The document discusses the impact of spam and viral marketing, highlighting the economic costs spam imposes on recipients and ISPs. It emphasizes that spam is defined by the lack of permission, regardless of content or targeting, and warns against the dangers of e-mail marketing that may damage brands. Additionally, it suggests that while e-mail is not an effective acquisition tool, it can be powerful for retention if used appropriately.

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 didn’t want to receive.” Marketers say, “It’s targeted, so it isn’t spam.” The true metric of spam is an economic one.

3. What’s Wrong with Spam? The problem with spam is NOT that it’s: 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. Erol’s: 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 - it’s still spam. Remember MCI’s 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.