Companies such as Dynamics Direct, TMXinteractive and RadicalMail are beginning to produce simple, streamlined e-mails that are interactive and full of streaming audio and video.
So-called rich e-mail arrives just as e-mail marketers are looking for new ways to make their messages stand out.
These messages need to make a significant impression because, according to research by eMarketer, 10% of all e-mails sent last year were to people on some sort of opt-in list, and by 2003, 20% of all e-mail will be of this type.
"E-mail is getting more popular for advertising and marketing, so people are asking how can I raise my message above the text clutter," says Blair Lyon, president of TMXinteractive. "Rich e-mail is the next level."
BUDGETS TO TRIPLE
By 2004 companies plan to set aside a median of $720,000 for their online marketing budget, according to Forrester Research, compared with $240,000 in 1999.
Golf equipment Web site Chipshot.com recently sent out an e-mail promotion for a line of golf clubs. The e-mail, developed by Dynamics Direct, features pictures of the clubs. As a reader drags the mouse over the putter, for example, a close-up pops up on screen along with text listing club features. Immediate purchase is a click away within the e-mail.
The e-mail providers, which typically do the creative and technical work as well as delivery and tracking, cite response rates as high as 70% on individual campaigns. More typically, says Jeanniey Mullen, general manager for Grey E.Mail, a division of Grey Global Group, New York, marketers should expect a response rate that's 25% to 35% better than the response rate on their text messages.
If the average response to text-based e-mail ads from consumers who opt in is 10%, according to Forrester, marketers using enriched e-mail would see a response-rate increase to 12.5%, according to the Grey executive's formula.
TOO NEW FOR HARD STATS
However, since enriched e-mail is a marketing tool introduced this year, it is too new to have established reliable results.
Ten percent of e-mail advertisers want rich e-mail now, says David Lamb, CEO of Net-mercial, a company that offers rich e-mail and other online services. He expects half of all e-mail advertisers will want these eye-catching missives within two years.
Both clients and providers cite the "wow" factor, the initial positive reaction people have when they receive what is broadly an interactive TV commercial in their e-mail ads.
Even after the novelty wears off, there are advantages to rich e-mail.
For one, "the immediacy is great," says Jeanine Farrall, manager of interactive communications at RealTime Media, which manages promotional campaigns for marketers such as StoreRunner.com.
Another plus is also the high level of consumer tracking that's available. The sender can glean all sorts of real-time information about consumers, such as whether or not a particular person opened the message and at what time of day. Services can learn how long a consumer viewed a message, whether he forwarded it to anyone, and what type of Internet connection, Web browser and computer was used.
"If people are mostly opening the e-mails at night we know they're probably home and on a slower Internet connection," says Mr. Lyon. "So we'll know to keep the technology simple for the client."
Then there's the viral marketing aspect. Most rich e-mails include a "forward this to a friend" option.
In a recent Office.com promotion, people received a coupon for a discounted purchase if they forwarded the message on, and 12% of all recipients did.
"We exceeded our new-registers goal by 280%," says Parnell Noth, director of marketing at Office.com.
Something as new as rich e-mail is bound to have problems. The biggest one so far seems to be that only about 40% of e-mail users can receive rich-media ads right now, says Mr. Lamb.
Industry giant America Online can only handle text e-mails, while popular Web-based online services like Hotmail only accept still graphics. So for the majority of e-mail users, the message offers a URL address and hot link to a fancier site.
Still, providers expect the possibilities for rich e-mail to evolve quickly. Before the end of the year, TMX and RadicalMail hope to be able to offer clients platforms for developing their own ads. Then the rich-mail companies would do the mailing and tracking.
"There's no way we could scale this business if we insisted on doing everything in house," says Jay Stevens, RadicalMail marketing chief. The mailing and data collection is largely automated, and companies charge about 6-to-10-cents per piece for that. Building the ads is the most time and labor-intensive part of business, so providers say it isn't cost-effective for them to do end-to-end projects unless the e-mailing is at least 200,000 units.
If marketers had templates, however, they could incorporate rich media into daily newsletters or send a major promotion and a series of tweaked follow-ups, says Mr. Lyon.
"We also expect to see a lot of test marketing," he says. "We want people to be able to send a test batch of 1,000 e-mails, adjust their message on the fly and send out another 1,000."
Executives at rich e-mail companies believe this technology will finally drive mass-customization in Internet marketing. TMXinteractive and Dynamics Direct claim they have the technology to personalize e-mails according to such variables as buying patterns, geography and age.
"Companies haven't had the tools to exploit their databases so they aren't in the habit of doing real mining yet," says Russell Gilliam, CEO of Dynamics Direct. Still, he expects customization to catch on as catalog companies and other experienced direct marketers migrate to rich e-mail offerings.
Marketers themselves believe customization will gain importance once rich e-mail is the commodity text mail is already becoming. As one marketer told Forrester in a recent survey, "when people get a lot more e-mail, the difference will be offering value. Customization is a way to do that better."