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NetCreations Inc. President Michael Mayor calls e-mail marketing "the problem child of interactive advertising." It’s an apt metaphor. Though many marketers have enjoyed success with e-mail, they’re becoming more concerned about spam and privacy issues. In an effort to stem e-mail marketing’s excesses, the government, marketers and industry associations are acting to add a little discipline to the practice.

Although spam arguably is more of a problem in consumer marketing, its proliferation is causing serious problems for b-to-b marketers and Internet service providers. Spam often clogs servers and requires companies to purchase and maintain filtering technology, and it contributes to the deluge of e-mail that threatens the overall effectiveness of legitimate e-mail marketing messages.

The effects are significant: Spam is responsible for an estimated 10% increase in Internet access costs, as individuals and companies must dedicate bandwidth, storage space and time to it, while the sender pays almost nothing, according to the Spamcon Foundation, a nonprofit group.

"I see spam as one of the major marketing problems in 2003," said Matt Leonard, senior manager of global customer information policy and privacy at IBM Corp.

Twenty-nine states have passed spam laws that make it illegal to send unsolicited commercial e-mail. In addition, seven anti-spam bills were proposed in Congress in 2002.

One bill, S. 630, dubbed the "Can Spam Act," includes provisions for simpler opt-out mechanisms (most state spam laws already require marketers to provide an opt-out option), full sender contact information and subject lines that are not misleading. It would also prohibit senders from disguising the real source in the "from" line of their messages.

Some in the industry are confident S.630 will go through when it is re-introduced in Congress this month. "I think it will pass this year," said Ben Isaacson, principal of the Isaacson Group and co-chairman of the Association for Interactive Marketing’s Council for Responsible E-mail. "We want to see a bill passed."

Currently, all the cases in which marketers have allegedly violated spam laws are in litigation or are being appealed. In the future, those who are determined to have broken the law will pay fines, Isaacson said.

"There will be cases where marketers will lose money, " he said. "It’s going to be a per-e-mail fine, much in the same way the state [spam] legislations are worded. Probably a flat fine and per-e-mail fine on top of that."

In the meantime, federal authorities have been enforcing the FTC Act, which was enacted in 1915 and prohibits deceptive business practices. "We’re at the beginning of a long and aggressive enforcement agenda targeting spam," said Brian Huseman, staff attorney at the Federal Trade Commission.

Definitions vary

Some define "spam" as unsolicited bulk commercial e-mail, but there is no universal agreement on the word’s meaning.

"There’s official spam, and there’s the marketer that just starts sending everything to a customer who gave permission at some point," said Diane Lucca, senior interactive marketing manager for IBM. "[These customers] perceive it as spam because it’s not relevant to them."

Marketers need to be sure communications are permission-based and targeted, she said. "Just because you get e-mail permission from a customer doesn’t mean you should open the floodgates."

Others agreed. "Spam is absolutely in the eye of the beholder," said Jim Nail, an analyst at Forrester Research Inc. "Marketers are beginning to understand just because they have an opt-in from people, it doesn’t mean they can send anything they want."

Privacy policy not required

In general, marketers are not required by law to have a privacy policy.

The Children’s Online Privacy Protection Act bars the collection of information about children under age 13. And industry-specific laws exist, such as the Health Insurance Portability and Accountability Act, which has a section about health care privacy, both online and offline, and the Gramm-Leach-Bliley Act, which covers financial services privacy requirements, both online and offline.

For the most part, though, marketers are allowed to self-regulate. The Interactive Advertising Bureau’s newly formed e-mail committee announced last month new guidelines for obtaining and using e-mail lists. These IAB guidelines provide an "ethical e-mail guarantee" that senders have followed responsible e-mail guidelines.

AIM’s Council for Responsible E-mail continues to refine its guidelines, and the Spamcon Web site lists 15 sets of best practices from several sources.

The Direct Marketing Association also has Guidelines for Ethical Business Practice, which require the association’s members to post a privacy notice on their Web sites. Those that don’t may be subject to expulsion from the DMA.

As a result, many marketers have clear-cut privacy policies posted online, indicating that customer information is not given to third parties without consent. These policies also often include information regarding cookies, order security and third-party affiliations.

Filtering still necessary

As long as the spam problem persists, Internet users will need filtering technology. Software such as Cloudmark Authority, MailWiper Inc. and McAfee’s Spamkiller monitors keywords in incoming e-mails and filters out messages assumed to be spam. The challenge is to continually evolve the technology as spammers attempt to circumvent these filters.

"As fast as people are learning the way to build firewalls, [spammers] are finding ways to get around it," said IBM’s Leonard.

Another problem with trying to block spam is much legitimate e-mail gets blocked as well. "There may be instances when the spam-blocking system, which is based on a list defining blocks according to the sender’s address, inadvertently blocks legitimate e-mail," said Brigida Bergkamp, corporate media relations manager for Hewlett-Packard Co.

Certifiable solution

Other industry solutions to the spam problem may lay in certification technologies, such as Postiva, ePrivacy Group’s Trusted Sender program. Postiva provides marketers with a stamp of approval that certifies that the message is not spam. Habeas Inc. licenses software to marketers and provides them with a similar stamp of approval. If the marketer violates any anti-spam rules, it can be penalized. Vanquish Inc., a similar service and software combination, will launch in March. The company fines marketers if their e-mail recipients click on a button to indicate that the e-mail was unsolicited.

Forrester’s Nail said economics may ultimately provide the answer to spam. With better filtering technology, he said, less spam will get through, so spammers’ revenues per mailing will decrease. Spammers will eventually discover the medium is no longer economically viable, he said.

"I think we’re not quite at the crest of the spam tsunami, but we’re close to it," Nail said. "We’ll see a continued increase in spam for another year or maybe a little longer."

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