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Should you opt in to opt out?

March 05, 2003 |

Permission or forgiveness? For marketers crafting an opt-in policy, it's a long-debated question. Privacy advocates have called for marketers to agree on an opt-in standard.

Permission or forgiveness? For marketers crafting an opt-in policy, it’s a long-debated question. Companies are re-examining their opt-in policies and wondering, “Should we have an opt-out policy and collect piles of e-mail addresses with limited response rates? Or should we have an opt-in policy where we’re sure we are engaging with truly interested individuals but cannot boast of a seven-figure house list?”

Privacy advocates have called for marketers to agree on an opt-in standard. In many ways this makes sense. It’s certain vast numbers of consumers unwittingly sign up for e-mail newsletters when marketers take the opt-out route. Many of these consumers view the e-mail they receive from these companies as spam. It’s well known opt-in house lists perform better than those built from opt-outs.

E-mail is inexpensive but not free. The vast number of messages that are ignored cost companies money. Given time, it’s serious money. Let’s assume a mid-sized site has an additional 100,000 names on its list because of an opt-out policy overlooked by “subscribers.” At a rate of one e-mail per week at $5 CPM, that marketer spends $25,000 per year reaching out to indifferent (if not hostile) customers. Assuming a generous 10 percent net margin, this marketer must sell an extra $250,000 worth of product to realize a positive return on investment (ROI) on its opt-in policy. Impossible? No, but it sets the profit bar for its e-mail program much higher.

If opt-out increases e-mail costs and alienates consumers, why do I (and other Jupiter analysts) often recommend marketers take this approach?

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