Email Marketing News

Regulatory Impact of Email Marketing

By Glenn Gaudet, Partner, Reservoir Partners

Recent federal legislation has extended the government's role in business by defining parameters for email marketing. On December 8, 2003 S.877 passed both houses of Congress. The bill was signed by President Bush on December 16, 2003. The law took effect on January 1, 2004. The legislation is called ''Controlling the Assault of Non- Solicited Pornography and Marketing Act of 2003,'' or more commonly known as the ''CAN-SPAM Act of 2003.'' The legislation is designed to curb the growing unwanted, unsolicited email called SPAM. The legislation identifies specific rules of engagement for email as well as penalties for abuse.

SPAM will only be addressed when the email provider industry self regulates with technology that can address the problem effectively. Given this, was CAN-SPAM a red herring that the politicians saw as a big win on the heels of its Do Not Call legislation? Probably, but they actually did business a favor. Too many states such as California were going to create a lawyer-fest with their legislation. The feds were able to curtail this with their legislation.

So, what has happened 2+ months after the legislation has passed? Well, my inbox still is flooded with a host of unwanted SPAM. Companies still use email marketing as a tool and all has been quiet on the enforcement front. The reality is that SPAM will not be stopped through legislation. However, the impacts that the legislation has had on companies is real. Reservoir Partners concluded a survey in February 2004 to find out how real these impacts are. The survey broke out companies into two categories, business to business and business to consumer.

Let's first understand what the awareness level is for CAN-SPAM. Reservoir Partners found the following results:

CAN-SPAM Awareness Level	B2B	B2C
I have not heard of any such legislation.	46.30%	33.30%
Somewhat knowledgeable	29.60%	33.30%
Knowledgeable	18.50%	23.80%
Very knowledgeable	3.70%	4.80%
Most knowledgeable	1.90%	4.80%

Source: Reservoir Partners

It was surprising to see how many companies were not aware of the CAN-SPAM legislation - particularly with the press associated with it.

Next, we wanted to understand the usage and effectiveness of email marketing in an organization. We discovered that email scored highest against all other outbound communications channels in BtoB companies in terms of percentage of companies using this channel. On the BtoC, side, email tied for second place, next to print and web advertising. Email was rated the 5th most effective channel in BtoB, while it dropped to 7th for BtoC. We also discovered that both BtoB and BtoC companies have on average allocated 7% of their outbound communications budget on email.

Companies that made changes as a result of CAN-SPAM ranged from adding information to their email templates to eliminating email all together. The data shows that 25% of BtoB companies and 10% of BtoC companies have been impacted by the CAN-SPAM legislation.

A representative sample of the impacts that were cited for CAN -SPAM legislation is:

• "We now have to manage do not email lists."
• "Business and IT related changes were made to comply."
• "We moved to an external e-mail provider."
• "We do less email and are more careful of whom we send it to."
• "It is forcing us to consider and implement steps toward compliance."

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