The From Line

Every January email marketing pundits try to make predictions of what the industry will bring for the upcoming year. They range from the career conservative to off-the-wall reckless. Some self-serving predictions blur the line between editorial and advertising so much that only a New Year's hangover can help you tell the difference between the two. Even though the accuracy of annual email marketing conjectures can be debated, almost all have some sort of truth to them. With that being said, below are my four bold predictions for 2009 prefaced by the fact that I have a short-term 50% accuracy rate and an 80% long-term rate. So I'm usually right, eventually.

The price per email for the middle and enterprise marketplaces will drop.

Commercial email and the ESPs used to send them are both commodities. In a depressed economy, most commodity prices fall, especially ones with excess supply. Technologically speaking, with few exceptions, there's no difference between the commercial email you and your competitor send even if you use a more expensive ESP. It's true that more expensive ESPs tend to provide better feature sets and customer service -- however, feature and service parity have been achieved in the Soho market and are rapidly becoming reality in the middle and enterprise marketplaces. Therefore, I predict that customers using middle and enterprise market ESPs will squeeze hard during the contract renewal process in 2009, forcing the industry average price per email down. No rocket science here!

Commercial email volume will increase exponentially, forcing down email's lofty ROI.

Based on my above assumption, simple economics suggests that any high-demand commodity with an infinite supply and falling price will be over-consumed. Unlike traditional business models, the overconsumption of commercial email will cause a positive relationship between falling prices and ROI. The reason for this positive relationship is simple. As consumers receive more commercial email, marketing messages are lost in the clutter, making the medium less effective, and challenging marketers to come up with new ways to grab consumer attention. Hence my next prediction....

The demand to stream video via email will increase.

All savvy email marketers know that it's impossible to stream video via email as a result of enhanced anti-spam technology. What was once considered an advanced email marketing trick in 2002 quickly fizzled as inbox providers rushed to put anti-rendering measures in to curb the onslaught of spam, thus destroying many early ESPs' video-via-email business models. However, increased bandwidth and the fanfare of YouTube and similar video Web sites have resurrected the demand for video via email, prompting companies such as GoodMail to develop solutions that will keep both ISP and marketer happy. The catch is that not every marketer will qualify for GoodMail's certified video service -- creating two sets of have and have-not marketers, and forcing the have-nots to simulate video players with still images encouraging click-thoughs to a video-enabled landing page.

Social networking sites will become the new inbox providers.

I made the above prediction in January of '08 and was off the mark, but I'm going to continue to stick with it in '09, as I'm confident it will come to fruition (any year now). I laugh every time I hear someone claim that social networking will kill email marketing. It's true that social networking has cut into email's market share of consumers' personal communication, but this phenomenon will be short-lived as social networking sites rush to become the new inbox providers. The reason for my confidence is that social networking sites have yet to live up to financial expectations, forcing them to find other avenues to monetize their traffic. This has already started the early adoption of traditional ad models, allowing social networking sites to nibble at Yahoo, MSN and Google's market share. With the adoption of a traditional ad model comes inbox services, as email is one of the largest consumers of Internet time. If MySpace, FaceBook and the like want to sell more ad space, they will need to guarantee activities with proven performance.

Do you think my predictions makes sense for 2009 -- or are they completely off the mark? I guess we'll have to wait until next year to find out. In the meantime, if you have any additional insights you would like to share, please comment below.

Every New Year’s I take the avalanche of information I gather from clients, business partners and  hundreds of articles and white papers I have read of the previous year and try to make some bold predictions for email marketers.  Like any modern soothsayer, my predictions are a medley of hits and misses, such as my accurate such as the call for more email marketing legislation in 2008, and complete flops such as my 2007 suggestion of wider adoption of RSS by email marketers.  More importantly, however, they are the basis for my predictions for the upcoming year (2009 will be posted next week).

2008 Prediction 1: The Death of the ISP White List (Hit and Miss)
While still in use, ISP white lists have been fairly marginalized as reputation-based systems have taken a much larger foothold for managing spam.  In fact, Gold Lasso hasn’t noticed a real deliverability difference between clients who follow best practices and do not participate in a formal white listing program, than clients with the same practices and do participate in one.  This might explain part of the reason there was a fire sale of Habeas to ReturnPath.  The only ISP white list that will continue as is in 2009 and that I know can guarantee 100% deliverability is GoodMail.

2008 Prediction 2: Email Rendering on Mobile Devices Will Be a Continued Issue (Hit)
Even with the advent of the second generation iPhone with improved HTML email rendering, designing for the mobile screen was a big challenge for email marketers in 2008.  With click rates in some cases exceeding open rates, mobile devices threw email marketers through the rendering loop forcing many of them to abandon open stats and to better segment their mobile subscribers.  

2008 Prediction 3:  Authentication Technology Will Become Mandatory (Miss)
Even though email authentication is mandatory for all members of the Direct Marketing Association, it’s still not being used by a large number of senders especially marketers that use in-house email marketing systems.  Based on discussions with clients and other industry veterans, I have concluded that many IT professionals still don’t know how to implement email authentication technologies let alone understand what they are for.   In addition to the lack of education, email authentication technologies still face an uphill battle as a result of a number of domain registrars preventing their customers from attaching the necessary text files to their DNS entries.  Overall, authentication is gaining ground but it still has a long way to go to make a difference in the war against spam.

2008 Prediction 4: More Legislation Might Be Around the Corner (Hit)
In June of 2008, the Federal Trade Commission tightened and clarified some of the language in the CAN SPAM Act to make it easier for consumers to opt-out of commercial email.  In addition, the FTC took another step toward making a clear distinction between commercial and transactional email.  While all these new clarifications are good, this poorly crafted legislation continues to fall short of its original intention of staving off spam.

2008 Prediction 5: Social Networking Sites Will Become the New Inbox Providers (Miss)
This prediction was bold and premature, yet I believe it will soon come to fruition and I’m sticking to it for 2009.  There’s no doubt social networking sites are chipping away at traditional personal email as Millennials, Gen Xers and Yers are adopting the medium as one of their main choices for personal communication.  However, if social networking wants to entice older generations, increase visiting times and eventually sell more ad space they will have to open their networks to include traditional email communication.  This day is coming and I’m banking on it!
 

There's been a lot of speculation if GoodMail will survive in 2009, and thankfully much of it has been put to rest today with the announcement of its third round of funding lead by Bessemer Venture Partners. After a lot of research, my feeling is that GoodMail is currently a must for financial services companies. With identity theft on the continual rise, banks, credit unions and brokers need to ensure that they are taking every step possible to secure their customers information and to prevent phishing.

There is a dirty little secret with email service providers (ESPs) and it’s about time it has been brought to the forefront of industry discussions.  I learned about the intricacies of this secret while culling Gold Lasso customers that exceeded our spam complaint threshold. After politely showing a few of them the door, out of spite they revealed to me that they were simultaneously using the services of five other competitors unraveling a twisted web of ESP “switch-a-roonie” that promotes spam and hurts the industry.  This dirty little secret is so obvious that I’m surprised it hasn’t been exposed by privacy and anti-spam advocates and used to smack the smug faces of ESP executives.  Surprise!  The dirty secret is that most ESPs have no economic incentive NOT to do business with customers who refuse to use good list practices.  Let me say it this way: Email service providers make good money from bad customers who in some circles could be considered spammers.  You might be scratching your head thinking most ESPs have strict anti-spam policies and lobby hard to clean up the industry.  For the most part this statement is correct, however there are always a handful of bad customers that are tolerated because of the big checks they stroke.  These customers come in the forms of traditional direct marketing agencies that have to blow their client’s budget, affiliate marketers, and idiots who have deep pockets but not a clue about how email marketing works.  One thing these types of customers have in common is that they want or have to send large volumes of email and have either purchased an email list or have appended a purchased direct mail list.

Contrary to popular belief most ESPs don’t give their high paying bad customers the boot.  Most try to force them through a reformation process, however if the customer continues to ignore best practices some ESPs will do one of the following; either isolate the customer on an IP block reserved for wrongdoers (a sort of purgatory) or mix their bad customer’s email across multiple IP addresses of customers with good sending practices increasing the bad customer’s chance of making it to the inbox.  In the first scenario, the ESP milks the customer as they are well aware their email will either wind up in an ISP black hole or get bounced faster than an Atari Breakout ball. The bad customer, fed up with bad deliverability, will feverishly switch to a new ESP as soon as their contract is up.  In the second scenario, the ESP increases the deliverability risk of their good customers.  The attitude is akin to “so what if some customers get 90% deliverability instead of 96%.  What’s 6%?” Eventually this attitude catches up with reality and good customers start complaining.  This is when the ESP gives the bad customer the boot as their foot is already in the door of another ESP.  Contrary to what Ken Magill of Direct Magazine says “a marketer can’t ride an ESP’s e-mail reputation, folks” a marketer CAN ride the reputation of an ESP’s customers… for a while at least.  In either case the ESP is doing a disservice to not only their customers (good and bad) but to the industry at large.

The time has come for ESPs to get together and create their own blacklist of customers who they have booted because they refused to clean up their act.  This would prevent these bad customers from trying to hop ESPs causing headaches and silently undermining the industry.  The secret is out!  Let’s do something about it.

Ken Magill of Direct Magazine does it again by exposing the dirty side of email.  However this time a little bit of politics was added creating a cesspool of irony.  His recent report "Prankster Pollutes Obama's E-mail List" exactly makes my point from last night's blog post.  Even though politicians are exempt from the CAN SPAM Act they aren't immune to best practices.  As Hillary Clinton would have put it, "shame on you Barack Obama!"