Microsoft Outlook 2003 Puts Open Rates in Question

When Microsoft released the Microsoft Office 2003 beta last year, marketers realized some proposed anti-spam features in Outlook, the popular e-mail client, could be bad news.

It’s here. And it happened.

The issue lies in the way Outlook 2003 handles images and links in HTML messages. In previous versions, graphics and links were delivered to the computer and appeared in Outlook’s preview pane (in default mode). Now, HTML, images and rich media are cached on the server and downloaded only when the message is actually opened. This protects users from viewing possibly objectionable images; prevents invisible executables from opening in preview mode; and scotches directory harvesting of e-mail addresses. Users must either manually click to load a message’s images and links, or turn off the image-caching feature in the preferences.

Because many e-mail tracking programs use invisible graphics files to indicate if an e-mail has been opened, open rates will inevitably drop as Outlook 2003 is adopted.

Microsoft isn’t the only company changing the HTML e-mail rules. The major ISPs, AOL, Yahoo! and MSN, provide online or desktop e-mail clients. They’re all taking the no-HTML path. Panther, the new Macintosh OS, hits the street today with a similar function in its default e-mail client, Mail.

Marketers have pretty much thrown up their hands and bowed to the inevitable. Open rates may tumble. Most reason that’s better than raising consumer ire and being branded a spammer.

“This is a problem for the vast majority of e-mail marketers out there,” said J.F. Sullivan, director of product marketing for enterprise e-mail management provider Sendmail. “Unfortunately, the spam problem has to be dealt with, and we applaud what Microsoft has done as a necessary evil.”

What marketers want to know is how much open rates will fall — and how much it will matter.

Jupiter Research predicts by 2007, 59 percent of e-mail marketing messages will be in HTML, and rich media will account for an additional 15 percent. How much of that mail will be addressed to Outlook 2003 users is anyone’s guess. (Jupiter Research and this publication have a common corporate parent.) A Microsoft spokesperson said the company won’t share adoption forecasts. In tight-fisted times, corporations may not be in a hurry to upgrade their Windows license yet again.

A very small percentage of Bigfoot Interactive’s clients’ e-mail is read on Outlook, said CTO Ragy Thomas. The company’s lists indicate 20 to 45 percent of consumers use AOL. Another 15 to 20 percent use Yahoo! and a similar number use MSN or Hotmail. Thomas estimates Outlook users to be fewer than the remaining 30 percent.

One might think marketers could live with e-mails not being counted as opened unless they were, in fact, opened. As long as marketers aren’t using all-graphics e-mails, it’s possible they could get a message across even if users fail to download the graphics.

“These new features collectively are impacting our ability to track results,” said Dave Lewis, vice president, deliverability management and ISP relations for Digital Impact. The acid test, he said, is store traffic or conversion rates. “But what’s been a somewhat imperfect science in the past is now going to become more so.”

Many marketers think the lower open rates could result in better analytics.

“Open rate numbers will be lower, and the accuracy will improve,” asserted Bigfoot’s Thomas. He thinks marketers will know if Outlook users, at least, unblocked images. “That’s a real number. With a lot of the preview windows today, there’s a certain percentage passed off as open when really the person is just scrolling through. This is a double action that validates the open rate.”

“The issues with Outlook are similar to what we expect with AOL 9.0 and MSN 8.5, where they introduced the same functionality,” said Digital Impact’s Lewis. “The difference is, with AOL…you’ll get about a 50 percent adoption rate by the mid-part of January, and the heavier the promotion, the higher and quicker the adoption number will go. With Outlook, the adoption curve is much slower. There’s an opportunity for marketers to react to what’s happening much more so than with AOL.”

ISPs will listen to marketers, said Gary Black, DoubleClick product management director. His company has been speaking up in industry forums and working with the larger ISPs. “We learned that ISPs are obviously sensitive to marketers needs, a lot more sensitive in the last six months,” he said. “They realize they can’t be too aggressive, because a lot of people who send e-mail to their customers are the same ones that are advertising on their Web sites.”

Agencies and e-mail service providers advise advertisers change their ways. Bigfoot tells clients to go easy on graphics, and, said Bigfoot director of marketing Michael Della Penna, “Make sure the brand is front and center in the ‘from’ and ‘subject’ lines so the recipient of e-mail can immediately identify the sender and unblock the image if they choose.”

As e-mail from trusted senders is delivered intact in most new, graphics-blocking programs, marketing campaigns may be dedicated to getting consumers to add companies to address book whitelists. “The address book is the silver bullet,” said Lewis. “What marketers need to do, from the point of sign-up, is try to incent customers to add the company, then reinforce the message through the confirmation e-mail or subsequent e-mail activity.”

Other marketers don’t view it as a numbers game. Kirill Popov, director of ISP relations and delivery for EmailLabs, said, “There are two different camps of marketers, those that deal with really large lists and depend on a large volume of e-mail to get a good return, and marketers that have permission-based lists where policies are followed during subscription.” As users actually expect e-mail from these companies, “It would be a benefit… because it will clean up the white noise of junk mail in the inbox and help their messages stand out.

Bigfoot’s Della Penna noted one advantage of the new Outlook. “The preview window is bigger,” he said. “Bigger preview functionality will allow them to say a lot more up front.”

The trick will be to offer consumers something interesting enough to make them open an e-mail, however many steps it takes to do so. “If there really is content and value in the information I’m receiving,” said Sendmail’s Sullivan, “[marketers] don’t have to worry. If it’s something I want, it doesn’t matter whether it previews it or not. I’m going to open it.”

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