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Tough Money: Technology

Keep on Pitching

The new breed of direct e-mailers is moving discreetly by tailoring ads suited to their subscribers.


In the next few weeks, subscribers to QuoteCom will notice a change in the e-mail they receive from the financial information service that they might not like. Included in the daily stock updates they get via the Internet will be ads from a San Francisco brokerage trying to grab their business.

QuoteCom is just one of a growing roster of digital marketers that use e-mail to deliver not only information but also ads. Advertisers like e-mail because it is significantly cheaper than using the mail, and it allows them to reach thousands of consumers at the touch of a button.

But direct e-mail has received a cool reception from Internet users. An outcry by members led CompuServe and America Online to block pitches from Cyber Promotions, a mass e-mailer of everything from easy-money opportunities to vitamins. The CompuServe ban was upheld last month by a U.S. District Court in Ohio, which said junk e-mail from Philadelphia-based Cyber Promotions trespassed on the service.

QuoteCom, based in Sunnyvale, expects its 18,000 paying customers to tolerate ads because revenue from them will be used to expand subscriber services. QuoteCom thinks some customers might even welcome the pitches because they are related to investing.

"As long as customers believe they are getting added value, they won't be offended," maintains Scott Duffy, former advertising director for QuoteCom.

Internet users resist the hard-sell. America Online allows members to unblock their e-mail boxes to receive pitches from Cyber Promotions and other bulk e-mailers. According to an AOL spokesman, few members have done so.

So the new breed of direct e-mailers is moving discreetly. Mercury Mail Inc., based in Denver, delivers free weather reports, sports scores, stock quotes and news briefs to 400,000 subscribers, along with ads suited to them. Sports fans, for example, are likely to find that their news updates include a pitch from Sports Illustrated.

Mercury Mail tries to avoid alienating subscribers by limiting the amount of advertising in each message. Most e-mails contain one ad and none has more than two. People who don't like ads can quit the service, thus removing themselves from the e-mail list.

Chief Financial Officer Blair Whitaker said Mercury has received few complaints. Subscribers, he said, view the service as "a free magazine that has ads."

Nvolve is another direct e-mailer that uses free services to deliver ads. Since last June, it has enrolled 200,000 members in a free Internet site devoted to discussing video and computer games. With membership now large enough to attract advertisers, San Mateo-based Nvolve is preparing to deliver e-mail pitches on behalf of marketers interested in reaching gamers. One such advertiser is arcade game developer Accolade.

Nvolve is taking steps to keep gamers sensitive about junk e-mail from defecting. Pitches will be delivered only to private mailboxes at the Nvolve gaming site to avoid clogging up personal e-mail boxes elsewhere. Junk e-mail will appear in a different color of type.

Nvolve is betting that members will open their junk mail, but they don't have to. "It is self-selecting," said Nvolve President and Chief Executive Tom Morgan. "If they don't want to read it, it is fine to delete it."

Internet users have distinct preferences about which junk e-mail they choose to read.

In a test involving 10,000 Internet users, American List Counsel of Princeton, N.J., found that consumers respond better to junk e-mail from companies they've patronized. The test also showed that consumers respond when told why they are being pitched. (For instance: "You like to travel, so maybe you'd like our hotel guides.")

The six advertisers participating in the test found e-mail to be as effective as direct mail, but at a fraction of the cost, making the test a great success. American List Counsel President Donn Rappaport wouldn't identify the direct marketers in the test, but he described them as catalog companies and magazine publishers. American List Counsel maintains mailing lists for these firms.

"E-mail is a very powerful medium that is not onerous or repugnant under certain circumstances," Rappaport said.

It has been a useful tool for telemarketer 1-800-Flowers. The company, based in Long Island, N.Y., told attendees at an Internet marketing conference this month that it derives 20% of its online business from e-mail solicitations. Bulk e-mailers agree that a barrage of unsolicited junk e-mail could trigger a backlash--if it hasn't already. But President Sanford Wallace is not apologetic.

"E-mail is the most exciting invention since the wheel," he said. "It's free, it's fast. For our clients, it works."

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