Pay Me Now, Pay Me Later

How much would you pay to send 100,000 emails to an audience of males between the ages of 18-24, living within 30 miles of a top-five media market? How much more would you be willing to pay if each of the males in the target audience agreed to receive the email advertisement? Hw much more would you be willing to pay if their ISP or email provider ensured your email would be the only email advertisement delivered to each of the males in your target audience on the day of delivery?

An interesting proposition. Marketers would reach a highly valued audience that agreed to receive category-specific advertising. They’d be ensured no other email advertisements would be delivered to that audience. Distraction and inbox clutter would be eliminated. Conversion rates would increase, justifying the higher rate to reach the audience. Unfortunately, there’s currently no system with the capability of making this proposition a reality. Perhaps one day there will be.

There was an interesting editorial (subscription required for link) in the Wall Street Journal by Ian Ayres and Barry Nalebuff. Who are they? A couple of academics at Yale who presented an argument to create a marketplace solution to the national Do-Not-Call registry. Ayres and Nalebuff make the following point:

“It misses a market opportunity…the Do Not Call registry needlessly prevents you from selling a scarce resource — your time and attention. Telemarketers could call from a reverse 900 number. That way, you would get paid for taking the call. While they are trying to sell you a product, you can be selling them your time.”

Ayres and Nalebuff make an interesting case. Local phone companies should create a market for consumers to sell their time to advertisers. It got me thinking about a similar solution to the spam problem. Here’s how it would work:

  • Federal legislation would create a national Do-Not-Spam registry. Violators would face severe economic penalties.

  • Consumers would sign-up for the Do-Not-Spam registry on a Web-based platform.

  • Consumers who completed Do-Not-Spam registration, but who are willing to receive email advertisements for a price, register with their email providers.

  • During the registration process, consumers complete a detailed personal profile, including geographic and demographic data, identify their minimum price to receive an email advertisement and designate the maximum number of email advertisements they agree to receive on a daily, weekly and monthly basis.

  • E-mail providers would create an eBay-like marketplace where advertisers could bid for the right to send email advertisements to targeted audiences, based on geographic and demographic data collected at registration.

  • The ultimate price a marketer would pay to reach a consumer would be determined by the marketplace bidding process.

  • Assuming the final bid was equal to or greater than the consumer’s minimum price identified during registration, the advertiser would send the consumer an email and a payment at the bid price.

  • As market makers, the participating email provider would receive a small percentage of the bid price.

Let’s use an imaginary guy named Steven as an example. Steven goes online and signs-up for the Do-Not-Spam list. Steven then goes to his email provider, Yahoo, and completes the registration to allow marketers to bid for the right to send him email advertisements. Steven indicates he’s 34 years old, married, lives in Los Angeles and is interested in movies, politics, Asian antiques and homemade gelato. He sets his price to receive email advertisements at $1.00 and limits the number of email advertisements he is willing to receive to 10 per month.

Marketers bid for the right to send Steven, and consumers like Steven, email solicitations. Steven is a highly desirable target, so marketers bid heavily for the right to send him, and other consumers with matching profiles, email. Ultimately the winning bidder agrees to pay $2.00 per consumer. Steven receives an email message from the winning bidder. Yahoo collects $2.00 from the winning bidder and promptly deposits $1.90 in Steven’s PayPal account, keeping a 10 cent fee for the transaction.

The weak link in this plan is spammers’ ability of to circumvent economic penalties associated with the Do-Not-Spam registry by operating under fictitious names or offshore, far from the reach of U.S. authorities. While this plan is unlikely to eliminate spam, it would cut down the sheer volume of email.

As a marketer, would you participate in a bidding process to acquire the right to send email to consumers? Do you believe access to the consumer is more valuable when delivery of other email advertisements are restricted? Would this business model work for you?

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