CAMPAIGN DIRECT: MARKETING CHALLENGE: Why Internet users are being paid to view online advertising

HT Mail pays customers to read e-mail ads. What will advertisers gain from this scheme, Tim Rowell asks?

HT Mail pays customers to read e-mail ads. What will advertisers

gain from this scheme, Tim Rowell asks?



The idea that consumers could be paid to view ads is one that is likely

to offend advertisers and agencies alike.



Bill Gates, the founder of Microsoft, mooted the idea in his book the

Road Ahead. He wrote in 1996: ’In effect, some of the billions of

dollars now spent annually on media advertising and on printing and

postage for direct mail advertising will instead be divided up among

qualified consumers who agree to watch or read ads sent directly to them

in electronic form.’ At the time it sounded like another dose of

futuristic star-gazing but recent developments within new-media

advertising suggest that it might happen sooner than Gates thought.



At the beginning of June, HT Mail, a marketing company based in Bath,

launched a service on the Internet offering consumers the opportunity to

earn cash in return for agreeing to receive advertising e-mails. Members

of the HT Mail service supply personal details and preference data from

which advertisers can then target the most likely respondents. Criteria

include age, sex, job title, line of business, purchasing

responsibilities, choice of newspapers and hobbies.



David Broadway, the founder of HT Mail, describes the motives behind his

service: ’Having worked in the direct mail industry for many years and

having spent considerable time surfing the Web, I’d been searching for a

way to transport paper-based direct marketing techniques over to the

Internet.



’The fact of the matter is that e-mail is an extremely cheap way of

advertising, but its reputation has been damaged by companies that are

willing to send out huge numbers of unsolicited e-mails in return for a

very small positive response rate.



The system we have come up with will, we hope, reduce the amount of spam

(junk) e-mail that is running around the system and it will offer

advertisers the opportunity to promote their products to an interested

audience.’



It is true that junk e-mail is reaching epidemic proportions reminiscent

of junk direct mail in the late 80s. This situation has led the Direct

Marketing Association to announce plans to launch an E-Mail Preference

Service, similar in scope to the Mailing Preference Service.



There is, however, an important distinction to make between the two

forms of junk. Whereas it costs the recipient of paper-based junk mail

nothing except the time it takes to throw it into the wastepaper basket,

junk e-mail costs the Internet user expensive connect time while he or

she awaits delivery of the advertiser’s commercial message to the

desktop. If you add up the cost of receiving five or so e-mails a day

over the course of a year, the charges soon begin to escalate.



A service comparable to HT Mail’s has has been operating in the US since

the beginning of the year. CyberGold offers consumers a similar

pay-for-performance incentive, in which the rewards range from 50 cents

to a few dollars a time. CyberGold members use the company’s Web-site to

access advertisers’ special offers. A recent test on Time Warner’s

Pathfinder service found that CyberGold incentives produced up to 13

times more click-through responses than conventional Web banner ads.

Proof enough that the concept of paying cash to people who respond to

advertising on the Internet can be effective.



The overwhelming reason why companies pay consumers to view

electronically delivered ads is that, compared with traditional

advertising, it is extremely cheap. The average direct mail paper piece

costs about 35p to produce, while its e-mail equivalent costs no more

than a couple of pence. If it will guarantee a reading, however brief,

then there’s a good argument for paying the consumer to do so. HT Mail

is offering consumers 5p for every e-mail read and 10p for visiting the

advertisers’ Website.



The incentive for consumers is straightforward: Internet use can be an

expensive business - both in terms of annual connection fees and

telephone bills - and, if the medium offers some way to recoup these

charges, why not take advantage of it?



Since its launch, HT Mail has signed up more than 1,500 members and the

company claims to be acquiring new members to the service at the rate of

between 50 and 70 a day. But Broadway concedes that there is still a

long way to go before the company can begin to compete with the sheer

size of lists held by the established list rental and direct marketing

specialists. He also points out that ’advertisers are unlikely to be

interested in our e-mail list until we can offer a broader sample of

consumers’.



Most responsible advertisers have already begun the process of acquiring

the e-mail addresses of their customers and prospects, and have realised

that it doesn’t make sense to bombard them with advertising

material.



Furthermore, if the Mailing Preference Service is anything to go by,

advertisers who make use of unsolicited e-mail advertising know that

their only legal requirement is to remove the e-mail addresses of users

who have signed up to the E-Mail Preference Service - knowing that this

is likely to be the few rather than the many.



As Mark Dickinson, managing director of Index Finger, points out: ’HT

Mail is very brave to attempt to introduce such a scheme. There’s no

doubt that it is an innovative solution to the problem of advertising

e-mail.



I just hope that HT Mail has very deep pockets.



’I can see this type of scheme working but it’s more likely to be in

five years’ time than in the next five months.’



HOW IT WORKS



HT Mail compiles its hit list via its Website. Consumers complete an

application offering advertisers criteria from which to target

users.



The operation hinges on the use of specific codes within all advertising

e-mails and sites promoted through the service. Members supply HT Mail

with all the codes they have received or viewed that month and payments

are calculated.



Members earn 5p for each e-mail received and 10p for each site visited.

Money is generated from the charges for advertisers who pay 1p for the

rental of each name, 6p for each e-mail received and 12p for each site

visited. If consumers receive five e-mails a day and visit five sites,

they are likely to earn pounds 15 to pounds 20 a month.



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1 Job description: Digital marketing executive

Digital marketing executives oversee the online marketing strategy for their organisation. They plan and execute digital (including email) marketing campaigns and design, maintain and supply content for the organisation's website(s).