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E-MAIL EXECUTIVES ARE growing tired of the lack of attention and budget chief marketing officers give the channel.

While they understand that 90% of most marketing budgets are devoted to television, and that in turn TV draws most of the top execs' notice, they argue that e-mail delivers the best return on investment of all media at a CMO's disposal.

That was one of the themes which surfaced at this year's e-mail marketing roundtable.

Participants also strongly cautioned that while the trade press has been relatively quiet about e-mail authentication for the last six months, inbox providers are increasingly adopting authentication standards. As a result, some marketers are going to start experiencing deliverability problems seemingly out of the blue in 2007.

Logistics forced Direct to conduct this year's roundtable virtually and interview participants individually.

Participants included Josh Baer, chief technology officer at pay-for-performance marketing services firm Datran Media; Chris Baggott, CMO of e-mail software firm ExactTarget; George Bilbrey, vice president/general manager of Return Path's delivery assurance division; Chris Marriott, vice president/general manager, Eastern Region, for e-mail service provider Acxiom Digital; Elaine O'Gorman, vice president for strategy at e-mail marketing software maker Silverpop; and John Rizzi, CEO of e-mail service provider e-Dialog.

DIRECT: What's had the most profound impact on the e-mail marketing industry in the last year?

BILBREY: I think the increasing openness of ISPs to provide information via feedback loops or via Microsoft's [Smart Network Data Services, where e-mailers can get deliverability information] are — from a deliverability standpoint — a really big deal. It helps you understand what you look like to those guys and gives you pretty good information on what you need to change to get more mail delivered. For example, Microsoft's SNDS service will tell you what your complaint rate is or whether or not you're hitting spam traps. Before, this kind of information was hard to come by.

O'GORMAN: I think we've really seen a steady growth and adoption of authentication standards over the last year. And I think it's really gone under the radar of a lot of marketers that may not realize there are things they need to do to take advantage of (or at least not be hurt by) them. However, for a lot of marketers, the concept of having to talk to IT is terrifying.

DIRECT: But if I'm a marketer, I'm going to say: ‘I thought [the ESP] was handling authentication. Why do I have to deal with it?’

O'GORMAN: That's precisely why authentication is a bigger deal than people think it is. They don't realize it's not just their provider that has to handle it. In many cases, they have to handle it themselves, and it won't be fast and easy because they'll have to work with their internal IT resources. If you don't have this down in the next six months you'll be facing serious problems. And because it requires going through your IT department you need to start now, because a six-month time frame for an IT project is lightning fast.

DIRECT: Can a marketer get this done without taking the time to learn about the standards?

O'GORMAN: Absolutely. And in most cases you're not going to be able to do it yourself.

DIRECT: How about the marriage of data and e-mail that everyone's talking about? We're not real far along with that yet, are we?

O'GORMAN: [Regarding Web site analytics data,] we're not. And it's going to be a slow process because it's hard. No. 1, data is structured differently for different purposes so it takes a fair amount of massaging the data to get from point A to point B. No. 2, there's a lot of data, so it's complicated to skinny it down to get what's relevant. No. 3, every implementation tends to be quite custom.

RIZZI: [Regarding data from outside sources,] most marketers are still working on the fundamentals of execution. The concept of integrating that with other data sources (such as demographic data), while valuable, is still on their ‘B’ list of important things to do.

DIRECT: OK, it's prediction time. What are the big developments or challenges we can expect to see in the next 12 months?

RIZZI: There continues to be the challenge of bringing e-mail up in importance at corporations. The chief marketing officer of a large company today still doesn't think much about e-mail. [CMOs] need to understand the value and the risk of e-mail more, the value being the tremendous ROI, and the risk being that if you do it wrong there's a danger of alienating your customers. That should be really important to every CMO, but e-mail is mostly relegated to a division within a division.

DIRECT: Why is that?

RIZZI: I think part of it is because of e-mail's roots. It started as a discretionary budget item somewhere in marketing. It's also a very inexpensive medium. So with 90% of a CMO's budget going to TV, what do you think they'll spend their time on? You pay attention to where the money is, which is lopsided compared with where the ROI is.

MARRIOTT: E-mail budgets are staying modest even as the campaigns become more complex. My frustration is that as the channel becomes more effective, more money isn't flowing to it. Part of the reason is that e-mail doesn't get enough respect at the senior level in client marketing departments. E-mail marketers are siloed within their organizations and they tend to be overlooked. And as for TV, there was a great quote from one of the American Express guys who said: ‘Where else can you find a product that gets diminishing returns every year, yet costs more?’ Part of the problem is e-mail isn't sexy. One of the great paradoxes of electronic marketing is the stuff that's proven to work best is not the stuff a lot of clients spend their time thinking about. They've done e-mail and now they're getting distracted by blogging, mobile marketing, RSS and consumer-generated content. And all these things, by and large, have demonstrated no value as marketing tools, with some isolated exceptions.

BAGGOTT: One big challenge for 2007 will be the ability to generate e-mail that renders on a handheld. Fifty percent of all e-mail renders on a handheld now.

DIRECT: Really? That number seems absolutely unbelievable.

BAGGOTT: In the business-to-business world, 50% of e-mail renders on a handheld. Also, 50% of all e-mail doesn't render images automatically. There's a lot of disengagement because marketers have been building e-mails that are extremely image-heavy, to the point of being all image. Now if you have a Blackberry, what you find yourself doing is using it to clean up your inbox. You sit there in your downtime and you hit delete, delete, delete while you figure out which ones you're going to engage with later. There are 2.5 billion handhelds in the world, and you've got to prepare yourself for them as the communications medium of choice.

DIRECT: But images are a problem on desktop computers as well. Right?

BAGGOTT: Yes. So it comes down to engagement. Marketers [whose messages] are extremely image-heavy and very light on text — or even worse, make their text images — have got a problem. If the goal is engagement, you have to make sure you've got text in your e-mail. And you want to get that text toward the top.

MARRIOTT: I understand concern about images being blocked, but I think we're being a little overwrought about it. If I've truly opted into the e-mails and the messages I've received from that mailer in the past have been relevant and valuable, it really isn't going to be all that hard for them to get me to click to turn on the graphics. If you deliver valuable information, people will take the extra step and click through.

O'GORMAN: [In 2007] I think we're going to see a much greater emphasis on thinking about every e-mail that goes out of the company in a holistic manner rather than just focusing on marketing e-mail. We're going to start thinking about how our transactional messages look, about how we leverage our transactional e-mails for marketing purposes without making our customers angry. We're going to start thinking about how our brand comes across in administrative messages. I think we're starting to look at e-mail a lot more holistically than we have in the past and marketers are getting excited about the ways they can deliver their messages through alternative e-mail vehicles and get results.

BAER: I think authentication is an issue that not enough people have thought about. 2006 was the year it became very real. 2007 is going to be the year it's “authenticate or else.” If you're not using authentication next year it will have an impact on deliverability. There will be more feedback loops [where ISPs supply reports on why e-mails bounce], more whitelists and more unsubscribe buttons. There are a bunch of them on the way right now. Finally, I think we're going to see Microsoft, AOL, Yahoo! and Google getting into e-mail marketing in a pretty big way in 2007, and that's going to change the landscape.

DIRECT: This sounds like pretty positive news for the industry.

BAER: For marketers that are doing things right, it couldn't be better. It's getting easier and easier to show you've got good practices, to receive feedback and to be whitelisted. I also think marketers are going to be challenged to figure out what the real value of an e-mail address is for them. It's been very hard without reliable deliverability to tie e-mail into other channels. A lot of those pieces are coming together right now where deliverability's more reliable, where acquisition costs are more understood, and where, through analytics, we're able to compare what's happening in e-mail to other actions on the Web sites. Also, people are starting to monitor and measure unsubscribes, complaints and other issues. So tying all those things together, there's more pressure than ever to understand what you're willing to pay to acquire a customer's e-mail address and what its costs you when that customer unsubscribes and your messages don't get through.

DIRECT: What are some things marketers can do now to improve their e-mail efforts?

BILBREY: Sign up for feedback loops and clean people who have hit the “report spam” button from your list. In our experience, you can reduce your complaint rate by 50% to 75% just by doing that. There's [usually] a small subset of people that has a propensity to hit the “report spam” button. Also, unknown users are very easy to fix. An unknown user is a bad address and it's pretty easy to pull those guys off your list.

BAGGOTT: Marketers have to realize that e-mail marketing isn't about the creative. It's about the message. It's about the engagement. It's a mechanism to try and get someone to do something. Yet most e-mail marketing is still very focused on the creative. Marketers need to realize that creative is going to become less and less important if I can't see the images on my laptop or on my handheld.

MARRIOTT: Time and again, we've seen that people who [recently have] opted in are those most likely to take an action. And if I opt in to an e-mail newsletter or e-mail special, I'm astonished at how rarely I get instant recognition thanking me for opting in, and receive a follow-up e-mail with an offer. I'm astonished that weeks often go by before I get e-mail from [those senders]. One thing marketers can do right now is look at what they do when someone [chooses to receive] their e-mails. I also don't understand why so many marketers fail to use transactional e-mails as a marketing tool. They have the highest open and clickthrough rates of any e-mail.