Have you read the actual text of the law or have you relied on some other person’s summary of the requirements?   It is well worth the time to read through all 21 pages of the act and be sure you have a firm understanding of not only the explicit requirements but also the nuances.  I’m not a lawyer.  I’m simply a technology executive working hard to ensure that my company and our clients have the tools they need to comply with the law.  Having read and re-read it a few times, there is still quite a bit of ambiguity especially for participants in network marketing.  One example of this ambiguity is the definition of sender “… means a person who initiates such a message and whose product, service, or Internet web site is advertised or promoted by the message.”  As an affiliate or a network what does that mean to you when you are promoting somebody else’s products?  If you send out a message for an advertiser that you pulled from a network that does not include any of your links, does that mean that the message in essence has no sender?  Regardless of the confusing language, one thing is very clear; all of us need to take the necessary steps to comply

Helping our clients comply with the law.

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Last year, a major trend in the online direct marketing sphere was the emergence of affiliate networks from already established companies.  Networks like DirectLeads, Adteractive, Websponsors and Azoogle were pioneers in the CPA affiliate market.  On the heels of their successes other networks such as Vendare’s eMarketMakers, SubscriberBASE’s AdDrive, Torpedo Mail’s Offerweb, OptInBig’s CPAEmpire, and InternetTraffic Pro’s CPAOffers sprung up in the rich soil that was the affiliate market space.  These networks developed their own identities for the types of articles they contained and the payouts they offered compared to other networks.  However, they remain relatively similar in the way they get ads delivered from the advertiser to the publisher, ultimately to the consumer.  How will CAN-SPAM affect these networks that so many advertisers and publishers rely on for distribution?  What is the future for these markets which seemed so popular just this past summer? 

Section 6 of CAN-SPAM specifically targets advertisers who use email marketing for their goods and services:

(a) IN GENERAL- It is unlawful for a person to promote, or allow the promotion of, that person's trade or business, or goods, products, property, or services sold, offered for sale, leased or offered for lease, or otherwise made available through that trade or business, in a commercial electronic mail message the transmission of which is in violation of section 5(a)(1) if that person--

(1) knows, or should have known in the ordinary course of that person's trade or business, that the goods, products, property, or services sold, offered for sale, leased or offered for lease, or otherwise made available through that trade or business were being promoted in such a message;

(2) received or expected to receive an economic benefit from such promotion; and

(3) took no reasonable action--

(A) to prevent the transmission; or

(B) to detect the transmission and report it to the Commission.

Now, the consequences are more serious than what the myriad state laws and angry consumers could impose.  As a result advertisers and publishers are scrambling to make sure their creatives and suppression files are completely up to date.  With advertisers facing such a responsibility for ensuring that consumers who have asked not to be contacted again by them, advertisers are faced with a larger responsibility to make sure their offers don’t end up where they should not be in the first place.

Affiliate networks are unique in the challenges they must face to be CAN-SPAM compliant.  When the number of affiliate networks grew last year, the basic format they operated on was for a publisher to be able to log into the network, grab a creative and subject line, then run it to their lists.  Affiliates were fairly self-reliant and advertisers supplying ads to the networks had little to worry over if the affiliates had signed the necessary agreements that are a part of all affiliate network applications.  As a result, the size of these affiliate networks grew, and the advertisers reliance on their steady numbers became a large part of any online marketing campaign.  This has all changed. 

Suppose that an affiliate network has 500 active publishers and 50 individual advertisements.  There are 25,000 possible relationships existing in such a network.  In the format used in the past, any of those 500 publishers could log in and grab any of the 50 ads for their newsletters.  As long as the relationship is based on the publisher logging in and grabbing creative, few problems exist.  However, with the advent of CAN-SPAM, affiliate networks must manage these relationships in an excruciatingly detailed manner. 

Networks are taking various strategies to keep compliance with the law.  A mammoth challenge is the use of suppression lists (or unsubscribe files) within the framework of the publisher-affiliate network-advertiser relationship.  Somehow, publishers must scrub their send lists against the suppression files of the advertiser.  Publishers must update these lists in some sort of a regular fashion, advertisers must update these quite frequently, and the affiliate networks have to manage these interactions.  Is it possible that no human error will creep into these delicately balanced situations? 

Perhaps the market will continue to evolve from a bulk supply side to one that is focused on more demand-based relationships.  In this scheme, advertisers would primarily do most of their business through trusted publishers with whom they have built an amicable relationship.  Instead of relying on affiliate networks as “middle-persons,” they would either outsource to managed marketing directors or handle the promotion of their products on a limited scale in-house.  However, this would cut out the use for affiliate networks.  Might network marketing move towards a network based on small numbers and large amounts of trust in light of CAN-SPAM?

AT&T was recently sued by the FTC for violating the Do Not Call List.  The FTC maintains that 29 consumers were contacted wrongly.  Clearly, that is not a large number considering the number of phone calls that were made.  Is it possible for affiliate networks to maintain an error-proof and airtight structure that will not allow 29 emails to get out to consumers who have opted out from receiving communications in the past?  Ultimately, what will be the future of affiliate networks in the post-CAN-SPAM market?

Sam Harrelson is co-editor of the Digital Moses Confidential.  Send any questions, comments or suggestions to sam@digitalmoses.com

Banners of all sizes, mini-sites, pops, splash pages, email newsletters, animated interactive banners. 24 hour turn-around. Contact Michael at mm@maridium.com AOL IM: maridium

How big is your file ?
by Sam Harrelson

CAN-SPAM lays a formidable task to advertisers who deal with email marketing publishers.  Along with having to keep creatives compliant with the new law, advertisers must also now face the daunting task of what to do with unsubscribes and suppression lists that must be distributed to publishers.  Advertisers must now honor the requests of those who don’t want to hear from their brand or company again by gauging the intent of the user.  If done wrong, unsubscribes will pile up and cause serious brand damage. 

CAN-SPAM lays out the necessity of a successful policy for unsubscribes in clear language:

(3) Inclusion of return address or comparable mechanism in commercial

electronic mail-

(A) IN GENERAL- It is unlawful for any person to initiate the transmission to a protected computer of a commercial electronic mail message that does not contain a functioning return electronic mail address or other Internet-based mechanism, clearly and conspicuously displayed, that--

(i) a recipient may use to submit, in a manner specified in the message, a reply electronic mail message or other form of Internet-based communication requesting not to receive future commercial electronic mail messages from that sender at the electronic mail address where the message was received.

Legitimate email marketing companies were already honoring unsubscribes.  However, with the CAN-SPAM law in effect, there are serious repercussions and consequences for advertisers if they don’t mandate that publishers follow their unsubscribe strategies. 

What is the best way to implement the unsubscribe link on an html creative?  Should it be clickable on the creative?  What page does it go to if so?  A base assumption is that consumers who are seeking to opt-out, or unsubscribe, from a commercial mailing advertisement will click on the first link available to them.  If the advertiser’s link is the first link in the creative, should they have it clickable, or should there be simply the email address that would have the consumer copy that link in order to send an unsubscribe request?  If the link is clickable and it is the first link available for users to unsubscribe, it can be easily assumed that the advertiser will very quickly amass a rather large unsubscribe file.  At that point, market forces take over, and the cost of a publisher doing business with an advertiser with a large unsubscribe file raises because of the necessary technology, risk and time used to scrub the send list against the suppression file.

If unsubscribe rates are around 1%, then it would only take a few 10 million sized drops (growing the unsubscribe list at 100k per drop) to grow an advertisers unsubscribe list exponentially.  With large unsubscribe files, less legitimate publishers will seek to do business with the advertiser.  The market forces direct the relationships formed, and by doing business with publishers with lower quality lists can quickly set an advertiser in a bind by growing their unsubscribe list to something quite large. 

With these unsubscribe lists intact, how do advertisers get them to publishers?  Some advertisers have opted for posting the lists on ftp, available for publishers to download and scrub their lists against.  However, is that keeping the marketing campaing SPAM-CAN compliant to the letter of the law?  This passive way of getting the unsubscribe list distribution can lead to long term problems if something were to go bad legally because there would be no record of the advertiser actually giving a publisher a list they need.  By sending the unsubscribe on email or with some means that requires the publisher to accept and even give an ip address signifying they received the unsubscribe list and agree to use it in their marketing gives the advertiser recourse in the worst case scenario.

CAN-SPAM compliance poses serious and weighty questions to consider for the advertiser.  There is definitely more to consider than just creatives.  How to best optimize your unsubscribe practices and pass them on to your publishers can determine the difference between a profitable campaign and one that puts your business in legal trouble. 

Sam Harrelson is the co-editor of Digital Moses Confidential. He can be reached at sam@digitalmoses.com 

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CAN-SPAM: Act Now or Pay Later
by John Nesbit

   It’s now 2004 and the buzz about CAN-SPAM has reached a crescendo.  Responsible marketers are struggling to understand and comply with this new law, which carries penalties as high as $11,000 per email, up to $2 million.  Wondering how you can comply with  CAN-SPAM?  Here are your options:

- Option 1 - Ignore the CAN-SPAM Act

Its laughable but some advertisers are taking a wait and see approach to CAN-SPAM.  Waiting to be caught.  Seeing who will test the law.    A look at the pros and cons of this approach:

Pros:

While you can save the cost of hiring a compliance officer (approx $30k-$40k per year) or outsourcing compliance to a third party (approx $250-$1k per month), you run the much greater risk of…

Cons:

• Imprisonment for up to 5 years

• Fines of up to $2,000,000

• Loss of reputation among consumers and across the industry

- Option 2 – Manage CAN-SPAM Compliance In-House

Pros

• Reduce risk of prosecution

• Allows for portability/flexibility of suppression file

Cons

• Might require resources you don have (software; employees)

• Assumes a high level of liability

• Takes away from the focus of the company

- Option 3 – Use a 3^rd Party for CAN-SPAM Compliance

By far this appears to be the option that is most cost-effective and liability-protective, while being the least labor-intensive.  There seems to be two types of third parties, independent third parties and non-independent.  There are few firms offering independent turnkey solutions such as the one developed by CAN-SPAM Compliance Company LLC (www.can-spamcompliance.com).  There are also non-independent services such as Direct Response Technologies (http://www.directresponse.com).   Non-independent firms are often owned by companies in vertical markets such as an ad agency thereby locking an advertiser down to the agency managing the suppression file.  If you are thinking of outsourcing your company’s CAN-SPAM compliance function, consider:

Pros

• Turnkey solution (easy setup and maintenance)

• Independent 3^rd parties specialize in just compliance

• Allows for portability/flexibility of suppression file (you own your file)

• Provides Errors & Omissions (E&O) insurance to offset your liability in case the worst happens.

Cons

• Costs between $250-$1k per month on going.

• You have to commit to keeping your nose clean and obey the law

Perhaps Glenn Close said it best in “Fatal Attraction.”  You know the line:  “I will not be ignored.”  CAN-SPAM is here to stay and you can’t afford to ignore it.  Whether you choose in-house or outsourcing solutions, comply now or pay later.

John Nesbit is the Vice-President of Operations at Thomas, Townsend and Kent (TTK). A provider of hotline self-reported consumer data to the Fortune 1000. If you’d like a complementary copy of the white paper TTK has produced to help advertisers with the CAN SPAM Act, please e-mail him at john@thomastownsendandkent.com