Direct hit: can direct marketing survive a consumer backlash?

Entrepreneur, Sept, 2003 by Chris Penttila

TELEMARKETING, JUNK MAIL and spam have consumers up in arms. Now Congress, the states and large technology companies are taking action. AOL and Microsoft are suing spammers, and at least five anti-spam bills are making their way through Congress. Fraudulent spam is already illegal, but Sen. Conrad Burns (R-MO) and Sen. Ron Wyden (D-OR) are co-sponsoring the "Can Spam Act," which would make it a federal crime to send unsolicited e-mail to consumers who "opt out." Sen. Charles Schumer (D-NY) is sponsoring a bill to create a "no spam" registry, and some states are considering "do not spam" lists that will let consumers sue spammers. In California, state Sen. Debra Bowen (D-Marina Del Rey) is sponsoring a bill requiring companies to get consumers' permission before sending commercial e-mail.

Telemarketing is being called on the carpet, too: The FTC's national "do not call" registry requires telemarketers to reveal their phone numbers via caller ID, limits "abandoned calls" (when consumers pick up and there's no one on the line), and charges fines of up to $11,000 per violation. While the tide hasn't turned for a national ban on telemarketing, most states have adopted "do not call" lists, and the FTC recently asked Congress for even more power to go after spammers and telemarketers.

How will this affect direct marketers? "I'm watching very carefully," says Pankaj Gupta, 42, founder and CEO of Acteva, a San Francisco B2B firm that assists corporate clients with e-mailed event notices, online registration and payments and offers telemarketing services. Acteva recently updated its privacy policies and is making sure every contact with consumers is permission-based.

The current debate centers on spam, and Ross Petty, a professor of marketing and technology law at Babson College in Wellesley, Massachusetts, believes not much will change until Congress takes up the real issue: whether spam should be allowed at all.

Petty predicts this debate will start in the next few years: "[Politicians] will have to go after the issue when 70 to 80 percent of all e-mail traffic is spam." Will marketers turn to direct mail as a substitute? Probably not, says Petty. "Spam costs pennies per piece to send; direct mail is to times as expensive," he says. "Most of the notorious spammers couldn't profitably replace e-mail with direct mail."

Besides, direct mail Paces its own regulation efforts: New York State legislator David McDonough, a Republican assemblyman, has proposed a "no mail" (and "no e-mail") list. Similar measures are making their way through legislatures in Missouri and Colorado.