Online marketers look past the Web

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Newsgroups and targeted e-mail present big opportunity to Net biz

By Kate Maddox

It's targeted, efficient and dirt cheap. It has generated positive results and satisfied customers. But it makes even the savviest marketers quake in their boots.

It's marketing via Internet discussion boards and e-mail, two of the most controversial tools in the online world.

Companies send thousands of marketing-oriented e-mail messages over the Internet each week. Newsgroup discussion boards, meanwhile, carry postings for everything from hair-loss treatments to get-rich-quick schemes.

Not that Internet users particularly like this type of marketing. There are entire newsgroups dedicated to examples of unsolicited e-mail.

America Online and one bulk e-mail provider, Cyber Promotions, have gone to court over messages sent via AOL.

`WE'RE AFRAID'

With all these negatives, it's no wonder few major marketers have ventured into this territory--at least not openly.

"We are afraid of this thing, and don't want to do it publicly," said one direct marketing industry veteran. "But secretly, many of us have done it."

Will the pleasures of marketing via newsgroups and e-mail ever outweigh the apparent pitfalls? The tensions swirling around this issue may soon come to a head.

FTC TO HEAR E-MAIL GUIDELINES

This week, the Federal Trade Commission hosts two days of hearings on online privacy in Washington. The Direct Marketing Association and the Interactive Services Association will jointly present guidelines for e-mail marketing.

The guidelines may recommend that companies give users a mechanism to decline to receive e-mail, or create a seal of approval that adhering companies could display on their Web site, an ISA spokeswoman said.

In the meantime, many larger companies are sending e-mail messages only to those consumers who say it's OK.

Coors Brewing Co.'s Zima, for example, sends e-mail to users that request information at the Zima site.

"We would never send out any unsolicited e-mail to anyone," said Eric Blum, marketing director for Modem Media, Westport, Conn., Zima's interactive agency. "It dilutes a brand's equity when a consumer has something forced upon them."

GATORADE'S EXPERIENCE

Gatorade Co. in January sent out about 18,000 e-mail messages to users who had visited its site and indicated they would like to learn more about Gatorade products.

However, the company found that its self-generated e-mail database was unreliable, with many returned messages, and that some consumers considered the messages offensive, even though they had provided their names.

Nevertheless, many companies--particularly smaller ones with lean advertising budgets--find that the pros of sending unsolicited e-mail messages outweigh the cons.

LARGE NUMBERS AT LOW COSTS

"You can do large numbers at a low cost," said Don Farrey, president of Icon, an Atlanta telecommunications service provider that uses e-mail marketing.

Icon's most recent e-mail message, sent to 7,500 recipients, generated a 0.4% return, or about 30 sales, Mr. Farrey said.

New companies such as Cyber Promotions, Philadelphia, and net.net Advertising, Altoona, Pa., compile and deliver databases of e-mail addresses to advertisers.

But many Internet users decry their tactics; AOL and Cyber Promotions have filed lawsuits against each other, while net.net was a major source of controversy at last fall's DMA convention.

Nevertheless, many of these e-mail marketing facilitators say they're doing nothing wrong.

`IT'S SO CHEAP'

"It's the greatest form of advertising out there," said Mark Lichtenstein, president of Advance Web Creations, a Fairfield, N.J., Web design company that uses Cyber Promotions. "It reaches so many people, and it's so cheap," he said.

Web Creations paid Cyber Promotions $1,000 to send a message to about 800,000 recipients. net.net charges advertisers $120 per thousand pieces mailed.

While most e-mail collectors gather addresses from Internet newsgroups, marketers generally agree that it's bad form to post messages directly to the newsgroups.

ONLINE JUNK MAIL

"You're marketing to the worst possible group of people," said Philip Devorris, net.net president. "Because it's so easy to get their names, they get a barrage of junk mail and they get irritated."

That hasn't stopped companies from doing it, however. The Dance Garden, a San Francisco dance studio, posted a message to a dance-oriented newsgroup pointing users to its site. Online serial developer American Cybercast Network, meanwhile, has caused a storm of controversy on science-fiction newsgroups for posting a message advertising its fictional EON-4 serial. The message, written as if EON-4 were a real project, led some newsgroup users to call NASA for more information.

Even if the FTC likes what it hears at this week's hearings, rules will be hard to enforce.

"We could regulate out the kazoo on privacy, but someone sending an e-mail from Liechtenstein isn't going to listen to us," said Douglas Wood, executive partner at the New York law firm Hall Dickler Kent Friedman & Wood.

Copyright June 1996 Crain Communications Inc.

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