Launched in 1996, NetCreations is widely regarded as being amongst that exclusive handful of firms whose pioneering efforts have been responsible for the advent and rise of permission email marketing, as we know it today.

Co-founded, and helmed until late 2001, by iconic permission advocate, Rosalind Resnick, it’s often forgotten that NetCreations emerged out of an environment in which unsolicited commercial email was the norm, and the notion that consumers would provide their permission to receive “junk mail” was unthinkable.

Today, the permission versus unsolicited commercial email battle is over, and permission has clearly emerged the victor. As a recent research study by Executive Summary Consulting and Quris documents, user frustration with unsolicited commercial email runs high, while response rates to unsolicited commercial email messages hover at a mere fraction of what they are in the case of their permission-based counterparts.

However, as this same research also evidences, the rapidly growing pervasiveness of permission-based email, and the concomitant, accelerating rise in the volume of unsolicited email that is being received by users will make it undoubtedly increasingly difficult for marketers to initiate permission-based relationships with users, extract meaningful ROI from email-based campaigns, and harness email as a brand-building tool. Ultimately, these quiet shifts in underlying market dynamics could threaten the viability of permission email, altogether. But, far more probably, they will lead to fundamental changes in the ways in which permission email marketing is done.

From the vantage point of her recent retirement from the position of CEO of NetCreations, Rosalind Resnick spoke to avant|marketer about the brief history of email marketing; the quietly changing dynamics of the space and the implications of these changes for the future of permission email; the idea that permission email will be increasingly leveraged as a branding medium; the emergence of permission email-driven multi-channel marketing; and her five year vision for the Internet Advertising space as a whole.

avant|marketer: How would you categorize the state that the email marketing space finds itself in right now?

Rosalind Resnick: I would say that email marketing has finally, just within the last year or two, hit the mainstream. But, what most people don’t remember is that email marketing is nearly ten years old now. When we launched our PostmasterDirect service in 1996, junk email [SPAM] was supposed to be the future of email marketing, whereas, permission-based email was something that nobody thought possible. I remember having conversations with traditional direct marketers who said, “Rosalind, if you think anyone is going to come to your site to get junk mail, you’re wrong.” So, the fact that you today have NetCreations with a database of over 40 million opt-in subscribers, and YesMail, DoubleClick, and 24/7 Media with similar sized databases, represents a tremendous milestone in the history of email marketing, and also a tremendous success.

At the same time, a lot of people had very high expectations of opt-in email marketing when it first started out five or six years ago. While some of those expectations have been fulfilled, others clearly haven’t: We imagined that we’d found the cure to SPAM. Yet, today there is more SPAM then there ever was before. And, there is also more opt-in email than ever. As a result, Internet users are getting emailed to death out there, both on the opt-in and unsolicited side Also, permission has become so mainstream now that while in the past there was a real difference between acquisition email lists harvested from newsgroups and permission-based lists, being permission-based is no longer the differentiator it used to be for either the marketer or the user. So, what we see now is that many users are tuning out commercial email, or unsubscribing from it or blocking it, completely. So, in a strange way - that very few of us could have imagined in the earlier days - opt-in email has been too successful. It’s really become too pervasive.

avant|marketer: What are going to be the long-term impacts from this increase in the pervasiveness of email marketing? As you allude to, already we’re seeing steadily declining clickthrough and open rates in the permission email marketing arena. This has prompted some analysts to suggest that within a short time we’re going to see consumers become as unresponsive to permission-based email communications as they have already become to banners. Do you believe things are likely play out in this way?

Rosalind Resnick: In general, I think it’s a mistake to look at response rates alone - that’s a mistake that we as an industry have made in looking at everything from banners to email. Email is no worse today on a response rate level than telemarketing or direct postal mail. Unfortunately, many email marketers and analysts remember the glory days of 5% to 15% clickthrough rates and tremendous conversion rates on the back end. That all happened when email was a completely new medium which consumers had never been exposed to before. We’re simply not in that phase of the lifecycle of this medium anymore. Unfortunately, those nice, old memories die hard.

Yet, the reality is that response rates alone don’t determine whether a marketing medium is useful to a marketer. In telemarketing and direct mail, response rates have always been abysmal, but that hasn’t prevented marketers from spending billions of dollars on these channels. The fact remains that, even though response rates in direct mail are extremely low, it’s still profitable for a huge number of marketers, from an acquisition cost standpoint. And, at the end of the day, that’s all that matters.

I think most good B2C and B2B email marketers have already accepted that they aren’t going to be getting the 5% to 15% click rates that they used to get, but that they can still achieve a profitable acquisition cost with a 1% to 2% click rate.

avant|marketer: But, if clickthrough rates on email marketing campaigns sink to less than a half a percent, as in the case of banners, it appears within reason that this might erode the ability of marketers to be profitable on email campaigns, at least on the customer acquisition side. Are we going to see clickthrough rates on email campaigns get as low as with banners?

Rosalind Resnick: I think banners and email have always been two very different animals. The banner is far more like a television commercial, or a billboard that you drive by, than a piece of direct mail. And, believe it or not, companies that sell billboards are not going out of business because the people who drive by billboards aren’t stopping their cars, getting out, and writing down 800 numbers and making a call. There is a completely different expectation that advertisers have with these types of media.

The problem is that there are companies out there that continue to position banners as a form of direct marketing, which I don’t think is justified. I’ve always felt that banners are best used as a form of brand advertising. Because consumers have to proactively go out and find banners, and then proactively click on them, response rates for banners were always low, right from day one. Email, by contrast, is a true direct marketing medium, where messages are pushed out to people. So, it’s very hard to imagine that click rates on email campaigns could ever get as low as click rates on banners. On the opt-in side, in particular, since the prospect has requested, and shown some interest in receiving email from the company, I think prospects will always be responsive enough for email to be a profitable strategy.

avant|marketer: After having witnessed much of the evolution of permission email marketing play out before your eyes, what do you believe is the best use that can be made of email as a marketing tool? In other words, what’s the proper role of email in the overall marketing mix?

Rosalind Resnick: The email is simply the envelope. The web site is really the letter. So, the purpose of email marketing in the broader marketing mix is not to close the sale in a single message, as a lot of marketers still believe. The purpose of email is to serve as a teaser to drive people to the web site in order to get them to sign up for a house file list, fill out an information request form, or possibly make a purchase. Email by itself is simply a powerful lead generation tool. That’s its role.

avant|marketer: Do you think this is likely to change over the coming years? Is email’s role in the marketing mix likely to evolve substantially from where you see it now?

Rosalind Resnick: What I see happening now is the evolution of true multi-channel marketing. People have been talking about this for years, but finally it seems that multi-channel has started to happen. Now that we’ve finally gotten to the point where catalog companies and other direct marketers both on the B2C and B2B sides have developed a critical mass of email addresses to tie in into the huge amounts of postal address and purchase behavior data that they’ve had for years, we’re going to see email become merely a component in a larger strategy, as opposed to be a strategy, by itself.

avant|marketer: What are some examples of the sort of email-driven synergies we’re going to see working across marketing channels, going forward?

Rosalind Resnick: I think there will be different strategies for different marketers, depending on what they’re marketing. But, in general, the most important synergies will be created through the reinforcement of offline direct marketing messages by email.

For example, magazine publishers that have built up email databases will probably reap significant benefits from sending out a subscription renewal notice once by postal mail, and then following that up with three, four, or five email reminders, instead of using additional postal mail pieces. Postal mail has a large cost attached to it. What makes email such a powerful as a cross-channel marketing asset is that, no matter whether response rates are decreasing or not, with the supply of bandwidth where it’s at today with most large companies having T1 connections, the cost of doing an additional email blast is virtually zero. So, email becomes a very effective, yet bascially free way to drive conversions in synergy with offline. You start with an offline message, and reinforce it with email to take the customer to the point of conversion. This represents a tremendous cost-savings for companies.

avant|marketer: As you know, there is much talk right now of the branding power of the Internet. Along with this, there has been talk coming from a number of quarters suggesting that email should be leveraged as a branding tool, in addition to merely direct response. Is email going to ever evolve into a powerful branding medium, on a par with Print and Television?

Rosalind Resnick: No. And, I’ve never really understood that vision. Any company that wants to really do email branding would have to send out a huge amount of email messages to get the kind of advertising reach that you would get from say, a half-time spot on the Super Bowl. So, I really don’t see email developing into any sort of mass branding medium.

avant|marketer: Five years from now - which, admittedly, is a substantial amount of time in light of the pace of innovation in the Internet Advertising space - what formats will Internet Advertising come packaged in, and what will have happened to email by that time?

Rosalind Resnick: Jumping all the way to ten years from now, there is going to be no such thing as the “Internet Advertising industry”. Ten years from now, we’re simply going to have the “Advertising industry”.

Just as we’ve talked about earlier when we were talking about offline and online channels converging, there’s going to be a much larger convergence here. Ten years from now, there is going to be no question, for example, about whether email is part of a marketers mix. Almost every company is going to collect email addresses as a matter of course.

Looking at the history of media over the last hundred years, we can see that whenever a new medium bursts on the scene everyone says it’s going to be better than the old media, but what really happens at the end of the day is that the new medium is eventually just absorbed into the older mix.

Ironically, the future of this industry is that ten years from now it will be so successful that it will no longer exist.