Gmail – I Don’t Get It, Part II

Back in June, I blogged about Google’s new Gmail service, how I didn’t understand the fuss, and how its features would ultimately be replicated and true usership stalled at a couple million.  I stand by those assertions (just look at what Yahoo, Hotmail, and Lookout have done to the landscape since then), but my company Return Path published some data today that’s interesting on this topic.

We run the largest Email Forwarding and Email Change of Address service around, so our data on email switching is pretty solid — we’ve had about 16 million consumers register a change of email with us in total, and about 25,000 new ones come in every single day to report a new ISP.  So our numbers are probably pretty good relative to each other (ISP to ISP or month to month at the same ISP), but they’re certainly not meant to be correct on an absolute basis.

– In July, we saw 375 people join Gmail, in August, 802, and in September, 2,396.  To put these numbers in context, we see 50,000-100,000 new users every month at Hotmail  and Yahoo, and even 5,000-15,000 new users every month at smaller ISPs like AOL, Earthlink, Comcast, and Roadrunner.  These numbers are obviously on the rise, but they’re still pretty small.  In all fairness, though, G-mail is still invitation-only, at least in theory.

– Gmail is mainly stealing share from Hotmail and Yahoo, twice as rapidly from Hotmail as from Yahoo — and twice as rapidly from Yahoo as from AOL.

Read the full article in eMarketer here.

After I saw the article this morning, I asked my colleagues Jack Sinclair and Jennifer Wilson to tell me how many people we saw leaving Gmail every month, an interesting metric to offset the one most people are interested in covering.  The answer at this point is also revealing.  While we recorded 2,396 new Gmail users in September, we also recorded 741 people leaving Gmail in the same month.   That’s a sign to me that a lot of people are trying it out to see what the buzz is all about, but many are quickly switching back after a little experimentation.

And yes, we also took a look at how many people are leaving Yahoo, Hotmail, and AOL every month relative to the number of people joining those services.  Hotmail and Yahoo do a lot of treading water (lots of people leaving, lots of people joining), but let’s just say I wouldn’t want to be the guy in charge of AOL subscriptions these days.

It’s Up There With Air and Water Now

A study on “web withdrawl” conducted by Yahoo and OMD confirmed that most people are now so accustomed to using the web that they have problems when internet access is taken away from them. Nothing too earthshattering, but it’s an interesting quick read.

My favorite part: one person reported that he even missed getting spam. Now THAT’S a sign that it’s time to get outside and enjoy some fresh air.

Spam: Crisis, or Approaching Denoument?

A few interesting comments on this front today. Fred says the crisis is over, everyone should just calm down. Pamela says spam filtering technology is getting really good now. And I had lunch with Saul Hansell from The New York Times today, who thinks that authentication will make a monumental difference.

[For those of you who read OnlyOnce and aren’t super technical, authentication is the newest trend that ISPs are starting to employ to snuff out spammers. In a nutshell, it’s a technology like Caller ID that lets an ISP verify who’s sending the mail so they can shut it down if the mailer is clearly a bad guy (or someone who blocks Caller ID).]

I’m not sure as Fred says the crisis is over — but I think it’s on the way to being minimized. And Pamela’s right — filters like Cloudmark are pretty darn effective. Things like that just need to be rolled out to broader audiences. And Pamela’s also right that mailers will have to work on managing their identity and reputation in order to cope with new technologies like authentication and beyond. That’s a posting for another day.

But before we declare victory, let’s remember two things:

– First, these things take a LONG time to trickle down to a broad enough audience to say “problem solved.” I mean YEARS.

– Second, the bad guys aren’t going to give up without a fight. This is war! They’ll be back and they’ll find us. They’ll get better at avoiding filters, and they’ll infiltrate things like authentication and exploit loopholes in CAN-SPAM and other legislation. Remember, spam’s economics still work.

So I’m happy to say Spam isn’t still in Crisis Mode, but it’s not resolved either — how about Approaching Denoument?

• Soup for Nuts
  From our client, Business & Legal Reports, a HILARIOUS read in the strange-but-true category. This is essential reading for any manager who has ever mediated an employee dispute. Tthanks to Tami Forman for citing this one!
  (tags: Humor)

Today, the FTC very shrewdly punted on the issue of the proposed “Do Not Email” list implementation, saying that authentication systems need to be put in place before such a list can be considered. This buys the world more time to work on more effective, market-driven solutions to the spam and false positive problems.

I read a few interesting posts on this today, including one from Jeff Nolan which nicely captured Chuck Schumer’s elegant combination of demagoguery and idiocy about this issue; and one from Anne Mitchell pointing out that they’re about six months late with their conclusion. Feels about right for the federal government.

What’s interesting to me is that all of the comments by and about the FTC and the proposed “Do Not Email” list focus on the wrong thing: they say that the problem with the list is that spammers would abuse it by hacking into it and stealing all the email addresses. Ok, I’ll admit, that’s one theoretical problem, but it’s not THE problem.

The structural problem with a national “Do Not Email” list is that responsible emailers, non-spammers, don’t need to use it since they get appropriate permission from their customers before sending them email…and spammers won’t bother using it since they don’t give a hoot anyway and will find a way around the list as they do everything else. In the end, the creation of such a list would do nothing to stop spam, but it would certainly create a lot of confusion for legitimate marketers and their customers around opting in and opting out. It would also, notably unlike the fairly successful national “Do Not Call” list, not do anything to reduce the volume of spam, which will create disappointment and anger among consumers (and hello, Senator Schumer, backfire on its political sponsors).

Those aren’t bigger problems than spam to be sure, but why should we implement a solution to the problem that doesn’t work at all and that causes its own ancillary problems along the way?

Unleashing the True Power of Email

A recent Behavioral Insider column had a truly tantalizing quote from iPost’s Steve Webster:

"There is the presumption that when someone receives an email message they then click on the email go to the Web site and either make a purchase or not and then they are done interacting with your email. This turned out to be wrong. We discovered very quickly that the power of an email impression lasts for weeks after the customer has actually received the message. The particular interaction they will have with you later really depends more on their personal preferences than on your putting a new email in front of them."

The highlighted portion is a point we’ve been making here at Return Path for years now.  Emails are not perceived by recipients as distinct, one-off promotions.  But many marketers continue to view them that way and make both strategic and tactical errors because of that.  Here are a five things you need to start doing – right now – if you want to capitalize on the true power of email:

1. Stop analyzing each email in a vacuum.  The whole is worth more than the sum of the parts.  The deeper you can dive into your data and analyze the whole program and how recipients interact (or don’t) the better decisions you can make.  Be sure to read the entire Behavioral Insider column – some of the tests they describe around segmentation reveal how email does or doesn’t influence purchasing and how it can be used more effectively.

2. Sending ever more email isn’t the answer.  To the point above, more email seldom makes buyers buy more.  Marketers don’t quite believe this because every email blast they deploy results in revenue.  But the point this column makes is that you have to look at what is happening at the individual level.  It soon becomes clear that sending targeted, segmented email – less email per person – is more effective.

3. Look past the click. As a corollary to #1, many marketers believe if a subscriber doesn’t click, they haven’t interacted.  This clearly isn’t the case.  The smartest marketers segment their non-clickers into buckets.  For example, a retailer might look at non-clickers who are openers, online purchasers, site browsers or in-store purchasers.  If you have an email recipient who browses your website every other week and then purchases in store once per quarter, it is nutty to assume that the email isn’t influencing that just because they don’t click through.

4. Reliance on CPA is going to bite you.  Yesterday my colleague Craig Swerdloff wrote about CPA versus CPM in list rental on the Return Path corporate blog.  Marketers believe that CPA is the best deal for them because they only pay for performance.  The problem is that CPA often requires a very high degree of volume to achieve success for both publisher and marketer.  All those extra emails don’t just self-destruct and wipe the memory of the recipient who doesn’t take your "action."  They’ve still made an impression – positive or negative.  Both CPA and CPM can be effective, but you need to work with an expert who understands that email is about more than clicks.

5. Permission + value = ROI. Steve Webster’s quote goes on to point out that "We thought the quality of the … creative made all the difference. It turns out that it does – but not nearly as much as the fact that [the email] made an impression on a customer who actually was interested in receiving an email from you."  Sending email without permission, as defined by the customer not by you, is a non-starter.  The first step is getting that person to proactively sign up, and then making sure they recognize your emails as desired.  Then the value piece kicks in.  Do you send what you promised?  Do your emails exceed their expectations?  Do you delight them?  The more yeses you rack up there, the more revenue your email will generate.

These Things Do Take Lots of Care and Feeding

Pete Blackshaw wrote a really thoughtful piece in ClickZ today entitled “Ten Reasons Why I Should Stop Blogging.”  It’s a good read if you’re a middle of the road blogger…or particularly if you’re thinking about starting a new blog.

A Flurry of CAN-SPAM Activity – But Is It Meaningful?

Our four-year old oft maligned anti-spam legislation in this country, the CAN-SPAM act, has seen an uptick of activity this past week. 

Melinda Krueger sums up the sentiments of many in the anti-spam community in her Email Insider column today when she says,

There is no provision in the act against sending unsolicited email as long as you comply with the rest of the act. The motivation of the act was more to make voters feel politicians were doing something about this annoying problem.

In the last two days, however, we got news of ValueClick’s $2.9 million settlement with the FTC over a CAN-SPAM violation (the largest ever), as well as notorious hardcore spammer Robert Soloway pleading guilty on a variety of charges for Really Bad Things, probably including spamming (I’ve read differing reports of his plea, some of which include the CAN-SPAM violation, and some of which don’t).

I’ve never felt that CAN-SPAM did all that much to stop sneaky practices.  It has loopholes so large you can drive a semi through it.  People joke that the law means, “yes, you CAN spam.”  Yet, the law does seem to be doing at least a little of what it was intended to do, which is give the federal government the teeth to go after the bad guys. 

Soloway undoubtedly is a bad guy.  ValueClick may or may not be a bad guy, depending on who you talk to.  But, weak as the law may be, public fines and convictions for violations of CAN-SPAM will ultimately start to impact both the black hats and the grey hats.  Let’s just hope the feds keep up their enforcement work!

Scaling Frustrations

Two things have come up in spades lately for me that are frustrations for me as a CEO of a high growth company.  These are both people related — an area that's always been the cornerstone of my leadership patterns.  That probably makes them even more frustrating.

Frustration 1:  Worrying that I don't get completely candid feedback from deep in the organization.  I've always relied on direct interactions with junior staff and personal observation and data collection in order to get a feel for what's going on.  But a couple times lately, people had been warning me (for the first time) when I've relayed feedback with comments like, "Of course you heard that — you're the CEO.  People will tell you what they think you want to hear." 

So now the paranoid Matt kicks in a bit.  Can I actually trust the feedback I'm getting?  I think I can.  I always have.  I think I'm a good judge of character and am able to read between the lines and filter comments and input and responses to questions I ask.  But maybe this gets harder as the organization grows and as personal connections to me are necessarily fewer and farther between. I probably need to start recognizing that as the CEO, people may feel uncomfortable being totally open…and it is my job to figure out how to be sure people understand that I do want to hear their voices…unplugged and constructive.

Frustration 2:  Needing to be increasingly careful with what I say and how I say it.  This comes up in two different ways.  First, I want to make sure that while I'm still providing as transparent leadership as I can, that I'm not saying something that's going to freak out a more junior staff member because they're missing context or might misinterpret what I'm saying.  Ok, this one I can manage.

But the tougher angle on this is having unintended impact on people.  Throwing out a casual idea in a conversation with someone in the company can easily lead to a chain reaction of "Matt said" and "I need to redo my goals" conversations that aren't what I meant.  So I'm doing some work to formalize feedback and communication loops when I have skip-level check-ins, but it's creating more process and thought overhead for me than I'm used to.

Nothing is bad here – just signs of a growing organization – but some definite changes in how I need to behave in order to keep being a strong and successful leader.

Academic Inspiration

I just read in my alumni magazine that at Opening Exercises for incoming freshmen this year, Princeton President Shirley Tilghman closed her remarks with the following:

For the next four years, you will be encouraged – and indeed sometimes even exhorted – to develop the qualities of mind that allowed Katherine Newman, Simon Morrison, and Alan Krueger to change what we know about the world.  Those qualities are the willingness to ask an unorthodox question and pursue its solution relentlessly; to cultivate the suppleness of mind to see what lies between black and white; to reject knee-jerk reactions to ideas and ideologies; to recognize nuance and complexity in an argument; to differentiate between knowledge and belief; to be prepared to be surprised; and to appreciate that changing your mind is not a sign of weakness but of strength.  We ask you to be open to new ideas, however surprising; to shun the superficial trends of popular culture in favor of careful analysis; and to recognize propaganda, ignorance, and baseless revisionism when you see it.  That is the essence of a Princeton education.

While some of these comments are more appropriate for an academic setting, how many of us who run businesses want to encourage the same behavior and thoughtfulness of our employees?  Here are a few examples taken from the above.

To change what we know about the world — a hallmark of a successful startup is to invent new products and services, to change the way the world works in some small way.  In our case, to fix some of the most critical problems with email marketing.

The willingness to ask an unorthodox question and pursue its solution relentlessly — reinventing some part of the world only comes by challenging the status quo.  Return Path was started by asking an unorthodox question:  why isn’t there an easy way for people to change their email address online?

To cultivate the suppleness of mind to see what lies between black and white; to recognize nuance and complexity in an argument — the longer I run a company, the less black and white I see.  When I do seev it, I think of it as a gift.  The rest of the day is spent trying to figure out the zone in between.  Making 51/49 decisions all day long is difficult, but it’s easier when the rest of the organization is capable of doing the same thing.

To appreciate that changing your mind is not a sign of weakness but of strength; to be open to new ideas, however surprising — perseverance in business is critical; stubbornness is deadly.  How does the old saying go?  The definition of Insanity is doing the same thing over and over again but expecting different results.  If the only thing we were still doing at Return Path is ECOA, we’d be long gone by now, or at least MUCH smaller than we are today.

I don’t know too many entrepreneurs that don’t espouse most of the above principles.  The trick is to build an entire company of people that do.