Late Entrants Play Catch-up in E-Mail Marketing

What’s the hottest marketing medium that the industry’s biggest players are
throwing money at? It’s the Internet’s original “killer app,” the most
widely-used, but, until now somewhat overlooked, technology — e-mail.


In the past few weeks, the industry has seen the two leaders in the
advertising business — CMGI Inc. and DoubleClick — make big moves to
stake claims in direct e-mail marketing. CMGI (CMGI) recently acquired yesmail.com in a deal valued at around
$500 million; and DoubleClick (DCLK) recently laid out plans for the launch of its
direct e-mail products, acquiring Opt-in Email.com in hopes of
accelerating its entry into the market.


Suddenly e-mail direct marketing is a “must-have” capability. Why now, when
e-mail has been around since before the web?


“E-mail marketing is a relatively new medium,” says Dave Tolmie, yesmail.com’s president
and chief executive officer, “and I think it’s taken a relatively long time to
gain traction because of concerns about spam.”


Advertising in e-mail newsletters has been equally slow to catch on.


“Everybody I was talking to, of course, used e-mail, but they were so in
love with the Web that they didn’t recognize that e-mail could be an
advertising medium” said Tom Watson, co-founder of @NewYork.com, an internet.com publication that began as a
newsletter in 1995.


But now, it appears, both e-mail direct marketing and newsletter
advertising is taking off. The concept of opt-in e-mail is growing more
widely accepted, and advertisers are beginning to recognize the value of
highly-targeted e-mail newsletters.


Tolmie refers to it as an “inflection point,” where an interesting new
approach becomes a “must have.” The growth and consolidation is apparently
a response to advertiser and marketer demand for one-stop shopping and
coordinated campaigns. “As we build a relationship with the client,” says
Tolmie, “they ask ‘can you do this other thing for me?'”


So the biggest players are rushing to add these capabilities to their
arsenals, either acquiring other companies or building new products
themselves. DoubleClick has taken this second approach, saying that
building was more cost-effective than buying.


“We tried to build a system that anticipates the needs of the market two
years out,” said Eli Chalfin, DoubleClick’s vice president and general manager of direct response. “We feel it’s very compelling one-stop shopping.”


Although Chalfin’s company has announced its strategy indicating it wants to be a player in this game, it won’t actually have
products until next year. DART for Publishers, a solution that inserts ads
and content into e-mail newsletters, will have its beta launch in early
January, and will officially be offered at some point in the first quarter.
The second offering, DART for Advertisers, a direct-marketing product,
won’t be ready until the second quarter. The acquisition of Opt-in
E-mail.com was an attempt to jump-start the company’s entry into this
second market, since DoubleClick is trying to quickly serve clients of
another of its acquisitions, Abacus
Direct
.


What DoubleClick hopes to create with all of these moves is a full-service
shop for advertisers, where they can come to buy ads across its networks,
as well as in e-mail newsletters. While they’re there, perhaps advertisers
will also pick up a targeted list of e-mail addresses, or do a campaign.


“What we felt was the compelling value proposition here,” said

Chalfin,
“was an integrated solution.”


Perhaps another reason for the e-mail marketing medium’s rise to prominence
is the technology infrastructure that has been developed recently. It
allows for meaningful tracking, analysis of results, and, soon, possibly
e-commerce within an e-mail message.


DoubleClick’s DART for Publishers, for example, allows publishers to
compose e-mail newsletters on the fly. Much as database-driven Web pages
have revolutionized the Web publishing business, allowing for easy
customization, something like DART for Advertisers could do the same for
e-mail publishing. The technology allows for newsletters to be personalized
based on a profile associated with an e-mail address; both content and ads
can be tailored to target the individual. However, they technology has yet to appear in even a beta release of a product..


But even the current technology has become more compelling for marketers,
now that HTML e-mail, and HTML-capable e-mail software, has become almost
universal. “That’s really put it on the radar screen of marketers,” said
Bill Jacobson, vice president of eDispatch, Flycast
Communications
‘ e-mail division.


Flycast (FCST) , like DoubleClick, is in the process of building a suite of
services for e-mail publishers, which includes the formation of a network
based on the kind of Web network that both companies operate. The network
is to have its commercial launch in January.


All in all, the conclusion is obvious e-mail marketing is reaching a new
level of maturity. What will this mean for the smaller, yet
more-established players like Digital Impact, Message Media, Click Action, Exactis, NetCreations, and Bigfoot Interactive? Well,
mergers and acquisitions are all but inevitable.


“There’s no question there will be more consolidation,” said yesmail.com’s
Dave Tolmie.

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