Spam and Viral Marketing

1
Spam and Viral Marketing

• When does word of mouse marketing cross the
  line?

2
What is Spam?

• Content-based metrics always fail, because it is
  subjective.
• Users say, Spam is the e-mail I didnt want to
  receive.
• Marketers say, Its targeted, so it isnt spam.
• The true metric of spam is an economic one.

3
Whats Wrong with Spam?

• The problem with spam is NOT that its
• Annoying
• Invasive
• or Fraudulent
• even though it is sometimes all of these.

4
The Real Problem With Spam

• Spam costs recipients in higher access fees.
• This is true whether the e-mail is sent from a
  fly-by-nighter or a responsible marketer.
• How can sending e-mail cost the recipient?

5
How Does Spam Cost?

• ISPs price their services by average use.
• When ISPs get hit with high volumes of e-mail,
  they have 3 choices
• let users live with worse performance
• buy more capacity eat the cost
• buy more capacity pass the cost on to the
  customer.

6
Remember Superman III?

• Richard Pryor is a hacker who diverts all
  fractions of cents in the company payroll to his
  paycheck.
• By capturing a huge number of tiny transactions,
  the hacker diverts huge sums, and almost no one
  notices.

7
Spam and Superman III

• Each e-mail consumes a tiny amount of server
  space and bandwidth that the ISP has to buy from
  a provider.
• In large volumes, this adds up to significant
  sums very, very quickly.
• Unlike most traditional advertising methods,
  senders can foist the cost of marketing onto the
  recipients.

8
The Cost of Spam (May, 1998)

• Netcom 1 million a month, or 10 percent of each
  subscriber's bill.
• ShoreNet 2 per customer per month.
• Mindspring 25 of traffic is spam.
• Erols 15 of server disk space, plus 3 FTEs
  (now six).
• AOL 30 of all inbound messages are spam.

9
The Risks of E-mail Marketing

• Damage to your brand - recipients lump you in
  with the spammers.
• Sixteen states now have laws on the books that
  regulate e-mail solicitations.
• Federal spam legislation is close to passage
  (HR3113).
• Loss of connectivity for violating your agreement
  with your ISP, or RBL.

10
The Benefits of E-mail

• Conversion cost 20, vs. 50 for direct mail,
  and 100 for a banner ad.
• The number of active e-mail users is expected to
  grow to 162-million by 2003.
• Consumers prefer e-mail to toll-free numbers (42
  vs 36).

11
How Not to Get Burned

• Get permission.
• If you have permission, then your offer is
  solicited, and is not spam.
• Remember The definitive attribute of spam is
  lack of permission, not content or targeting.
• NONE of the laws can touch you if you have
  archived, confirmed permission.

12
Viral Marketing Programs

• Incentive programs are problematic, because
  marketers are purchasing e-mail addresses.
• There is no functional difference between buying
  a CD of addresses from a bulker, or buying a few
  at a time from users with chances for prizes.

13
Viral Marketing Programs

• Customers cannot give you permission to send to
  others - its still spam.
• Remember MCIs Friends and Family program?
• Viral marketing can work just as quickly against
  you, as news of spamming spreads across the Net.

14
Conclusions

• E-mail generally is a poor acquisition tool, but
  an immensely powerful retention tool.
• Incentive viral programs can damage your brand
  far too easily.
• Offer useful and valuable services - NOT coupons
  or discounts - and word will spread with the
  speed of the Internet.