Think of it as spam cooked to order. This tastier brand of e-mail marketing — messages from respected merchants who have your permission to send notices of sales or new products, and who stop sending them on request — is on the rise and is helping to boost sales in a slumping economy. But as you've probably noticed from the bulge in your e-mail In box, the nasty brand of unwelcome spam is also booming. And it's getting harder to find the good stuff amid all the garbage. In a study released last month, Jupiter Research forecast that you will receive 2,257 pieces of "commercial e-mail" by the end of the year, 60% of them unwanted spam and the rest from merchants you've given permission to contact you. By 2006, both kinds will double.
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Why? E-mail marketing is fast, effective and dirt cheap — a godsend for marketers in an economy that has crunched advertising budgets. Zipping an electronic ad to your mailbox costs a marketer about 5, compared with 25 to $3 for the postal equivalent. And e-mail marketing works. The Direct Marketing Association, which represents nearly 5,000 companies that send both postal and electronic direct mail, announced at its conference last month that two-thirds of its member companies reported increased sales from e-mail, which generated an average of 15% of their online sales — up from 3% in 2000. Because it's so easy to click from an e-mail to a website's "purchase" button, an e-mail campaign can reap up to 12 times the response rates of ordinary junk mail.
Little wonder that old-line companies like Ford and Procter & Gamble are joining early users of targeted e-mail pitches like Amazon.com and J. Crew. Corporations will spend $1.8 billion on e-mail marketing this year and $6 billion by 2005, according to Forrester Research. It's a ticklish irony that the humble medium of e-mail is blossoming while flashier forms of Internet advertising are going the way of the Pets.com sock puppet. Response rates — called "click-throughs"--on banner ads have hit an all-time low of 0.3%, and the AOL online service (owned by TIME's parent company) has announced that it will squelch most of its annoying pop-up promotions.
The best e-mail marketers turn customers into virtual pen pals. Lands' End sends its shoppers electronic newsletters filled with folksy tales from around its headquarters in Dodgeville, Wis. One told of a neighbor who grew her own prairie, another of a local llama farm. On occasion the newsletters mention products, as in a story about a man who wore a Lands' End mesh polo shirt to a gorilla preserve in Africa. Sales for the shirt shot up 40% that week. Following a newsletter about women who love their moccasins, sales of the shoes doubled. E-mail is a big reason Lands' End sells more clothing online than anyone else--$327 million last year out of $1.6 billion in total sales. Already this year, online sales have surpassed the 2001 total by almost 50%. "What's more," says Bill Bass, head of e-commerce and international sales, "we can have the same sort of relationship with shoppers in Germany, Japan and the U.K."
This was a promise of the Internet — to give regional companies global reach. Peet's Coffee & Tea has only 65 retail stores based almost entirely on the West Coast. But via e-mail, it can alert java lovers around the world to a new shipment of special beans from Ethiopia or Sumatra. The postal equivalent wouldn't work. Says CEO Patrick O'Dea: "We'd never want to sell you coffee that wasn't hand-roasted a day or two before you get it."
The more you respond to commercial e-mail, the more marketers know about you — and whether that's for better or worse depends on the marketer. Many companies tailor e-pitches to where you live and what you've bought in the past. Consider a recent campaign by Hewlett-Packard, which began tracking customers who had bought, say, a printer. A month after the purchase, HP sends an e-mail telling how to deal with paper jams. A month later, when you might be low on toner, another note would explain how to shake it to extend its life. Then about the time the toner really runs out, HP sends an e-mail guiding you to its site for a replacement. HP and its e-mail marketer Digital Impact say the company saw a $300 million boost in sales over 12 months from the campaign.