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Gartner User Survey: Security Summit Reveals Spending Patterns, Worldwide, 2005. Learn how regulatory compliance appears to be driving information security investments.


E-Mail’s New Complexities Potential Boon for Service Providers
By Kevin Newcomb

August 17, 2004

New efforts to eliminate spam are looking good for e-mail marketing companies. Emerging technologies like e-mail authentication, coupled with the complexities of legislation like CAN-SPAM, give e-mail service providers (ESPs) more services to offer, as well as more opportunities to sell those services.

The message to prospective clients: managing e-mail marketing is a job best left to professionals.

“E-mail delivery — particularly sophisticated campaigns — is a daunting task,” said Trevor Hughes, executive director of the E-mail Service Provider Coalition (ESPC). “There are many ways that someone can stumble into significant problems, even problems that can threaten a brand, and do so almost inadvertently, without realizing they were traipsing down a tortuous route.”

The new roles for e-mail service providers come at a fortuitous time. E-mail marketing has been far from booming, with many feeling it has been tainted by the spam and phishing problems.

According to industry estimates, spam messages in July comprised more than two-thirds of all e-mail in the United States. About one-tenth of that could be classified as “phishing” — scams which attempt to trick users into divulging sensitive information, such as credit card numbers or account passwords, by pretending to be from a legitimate source.

Legitimate e-mail marketers have responded to these threats to their industry by supporting legislation like CAN-SPAM, a federal anti-spam law which took effect in January 2004. On the technological side, efforts to reduce spam and phishing have spurred a movement toward authenticating e-mail senders. That initiative culminated in a recent summit on Sender ID, a framework which verifies that an e-mail message originates from the Internet domain it claims to come from.

It also adds another layer to an already-complex e-mail marketing landscape. E-mail service providers have already used CAN-SPAM compliance as a tool to woo new clients. Now, they’re touting their compliance with Sender ID, which will soon — if all plans come to fruition — enable e-mail to get through to the inbox more easily. This is where ESPs see their value proposition, Hughes said.

Five years ago, a marketer would seek out an ESP simply to deliver lots of mail and provide analytics. While those aspects are still at the core of their service, a big part of what an ESP offers today is expertise in e-mail deliverability and compliance with applicable laws, Hughes said. In fact, most companies in the ESPC have a “VP of deliverability”, or a “director of ISP relations”, and a few of them even have multiple people dedicated to the job.

“E-mail service providers differentiate themselves on the basis of the deliverability and privacy compliance type services they offer,” said Hughes. “This is one more example of the types of things e-mail service providers do for large senders that it would be really difficult for a company to do on their own. I don’t think that many companies today could scale to a point where they could justify hiring a person like that.”

Most of the challenges that an ESP is able to address better than individual senders revolve around rapid changes both in the Sender ID specification and the proposed implementation by the receivers, according to Kirill Popov, director of ISP Relations and Delivery at E-mailLabs. “Individual receivers may not always be able to keep up. Because of our participation in industry groups and our ISP relations, E-mailLabs is able to stay in tune with the ways Sender ID, as well as other authentication or reputation schemes and proposals, are being implemented.”

Popov said that Sender ID is gaining momentum among larger customers, who typically have well established goals, targets, and budgets for their e-mail marketing programs, and have a great interest in ensuring e-mail delivery.

But to say that the issue is solely the problem of large companies is incorrect, Hughes said. “The Fortune 500 can get into trouble with privacy compliance and spam issues just as easily as your local bakery sending out a newsletter with their recipe of the month.”

Janet M. Muto, VP of marketing at small business-focused ESP Constant Contact, said there are plenty of reasons for a small business to turn to an ESP. “They neither have the scale to be able to have relationships with the ISPs, nor do they have the brand name that gets them through. Having their e-mail delivered for them is absolutely critical,” she said.

An important service that an ESP provides for its small business clients is education and coaching, she said. “As CAN-SPAM evolved and became a law, we had been working with our small businesses to understand what good e-mail marketing is, how to comply with the law, what practices they should have,” Muto said. “I expect we’re going to see the same thing as these authentication systems come to market and the ISPs use them.”

While compliance with standards is a strong selling point, it is more than just a marketing message for marketing’s sake, said Stephen Guerra, director of deliverability and ISP relations for Silverpop. “As the various sender authentication protocols are being adopted by the ISPs and other recipient domains, compliance will be a mandatory selling point,” he said.

Compliance with SPF, a precursor to Sender ID, is already a significant factor in the decisions of e-mail senders, he said. As more companies adopt Sender ID, it will follow. After that, the next step will be the implementation of accreditation and reputation systems, which depend on being able to validate the identity of a sender. These protocols will add even more complexity to the process, but will also go a long way in battling spam, he said.

“Once you can say that someone has an established reputation, and you can verify their identity, that’s when you’re really going to address the spam,” he said.

Sender ID should also help legitimate e-mail marketers repair a somewhat tarnished reputation. “It’s going to be able to carve out those folks that are spoofing domains in e-mail. So right off the bat, it’s going to help us respond to some of the challenges we are facing right now with phishing,” Hughes said. “More than that, it’s going to let legitimate senders really stand up and be recognized, and be held accountable for their sending practices, and also be rewarded for good sending practices.”

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