe that driving traffic to thewebsite is the most important reason to have an e-newsletter.

Most e-newsletter publishers (69%) employ opt-in procedures. However,31% do not obtain permission from their subscriber base to send additionaloffers and information. As for e-advertising, nearly all of the publishers(93%) accept ads in their e-newsletter. In fact, 34% of respondents report a5% click-through rate for the e-ads they feature.

Clientize mentions that more than a majority of magazines have beenpublishing an e-newsletter for more than 12 months, use existing staff fortheir e-newsletter and outsource e-mail distribution services.

Primary Purposes of eNewsletters, 2001

Drive traffic to website

36%

Generate ancillary revenue

33%

Generate subscriptions to print brand

16%

Source: Clientize/Folio, 2001

eNewsletter Advertising Packages, 2001

Combined website/e-newsletter 67%

eNewsletter only 57%

Combined print/e-newsletter 43%



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Most survey respondents do not believe their e-newsletters will be highlyprofitable by 2005 — 44% say they will generate less than $100,000annually, 25% project annual revenues of between $100,000 and $499,999and only 18% predict annual revenues of $500,000 or more.

According to a survey by List-Universe, newsletters aimed at consumershad a median average of 21,350 subscribers, sold ads for a median of$4.00/thousand and experienced a median advertisement click-throughrate of 1%. B2B newsletters had a median average of 5,670 subscribers, soldads for a median of $45.00/thousand and experienced a medianadvertisement click-through rate of 2%.

A study by the META Group says click-through rates of 15% andconversion rates of 5% are common for e-newsletters.

Newsletters with product information were rated the most effective typeof e-mail by respondents to a 1999 ActivMedia internet marketing survey.

eNewsletter Publishing Experience, among US Folio:500 Magazines, 2001

Use existing staff for e-newsletter

73%

Outsource their eMail distribution

57%

Have published e-newsletter for more than 12 months

56%

Outside service manages eMail distribution list

39%

Outsource ad management

16%

Outsource editorial content

7%


Cost Comparison between CPM, CTR & CPC, 2001CPM CTR CPC

Newsletter (1) $5.00 1.25% $0.40

Rented eMail lists (2) $200 3.5% $5.71

Website banners (3) $30.52 0.4% $7.63

Source: (1) List-Universe.com, 2001; (2) Forrester Research, 2001; (3)Adknowledge, 2001


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O. Rich Media/Enhanced FeaturesRich media e-mail marketing typically refers to e-mail messages thatdeliver a mix of sound and video or animation. The main drawback, ofcourse, is that not everyone can receive rich media e-mail, including AOLsubscribers. In addition, the large size of these e-mails means thatdownload times, especially for consumers using dial-up modems, can bepainfully slow. Nevertheless, many marketers are availing themselves ofthese new e-mail techniques.

One of the newer e-mail marketing features is transactional e-mail. Acompany called Cybuy, for example, offers a technology that allowsconsumers to purchase an item directly from an e-mail, without having toclick to a different page and complete a lengthy checkout process.

In a recent interview with eMarketer, Cybuy CEO Dominic DiMasciadiscussed the results of a study they recently commissioned from HarrisInteractive. Of the more than 2,000 respondents, 72% who have receivedmarketing e-mails selling a product said their unwillingness to initiate apurchase was influenced by the lengthy checkout process. However, 62% ofthese respondents said that if they were interested in a product, they wouldcomplete a purchase if given the opportunity to buy directly from e-mail.Additionally, 54% of the respondents indicated they would considermaking a spur-of-the-moment purchase if the checkout procedure wassimple and direct, with 10% saying they would be very likely to do so.

A new development has been dubbed “face mail.” These are e-mails thatcome equipped with computer-manipulated images of real models to readyour e-mail to the recipient. Initial problems with the technology includedifficulty using the application at offices where firewalls can be a problemas well as the somewhat odd computer-sounding voice. Using face mailalso requires a separate download.

Type of eMail Content Rated "Effective" byRespondents, 2000

Newsletters with product information

37%

Product bundling/price promotion

29%

Letters from company management

22%

Newsletters with entertaining editorial

20%



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P.Wireless eMailMany people already retrieve e-mail on their PDAs or other devices such asa Blackberry. According to IMT Strategies, wireless e-mail is set to explodeover the next few years. The research firm reports that 52% of wirelessusers and 40% of non-users are interested in wireless e-mail. ITM Strategiespredicts that wireless e-mail users will grow from less than 500,000 todayto 15.6 million by 2001. At the moment, only a small percentage of wirelessusers have wireless e-mail or messaging.

In addition, cell-phone carriers have begun to offer the ability to accesscorporate e-mail on their phones. Given that many e-mail marketers timetheir campaigns to reach recipients while in the office, presumably on adesktop computer, this has vast implications. With the spawning of wirelesscorporate e-mail, marketers may have to adjust their technique. Apart fromthe timing issue, they must also consider how their e-mail, designed to beopened and read on a desktop computer, will appear on a wireless device. Itwould not be unreasonable to assume that harried employees — perhapsalready somewhat annoyed at having their work e-mail follow themaround — might simply delete a message that can’t be read easily on awireless device.

Perhaps even more frustrating for e-mail marketers is that there willreally be no way of telling from where recipients check their office e-mail— or what they’re checking it on. If it could be determined, to a reasonabledegree of certainty, whether or not e-mails are read on a wireless device,then the creative could be adjusted accordingly. The virtual impossibility ofmaking that determination, however, may lead to a “dumbing down” of e-mail creative so that it can be read in either environment. While manypeople already choose “Text” instead of “HTML” when signing up fornewsletters and such, there are also a whole host of e-mail marketers whounderstandably pride themselves on the technical sophistication of theirmessages. That talent may be wasted, however, if wireless e-mail becomespervasive.

Capabilities Available to US Wireless Users, 2000Business Consumer

Paging 38% 22%

Wireless caller ID 38% 30%

Wireless e-mail/messaging 16% 8%

Two-way radio 15% 2%

Wireless net access 12% 5%

Wireless data 7% 4%

PDA with communication 3% 2%

Source: Constat/The Kelsey Group, 2000


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According to a study from The Strategis Group, however, 66% of wirelessmobile users in the US are not interested in wireless access to the internet,and 63% do not want wireless e-mail.

According to Gartner Group, the number of wireless text messages sentworldwide each month has reached 12 billion. While 9 billion of thesemessages originate from PCs, PDAs and mobile phones, pagers account foran additional 3 billion.

Interest in Wireless Access among US Internet Users, 2000

Definitely interested

11%

7%

Probably interested

10%

10%

Maybe interested

17%

18%

Probably not interested

24%

27%

Definitely not interested

39%

39%

Want wireless e-mail Want wireless internet access

Source: The Strategis Group, 2000

Cellphones Capable of Sending/Receiving SMS,1999-2002 (in millions)

1999

37

2000

61

2001

85

2002

110

30

90

150

Source: The Yankee Group, 2001


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According to a study conducted by Human Interface in Japan, an averagemobile phone user has about 12 people to enjoy e-mails with, and sendsabout 11 messages a day with their mobile phone. Asked who they send e-mails to, 72% said that their “pen pals” are friends only.

Amazingly, wireless spam has already become a problem. In Novemberof 2000, the Wireless Ad Association put forth a list of industry guidelinesthat said “The WAA does not condone wireless targeted advertising orcontent (push messaging) intentionally or negligently sent to anysubscriber’s wireless mobile device without explicit subscriber permissionand clear identification of the sender.”

There is presently a bill pending in Congress to outlaw wireless UCE.

Methodology

I Overview

II Market Revenues


IV eMail Users

V eMail Volume


Index of Charts 141


141



142

The eMail Markting Report

Index of Charts Index of ChartsWelcome to eMarketer 5

Methodology: The eMarketer Difference 7

I. Overview 9



eMail Is Ubiquitous 10

Push Beats Pull 11

eMail Cuts Costs 11

Average Cost per Message in the US, 2001 11

Direct Marketing Cost per Piece in the US, 1999 12

eMail CPM and Banner Ad CPM Rates, 2001 12

CPM Rates for eMail Marketing Ad Networks, 1999-2001 13

eZine eMail Marketing Spending, 2001 13

eMail Marketing Ad Network Payment Options in the US, 2001 (as a % ofpayment type) 13

eMail Offers Short Time to Market 13

eMail Drives Site Traffic 14

How Internet Users Discover New Websites, 1999 14

eMail Strengthens Your Brand 15

Brand Value = Customer Relationship 15

eMail Offers Higher Click-Through/Direct-Response Rates 15

Mail and Banner Ad Click-Through Rates (CTR), 2001 16

eMail Marketing Ad Network CTR, 2000 16

Comparative Estimates: Average Opt-In eMail and Banner Ad Click-Through Rates in the US, 2001 17

Comparative Estimates: Average Click-Through Rate of eMail Advertising, 2001 18

Comparative Estimates: Click-Through Rates, by List and Media Type,2000 18

US Open Rate of HTML Messages by Acquisition vs. Retention, 1999 19

eMail Marketing Click-Through Rates in the US, by Audience, 1999 19

Click-Through Rates of eMail Messages in the US, by Campaign Objective,1999 19

Response Rates and CPMs of eMail Media, 2000 20

eMail Creates Sales 20

eMail Click-Through and Conversion Rates in the US, by Campaign Goal,1999 21

US Conversion Rates for Sales by Retention and Acquisition, 1999 21

Comparative Estimates: US eMail Marketing Conversion Rates, 1999 22

How Often Online Shoppers Say eAdvertisements Trigger a Purchase,2000 22

eMail Offers Targeting 23

eMail Is Measurable 23


143


Index of Charts Online Advertising ROI: Four Common Methods, 2001 24

US Cost Effectiveness of eMail Compared with Other Target MarketingVehicles, 1999 25

eMail Improves Customer Relationships 26

II. Market Revenues 27


eMail Marketing Spending in the US, 1999-2003 (in millions) 28

Comparative Estimates 28

Comparative Estimates: eMail Marketing Spending in the US, 1999-2005(in millions) 28


eMail Advertising Spending in the US, 1999-2003 (as a % of total e-advertising spending) 29

eMail Advertising Spending in the US, 1999-2003 (in millions) 29

eMail Advertising Spending and Total eAdvertising Spending in the US,1998-2003 (in millions) 30

eMail Advertising Spending in the US, by Category, 1999-2003 (in millions) 31


Comparative Estimates: US eMail Spending on Opt-In eMail Lists forCustomer Acquisition, 2003 (in millions) 31

US eMail Acquisition Services Revenues, 1999-2004 (in millions) 31

US Spending on eMail Acquisition Services and Sponsored Newsletters,1999-2005 32

eMail Ad Dollars in Perspective 32

US eMail Advertising and Traditional Direct Mail Spending, 2003(in millions) 32

Comparative Estimates: eMail Cannibalization of Traditional Direct MailSpending, by 2004 32


Comparative Estimates: US Permission-Based eMail Marketing Spending,by Category, 2000 (in millions) 34

Comparative Estimates: Permission-Based eMail Marketing Spending, byCategory, 2003 (in millions) 34

eMail Retention Services Revenues, 1999-2004 35

eMail Acquisition and Retention Services, 1999-2004 (as a % of total e-mail marketing service revenues) 35

eMail Retention, Sponsored and Acquisition Services, 1999-2005 (as a % of total marketing e-mail spending) 36

III. Corporate Penetration 39

Companies Sending Marketing eMail, 2001 40

Comparative Estimates: % of US Companies Using eMail Marketing,2000 41

Top Direct Marketing Methods, 2000 42

How US Direct Marketers Use In-House eMail Lists and Cost, 2000 42

How US Online Catalogers Use eMail, 1999 & 2000 43

Type of Sites That Send Marketing eMail, 2000 43


144


Index of Charts Customer Service Capabilities Considered Indispensable by US Companies, 2000 44

eMail Marketing Spending by US Companies, 1999 & 2004 (in thousands) 44

IV. eMail Users 47


US eMail Users, Aged 14+, 2001 (in millions and as a % of adult population) 48

Percent of US Online Adults Participating Monthly, 1998-Q1 2000 48

Comparative Estimates: US eMail Users, 2001 (in millions) 49

US eMail Users, Professional and Personal, 2000 49

Multiple eMail Accounts

Comparative Estimates: eMail Accounts per User, 2000 51


eMail Boxes in the US and Worldwide, 1999 & 2000 (in millions) 51

Type of eMail Boxes Worldwide, 2000 52

US and Worldwide eMail Boxes, 2000-2005 (in millions) 52

Consumer and Business eMail Boxes, 1998-2002 (in millions) 53

US Internet Users’ Reasons for Changing Their eMail Address, 2000 53

US Internet Users’ Reasons for Never Changing Their eMail Address,2000 54

C. User Profile 55

Demographic Profile of the Average US Inhabitant and the Average USInternet User, 2000 55

Income 56

US Individual eMail Use, by Household Income, 1999 56

Gender 56

US eMail Adoption, by Gender, 1999 56

Why People Use email 57

How US Users Rate the Importance of eMail and the Internet, 1999 57

How US Consumers Rate eMail Vs Traditional Mail, 1999 57

How US Consumers Prefer to Communicate, 2000 58

Time Spent Online and on email 59

Average Time Spent Online among Active US Internet Users, 2000 59

US Internet Usage Habits: eMail vs. Web, 2000 59

Time Eudora Users Spend on eMail per Day, 2000 60

eMail Accessed from Homes in the US, 1999-2003 (as a % of internet users) 60

How Often US Users Check Their eMail, 2000 61

Impact of Gender on eMail Use and Attitudes 61

Usage Patterns 62

US Online Consumers Who Say Advertising Influence Their PurchaseDecisions, 2000

Attitudes and Usage Patterns 62

How US Internet Users View Permission Marketing, 2000 63


145


Index of Charts US User Attitudes toward Permission Marketing, 1999 63

How US Internet Users React to Permission Marketing and Spam, 1999 64

How US Internet Users View Permission Marketing and Spam, 1999 64

How US Consumers Find Out About New Products, Services or Promotions, 2000 65

How US Consumers Prefer to Be Contacted by Online Merchant, 2000 66

US Internet Users Who Have Signed Up for Permission eMail, 1999 67

US Internet Users Who Provide Personal Data for Incentive Programs,1999 67

How Often US Internet Users Reply to Permission eMail and to Spam,1999 68

US Users Who Have Clicked on a Website Promoted by Permission eMail,1999 68

User Attitudes toward Spam 69

How US Internet Users View Marketing eMail, 2000 69

How US Internet Users Regard Spam, 1999 70

How US Internet Users Regard Spam, 1999 70

US User Attitudes toward Spam, 1999 71

Primary Reasons Why US Internet Users Dislike Spam, 1999 72

US eMail Users Who Have Purchased Products Advertised through Spam, 2000 72

How US Internet Users Think Spammers Obtain eMail Addresses, 2000 73

How US Internet Users View Spam Legislation, 2000 73

How US Internet Users Think Spam Should Be Regulated, 1999 74

Preferred Solutions to Spam among US Internet Users, 1999 75

Actions Taken against Spam by US eMail Users, 1999 75

V. eMail Volume 77


US eMail and Postal Letters Delivered, 2000 (in billions) 78

eMail Message Volume in the US, 1999-2003 (in billions) 78

of eMails Sent per Day Worldwide and in North America, 2000-2005 (in billions) 79

B. Permission email 80

Permission eMail Message Volume in the US, 1999-2003 (in billions and as a % of total) 80

US Annual Growth of Permission eMail and Total eMail Volume,2000-2003 80


Comparative Estimates: Distribution of Permission-Based Commercial eMail, 2000 (in billions) 81

Comparative Estimates: Distribution of Permission-Based Commercial eMail, 2003 (in billions) 81

US Distribution of Permission-Based Commercial eMail, 1999-2005 (in billions) 81

US Distribution of Marketing eMail, 1999-2004 (in billions) 82


146


Index of Charts Permission eMail Volume by Type 82

US Permission eMail Volume, by Type, 2000 (in billions) 82

US Permission eMail Volume, by Type, 2003 (in billions) 82

Comparative Sources 83

Comparative Estimates: US Permission eMail Volume, by Type, 2000 (inbillions) 83

Comparative Estimates: US Permission eMail Volume, by Type, 2003 (inbillions) 83

Commercial eMail Messages Sent per Year in the US, 1999-2005 (in billions) 84

C. Spam 84

Unsolicited eMail Messages Received in the US, 1999-2003 (in billions) 84

Unsolicited eMail Message Volume in the US, 1999-2003 (as a % of commercial and total e-mail) 85

Average Number of Unsolicited eMails Received per Week in the US,2000 85


Average Number of eMails Received by US Users per Day and Week,2001 86

Comparative Estimates: Average Number of eMails Received by US Users per Day and Week, 2001 87

Commercial and Non-Commercial eMails Received by US Users per Year,1999 & 2005 88

eMail Messages Sent by US Consumers per Day, 2000 88

eMails Received per Day by US Users, 1999-2003 89

Average Number of Permission-Based eMails Received 89

Average Permission eMails Received by US Users per Day/Week/Year,2000 89

Average Permission eMails Received by US Users per Day/Week/Year,2003 89

Commercial eMails Received by US Users per Day, 2005 90

Home Marketing eMail Messages Received by US Users per Year,1999-2005 90

eMail Messages Received from Websites in the US, 2000 90

Marketing eMail Messages Received by US Users per Week, 2000 91


US User Attitudes toward eMail, 1999 (as a % of e-mail users who say...) 92

US Users Who Feel They Receive “Too Much” eMail, by Length of Time Online, 1999 92

US Consumer Interest in Receiving Advertising, by Type of Advertising,2000 93

VI. Techniques & Strategies 95


eAdvertising Can Reach the Consumer at All Points in the Sales Cycle 96

Acquisition vs. Retention Objectives 96

Competitive Estimates: US eMail Marketing Spending, Acquisition vs.Retention, 2000 97


147


Index of Charts US eMail Campaigns, by Objective, 1999 97

US eMail Marketing Budgets: Acquisition vs. Retention, 1999 98

eMail Marketing Budgets in the US, 2004 98

US eMail Marketing Models, 1999 99


US eMail Marketing Priorities, by Model Type, 1999 100


US eMail Users’ Definition of Spam, 1999 (as a % of all e-mail users) 102

What Most Commonly Seen UCEs Advertise, 2000 103

Anti-Spam Movement Broadens Its Mission 103


Seth Godin’s Five Basic Rules of Permission Marketing, 1999 106

Selected Permission eMail Marketing Vendors in the US, 2001 106


Methods of Acquisition Used by US Marketers, 2001 107

US eMail User Preferences, Opt-In vs. Opt-Out, 1999 108

Problems with Opt-Out Method Experienced by US eMail Users, 2000 108

Marketer Preference for Opt-In and Opt-Out Policy, 1999 109


US eMail Functions Outsourced, 1999 (as a % of all e-mail functions) 110

How eMail Outsourcing Affects Click-Through and Purchase Rates ,1999 110


eMail Co-Op Databases 111


Loyalty Programs Most Appreciated By US Internet Users, 2000 112


Comparative Estimates: % of US eMail Users Who Can Receive HTML eMail, 2000 114

eMail Format Ratios for Typical US Campaign, 2000 114

eMail Format Deployed by ClickZ eMail Conference Attendees in the US, 2000 114

Text vs. HTML Used in eMail Campaigns, 2000 115

Response Rates by Format, 1999 116

US eMail Users Who Have Received HTML eMail, 1999 116

US Users Who Want to Receive More HTML eMail, by Length of eMail Use, 1999 117

US Users Who Want to Receive More HTML eMail, by Age, 1999 117


Volume of Permission eMails US Consumers Would Accept from a Source, 2000 118

Promotional eMails Sent by Selected US Marketers on a Monthly Basis,2000-2001 119


How US Surfers Discover the Websites They Visit, 2000 121


148


Index of Charts Type of Viral Marketing Message Most Likely to Be Passed On in the USWorkplace, 2000 121

What Is Personal Relationship Marketing? 122


What Is Personalization and How Does It Work? 122

Consumer and B2B eRetailers Who Collect Customer Data at Their Websites, 1999 123

Data Collected by US Consumer Online Marketers, 1999 123

What Websites US Internet Users Say They Have Given PersonalInformation, 2000 124

Why US Internet Users Like Website Personalization, 2000 125

Types of Information Internet Users Are Willing to Divulge, 1999 125

How US Internet Users Feel About Sharing Personal Information Online, 2000 126

US Internet Users’ Concerns about Privacy When Shopping or Browsing Online, 2000 126

Types of Information US Internet Users Are Willing to Divulge, 2000 127

How Incentives Affect Internet Users’ Willingness to Share PersonalInformation, 2000 128

Type of Information US Consumers Are Willing to Provide Site, 1997 & 1999 129

Information Acceptable for a Website to Share with Other Sites in Return for Customized Content, 2000 130

When Not to Ask for Personal Information, According to US Internet Users, 1999 131

M. Integrating eMail within Marketing/Media Mix 132


Primary Purposes of eNewsletters, 2001 134

eNewsletter Advertising Packages, 2001 134

eNewsletter Publishing Experience among Folio: 500 Magazines,2001 135

Cost Comparison between CPM, CTR & CPC, 2001 135

Type of eMail Content Rated “Effective” by Respondents, 2000 136



Capabilities Available to US Wireless Users, 2000 137

Interest in Wireless Access among US Internet Users, 2000 138

Cellphones Capable of Sending/Receiving SMS, 1999-2002(in millions) 138

Index of Charts 141

Also Available from eMarketer 149


339

Asia Online

Also Available from eMarketer

ASPs■ Market size & growth■ Industry leaders■ Usage patterns■ Customer satisfaction

Broadband■ Users by access method (dial-up, fiber, DSL, cable, satellite,

wireless)■ Residential and business usage■ Access revenues■ User demographics■ Country profiles

CRM■ Market size & growth■ Leading vendors■ Budgeting & implementation

Online Advertising: Statistics, Strategies, Tools and Trends■ eAdvertising revenues worldwide■ Spending by ad format (banner ads, sponsorships, e-mail, etc.)■ Spending by industry category■ Measurements and standards (click-through rates, CPMs, ROI)

Asia Online: Demographics, Infrastructure, Usage Patterns andeCommerce Trends

■ Economy & infrastructure■ Internet users & demographics■ eCommerce, eFinance & eAdvertising■ Country profiles

eBanking■ Online banking around the world (US, Europe, Asia)■ Mobile banking■ Electronic bill presentment and payment

Brazil Online: Demographics, Usage Patterns and eCommerceTrends

■ Economy & infrastructure■ Internet users & demographics■ eCommerce, eFinance & eAdvertising

eCanada■ Economy & infrastructure■ Internet users & demographics■ eCommerce, eFinance & eAdvertising

eCommerce: B2B■ eCommerce: B2B revenues around the world, country by country■ eCommerce: B2B by industry■ Internet penetration among businesses■ Online marketplaces, auctions and exchanges


340

Asia Online

eCommerce: B2C■ eCommerce: B2C revenues worldwide■ Top B2C categories■ Online shoppers, buying frequency and size of transactions■ eConsumer attitudes and behaviors

eDemographics■ User demographics worldwide■ Age, gender and race■ Income, education and occupation■ Usage patterns

eEurope■ Economy & infrastructure■ Internet users & demographics■ eCommerce, eFinance & eAdvertising■ Country profiles

eGlobal■ Internet infrastructure, by region■ Users and usage, by region■ eDemographics, by region■ eCommerce, by region

eHealth■ Consumer demographics and attitudes■ Healthcare personnel, demographics and usage■ B2C spending■ B2B spending

eInvesting■ Online brokerages■ Online mutual funds■ Online asset management■ Online investment advice

Japan Online: Demographics, Usage Patterns and eCommerceTrends

■ Economy & infrastructure■ Internet users & demographics■ eCommerce, eFinance & eAdvertising

Latin America Online: Demographics, Infrastructure, UsagePatterns and eCommerce Trends

■ Economy & infrastructure■ Internet users & demographics■ eCommerce, eFinance & eAdvertising■ Country profiles

eMail Marketing■ eMail marketing revenues worldwide■ eMail users and user demographics■ Permission, opt-in and opt-out■ eMail marketing techniques and strategies


341

Asia Online

ePoland■ Economy & infrastructure■ Internet users & demographics■ eCommerce, eFinance & eAdvertising

ePrivacy & Security■ Consumer attitudes & behavior toward online privacy■ Online fraud■ Credit card security■ Corporate security (hacking and denial-of-service attacks)■ Virus attacks

eWireless■ Mobile internet use around the world, country by country■ mCommerce■ mFinance■ mAdvertising

Interactive Television■ User forecast■ Revenue forecast■ Business attitudes & behavior■ User attitudes & behavior

Marketing Online to Kids & Teens■ Demographics■ Advertising & marketing■ eCommerce■ Special considerations

For more information, or to order a copy, contact eMarketer at:

Phone: 212.677.6300 Fax: 212.777.1172

eMail: [email protected] Web: www.emarketer.com

For media inquiries:Gary Galati, Communications director, [email protected]

For inquiries about this report or other eMarketer reports:Marius Meland, editor, [email protected]

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