Six years ago, I was sitting in a hallway in a makeshift cube, trying to wrap my head around the business of Internet advertising. I joined this space the way many people do, as a media buyer. As I was “buying” on a CPC basis in a CPM world, it was more media begging than true media buying as is found in the agency world. It’s a beautiful way to get your feet wet and about as much fun as sophomore organic chemistry. I spent most of my time not so much on web but on the burgeoning world of email. Then to now, one of the few things that remains the same is Chris Pirillo, who operates the well respected Lockergnome.com website. While he remains the same, i.e. is still in business, a lot has changed in email. This week, we’ll take a quick look back over six years of email.
In 2000, the biggest lists were not the high quality, tech focused lists such as Lockergnome. No, the biggest lists, no surprise here, came from the Internet lotto sites. Free Lotto, Group Lotto, TroppoLotto, this lotto and that lotto, the precursors to today’s incentive promotion sites, rather quickly amassed lists with millions of people on them as users signed up to play. Before the existence of Coregio, sites like those that a high volume of signups would partner with companies like YesMail and NetCreations’ Post Master Direct to display the list-rental companies’ signup for targeted email lists in addition to their own. If you were a site that had a high volume of new registrants, partnering with NetCreations often was all you needed to make money in email. They managed targeted lists compiled from hundreds of publishers, and whenever they mailed to a subscriber that a site generated, it received a piece of the often exorbitant CPMs. At one point in time for example, Life Minders, the email reminder service, probably made more money from NetCreations ad sales than they did from their own. The list-aggregation and rental business was a great one for several years, being worth, at one point, several hundred million dollars. NetCreations managed the subscribers and the ad sales. The site owner merely had to focus on generating names. That model would continue but wouldn’t truly resurface for almost four years with the emergence of Datran.
The dark period for email happened during 2001 through 2003, when the focus went from content driven, high CPM mail to performance based ad-only offerings. During the beginning of this period, email inboxes received very little mail, which meant performance on the ads was incredibly high. Acquiring the name didn’t cost much, thanks to an abundance of affordable web media, and the performance on email ads only insured more people would send them. In a short period of time, a slew of businesses cropped up focusing solely on the acquisition of email addresses. They made their money by both mailing to users and through co-registration partners. Instead of partnering with one company who would send to your names, which was the case with Post Master Direct, companies would partner with three, four, ten, or if you were Bay9, forty other partners. If a user was lucky, all forty would be clearly listed and opt-in. More common though were for these co-registration partners to be opt-out and not readily accessible.
It didn’t take long for inboxes to become flooded, users upset, and easy access to inboxes cut off. It wasn’t CAN-SPAM that changed the face of email; it was really AOL, Hotmail, and Yahoo. They controlled the majority of names and ultimately an email company’s profitability. Returns on email went from an easy $5 eCPM to $.20 eCPM or RPM. The cost of an opt-in went from $2 to $.10 and opt-outs from $.25 to $.025. To support the cost of acquiring the names, companies that bought co-registration data would often share the data with multiple parties, only insuring even harder delivery and lower returns.
After a free for all when just about anybody could make money, email like almost every other type of online activity transitioned to segmentation and specialization of services. In the Free Lotto days, the list owners were the ones that built the technology to send the emails. In the co-registration heyday a crop of delivery platforms popped up to support the thousands of lists and constant subscribe / unsubscribe activity. By 2004, the only companies doing that type of outsourced delivery were those focused more in the CRM space – DoubleClick, CoolerEmail, CheetahMail, and to extent SkyList and Lyris. Sending costs had gone down but the average list host and in-house list management software solutions couldn’t get into the inboxes. Some of these smaller list hosting companies could scrape together a living helping small sites manage, but their business could not scale.
The world of email still faces low returns, tough delivery, and a significant amount of data sharing. Among the most significant changes, though, has been the rise, or perhaps return, of list management companies. These companies are more than list hosts, though; they are delivery firms. They get paid a high percentage of revenues not a serving cost. Their high margins and high value comes from their tireless efforts to crack the delivery codes – both above board and behind the scenes – of the major inbox providers. Success is as much reliant on good relationships as it is on secret sauces. In their eyes, the fewer people that know the tricks – using triggers to send emails, cycling through thousands of domain names and blocks of Class C IPs – the better.
Making money in email today is no sure thing, which in many ways is a good thing. But, there is still an inordinate amount of money made and to be made. Unlike other mediums though, owning the relationship with the user is often not a guarantee you can make money. You need to own the ability to reach them. And, for those interested in buying on email, finding a reputable company to work with is among the most important things possible. If you don’t, your offer might quickly be blacklisted and your income stream cut off. You will want education on pricing, targeting, list size, which cities in South Florida are good, and the networks that also know the difference. Email can be done right, but if you’re unsure, get a guide, and realize that consumers don’t really want to get commercial email. Appreciate those who can reach consumers and don’t enter if you can’t take a few complaints.
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