Spam and Viral Marketing

When does “word of mouse”

marketing cross the line?

What is Spam?

• Content-based metrics always fail, because it is subjective.

• Users say, “Spam is the e-mail I didn’t want to receive.”

• Marketers say, “It’s targeted, so it isn’t spam.”

• The true metric of spam is an economic one.

What’s Wrong with Spam?

• The problem with spam is NOT that it’s:– Annoying– Invasive– or Fraudulent– … even though it is sometimes

all of these.

The Real Problem With Spam

• Spam costs recipients in higher access fees.

• This is true whether the e-mail is sent from a fly-by-nighter or a responsible marketer.

• How can sending e-mail cost the recipient?

How Does Spam Cost?

• ISPs price their services by average use.

• When ISPs get hit with high volumes of e-mail, they have 3 choices:– let users live with worse

performance;– buy more capacity & eat the cost;– buy more capacity & pass the

cost on to the customer.

Remember Superman III?

• Richard Pryor is a hacker who diverts all fractions of cents in the company payroll to his paycheck.

• By capturing a huge number of tiny transactions, the hacker diverts huge sums, and almost no one notices.

Spam and Superman III

• Each e-mail consumes a tiny amount of server space and bandwidth that the ISP has to buy from a provider.

• In large volumes, this adds up to significant sums very, very quickly.

• Unlike most traditional advertising methods, senders can foist the cost of marketing onto the recipients.

The Cost of Spam (May, 1998)

• Netcom: $1 million a month, or 10 percent of each subscriber's bill.

• ShoreNet: $2 per customer per month.

• Mindspring: 25% of traffic is spam.• Erol’s: 15% of server disk space,

plus 3 FTEs (now six).• AOL: 30% of all inbound messages

are spam.

The Risks of E-mail Marketing

• Damage to your brand - recipients lump you in with the spammers.

• Sixteen states now have laws on the books that regulate e-mail solicitations.

• Federal spam legislation is close to passage (HR3113).

• Loss of connectivity for violating your agreement with your ISP, or RBL.

The Benefits of E-mail

• Conversion cost: $20, vs. $50 for direct mail, and $100 for a banner ad.

• The number of active e-mail users is expected to grow to 162-million by 2003.

• Consumers prefer e-mail to toll-free numbers (42% vs 36%).

How Not to Get Burned

• Get permission.• If you have permission, then your

offer is solicited, and is not spam.• Remember: The definitive attribute

of spam is lack of permission, not content or targeting.

• NONE of the laws can touch you if you have archived, confirmed permission.

Viral Marketing Programs

• Incentive programs are problematic, because marketers are purchasing e-mail addresses.

• There is no functional difference between buying a CD of addresses from a bulker, or buying a few at a time from users with chances for prizes.

Viral Marketing Programs

• Customers cannot give you permission to send to others - it’s still spam.

• Remember MCI’s Friends and Family program?

• Viral marketing can work just as quickly against you, as news of spamming spreads across the Net.

Conclusions:

• E-mail generally is a poor acquisition tool, but an immensely powerful retention tool.

• Incentive viral programs can damage your brand far too easily.

• Offer useful and valuable services - NOT coupons or discounts - and word will spread with the speed of the Internet.