UnsubCentral, List Suppression Dynamo

The passage of the CAN-SPAM Act in December 2003 saved email marketers a huge headache, preempting as it did California’s much more problematic bill. But it has still been a tough pill to swallow for businesses with a big investment in email. Though the Federal Trade Commission is still ironing out guidelines for some of the details, CAN-SPAM generally requires new labeling for some email, the inclusion of postal addresses in every mailing, and the cessation of all commercial email within 10 business days of an opt-out request.

This last requirement turns out to be a particularly difficult one to meet, especially for companies with extensive list rental and affiliate marketing programs. In fact, a Jupiter Research study conducted in January and February of 2004 found that nearly one-quarter of marketers continued to send email marketing messages after opt-outs were submitted and 16 percent sent messages after the legally prescribed 10-business-day period.

At least one company has stepped up to help marketers meet this challenge. Thus far, it has found considerable success doing a job nobody else has wanted — at least not yet.

Skylist CEO Josh Baer saw an opportunity in the daunting chore of juggling list files and suppression requests between advertisers, affiliates and other marketing partners (not to mention the company’s own sales force). He has spent the last several months incubating a company — called UnsubCentral — that would do just that.

“I knew life would be easier if there was one platform for storing suppression lists in a safe, trusted third party environment,” Baer said. “Whether you’re using an in-house provider, an affiliate program, a list rental company or in-house sales, it’s the same suppression list and you need to coordinate them through the same [system”. That’s what UnsubCentral is.”

How does it work? UnsubCentral is essentially a database with several applications riding on top. The most important of these are file-sharing apps that let advertisers submit opt-out requests they receive from prospects contacted through any number of channels. All senders synch with the constantly updated list before each mailing goes out, theoretically preventing slip-ups.

Getting the various affiliates to integrate with a single third-party platform isn’t as hard as it may sound, Baer insists. Advertisers essentially dictate the terms of their relationship with affiliates and list rental firms, and so can require those companies to integrate their communications with a fourth party like UnsubCentral.

Origins

Baer knew list suppression would be one of the toughest-to-implement aspects of the new legislation. But he was drawn to facilitate the process nonetheless. Why? To hear him tell it, the task fell to Skylist largely because of the late December timing of CAN-SPAM’s passage.

“We had less than a month until the legislation hit,” he said. “Everybody was going on vacation. The topic wasn’t fun or sexy or interesting. This was legal compliance; nobody wanted to solve the problem.”

Recognizing the opportunity and his unique position to cash in on it, Baer says he cajoled a group of Skylist employees to forgo their holiday vacation and work on getting the platform ready by early January, when CAN-SPAM took effect.

But it’s not as simple as that. Baer personally was in an excellent position to succeed; and he stood to gain a lot by trying.

Baer has long been on the steering committee of the E-mail Service Provider Coalition (ESPC), and he has longstanding contacts at the FTC, IronPort and TRUSTe, organizations whose buy-in he wanted. Thanks to those connections, UnsubCentral was quickly certified by TRUSTe and integrated with IronPort’s family of appliances designed to guarantee the delivery of legitimate email. These advances lent an early air of legitimacy and clout to the venture.

“We were in the right place at the right time, were able to move quickly, and leveraged the right relationships,” Baer said.

Now UnsubCentral is working to develop private label solutions for email service providers, essentially creating branded suppression platforms that can be deployed by other players in the email space, including Skylist’s competitors. Advertising.com, which recently agreed to be acquired by America Online, launched such a solution in February, and now has 50 customers using UnsubCentral through a private label interface that is integrated directly into the company’s affiliate network.

These arrangements may be another clue to why other email providers haven’t attempted to develop competing offerings. If a revenue-sharing partnership can be reached with the company that’s already developed a platform, why bother?

“Our real strategy for growth is not direct sales but partner channels,” Baer said.

UnsubCentral’s private label initiative also answers the question of why Skylist chose to launch UnsubCentral as an incubator company, rather than as a service division or subsidiary. The company knew fellow email marketing firms like Digital Impact or Netcreations wouldn’t have let their lists near Baer’s new project if it bore the name of competitor Skylist.

“I recognized early on that I was going to need to partner with a lot of Skylist competitors,” said Baer, explaining the motivation to incubate.

After an initial lull following its launch, UnsubCentral has met with considerable success, Baer said.

“I was in such a rush to have this ready by January, and we only had a handful of customers,” he said. “Nobody was ready to use it yet. I couldn’t believe companies with millions at stake would put it off.”

A scant few months later, UnsubCentral is cash-flow-positive, having been implemented by about 75 companies, including RealNetworks, eDiets, MyPoints and MatchNet. Baer has had multiple offers to buy — overtures he says he’s not entertaining. Yet.

Baer recalls a conference call with several members of the ESPC shortly after President Bush signed the legislation: “We were all going through it line by line. There was literally this ’oh shit’ moment [when we realized” when someone clicks unsubscribe, they need to stop receiving email within 10 days. A lot of people went into instant denial.”

Baer, it seems, did not.

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