When Salesforce.com bought Exact Target for $2.5 billion in May you might have assumed that the world finally valued the art of email marketing.
Did everyone miss the real story?
Email marketing isn't about sending email. Email marketing is about the email address - the customer relationship management (CRM) targeting power of this unique identifier. That's what Salesforce.com bought.
Email marketing companies aren't hot because they send email. They're hot because of the most unique and persistent piece of CRM targeting data in the universe: the email address and its hexadecimal derivative: the MD5 hash of the email address.
Send-based email marketing is almost an unnatural act: brands become publishers of a single-topic magazine (the first-party branded newsletter). Now Walmart.com might be the largest publisher in the United States. Brands send these newsletters hundreds of times a year. Most brands run this effective play with some small variations. Repetition is the formula.
But thanks to Facebook - and now Twitter - brands discovered that email marketing is not just about sending emails to your own first-party newsletter (opened only by 10 to 15 percent of its recipients).
What's the solution? Use the MD5 hashes of your customers' email addresses to reach them outside of your own newsletters. How does hashing an email address work?
Hashing takes an email address like firstname.lastname@example.org and turns it into a 32-character string like "43307bb5a669b247270a4d81cce6f3ff." This algorithm is a one-way cryptographic function that produces a unique and repeatable 32-character hexadecimal string. No algorithm translates a hash back into its original email address, hence its popularity for securely exchanging data.
For CRM purposes, the email hash string is an improvement on the cookie. Unlike cookies, email-based hashes are very effective on mobile because we use our email addresses on all our devices. You check your email on all your devices, but cookies don't follow you around, they live where they are dropped. So unlike email, cookies are not great for cross-channel campaigning.
This realization has led Facebook, and recently Twitter, to create what are known as "Custom Audiences" advertising exchanges designed to use the hash.
Custom Audiences allows retailers to safely "hash" their subscriber lists into targeting segments, pair them with display creatives/URLs, load them into Facebook, and bid for their customers. MD5 hashing has enabled customer targeting on third-party sites and newsletters without exchanging explicit email addresses.
So rather than wasting valuable dollars advertising to existing customers via cookie pools, brands can show one kind of ad to their customers and another one to prospects by using MD5 hash segments.
Ad exchanges are now being built (full disclosure: my company runs an email hash-based ad exchange with more than 300 publishers as members) to take advantage of this incredible capability. Brands using these exchanges can leverage the power of the email address without sending any email campaigns of their own.
Email marketing, long forgotten by agencies because it couldn't be bought like traditional web display, has now leapfrogged its competition - the cookie. When you combine the CRM powers of the email address with real-time bidding, you have something that promises to be both effective and consumer friendly.
Brands - start your hashing!
Image on home page via Shutterstock.
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As chief operating officer of LiveIntent, Dave Hendricks has overall responsibility for revenue, finance, legal, and operations. Prior to joining LiveIntent before its 2009 Series A, Dave was EVP of operations at PulsePoint (then known as Datran Media), where he worked with LiveIntent founder and CEO Matt Keiser and ran Datran's ESP StormPost. Before all that, Dave held senior roles at data management companies InfoUSA and Experian. A member of the founding executive team at ExperianCheetahMail, Dave began his email adventure at Pioneering ESP MessageMedia after running global partnerships for Oracle Corp. Dave was named one of Silicon Alley Insiders Top 100 technologists in 2011 and is active in several IAB Committees including Mobile and Email. Follow him on Twitter @davehendricks.