Should You Opt in to Opt Out?

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 email 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 (including many ClickZ readers) 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 email newsletters when marketers take the opt-out route. Many of these consumers view the email 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 email 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 email program much higher.

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

First, it depends on the marketers’ mandate. I’m asked far too often whether a tactic is right for a client without that client first considering the campaign’s goal. The process of mapping strategy and setting goals (and metrics to meet these goals) seems to have fallen out of favor among many Internet marketers. It’s imperative to establish a campaign’s goal prior to launch. Without one, how can you know what metrics to measure? Without metrics, you won’t know if you’ve succeeded — or whether you should bother doing another email campaign.

To help determine whether your company’s strategy lends itself to an opt-out approach, ask yourself a few questions:

• Will you rent out your list? If so, privacy is not key to your branding. This is not necessarily a bad choice. But if you will to rent out your house list, your goal is to make that list as large as possible.
• How do you measure success? If your organization cares about click-throughs more than anything else (I can give you a whole bunch of reasons why you shouldn’t, but that’s for another day), an opt-out list won’t help. If you want to increase your CTRs, stop sending email to people who don’t click. If you want to keep CTRs high, don’t email people who didn’t realize they would receive messages from you. You’ll be ignored in droves, and your CTRs will lag.
• What’s my company’s strategy? What’s the nature of your relationship with customers? Fast, big strikes with lots of churn or sustained, incremental growth? Both are valid strategies that can have positive bottom-line effect. Both suggest different approaches to marketing spend. Opt-out benefits the high-churn, one-off marketer. Opt-in benefits a relationship-driven business.
• What are your stakeholders telling you? The reality of many situations is it doesn’t matter what you think. If your boss wants a list with 750,000 names by the end of the quarter, opt-in probably won’t get you there. Sometimes, there’s no arguing with the boss.
• Are you more comfortable asking for forgiveness or permission? Last year, Yahoo opted in all users to its marketing programs. In other words, it changed users’ spam settings. It emailed all users asking them to change their settings (essentially, to opt out) if they did not wish to receive messages from partner companies. Yahoo decided it would be easier to ask forgiveness than permission. Had there been a widespread outcry among consumers, Yahoo would have asked for forgiveness, changed the policy, and reverted to opt-in. There was no outcry. Yahoo was able to sell the vast majority of its users’ names to advertising partners.

  If you’re a Yahoo shareholder, this is a good thing.