marketinglaw’s Osborne Clarke, together with digital marketing industry leaders Harte Hanks and Xpedite, recently sounded out British marketers on their readiness for new e-mail marketing laws.
Topic: Digital marketing
Marketing Strategies At Risk
Joint study shows large share of UK business are unaware of imminent e-marketing legislation
LONDON, UK – August 2003 – Despite 75% of organisations stating that e-mail communications are important to their future marketing strategy, only 50% of these UK businesses are aware of imminent legislation in this area. This startling result comes from a recent survey designed to discover if businesses are prepared for the European Union Directive on privacy in electronic communications.
Conducted in June 2003, almost 250 businesses, from a cross-section of industries, responded to the survey, organised and carried out by direct and database marketing service provider Harte-Hanks, Inc. (NYSE:HHS), multimedia messaging solutions provider Xpedite, and European law firm Osborne Clarke. Results showed that a high percentage of organisations:
- are unaware of changes to e-mail marketing laws and, as a result, have little or no understanding of how this legislation will impact their business.
- do not understand the importance of industry codes affecting marketing and, as a result, do not comply with them.
- are missing out on a number of marketing opportunities, borne from the new regulations, that could bring in additional revenues.
E-mail marketing rules
Due to come into force in October 2003, the new Privacy and Electronic Communications Directive is designed to harmonize the rules for a wide range of electronic communications services across Europe. It will also guarantee a level of personal data and privacy protection.
Steve Godman, UK Business Development Manager, from Xpedite states: ‘The new regulations set out how electronic communications can be used for marketing purposes, including the rules applied to unsolicited direct marketing via e-mail. One of the most significant rules enforces prior consent from an individual to receive targeted marketing materials, in the form of an ‘opt-in’. By ‘opting-in’, the individual agrees to receive such information. This does not apply when there is an existing customer relationship, where companies may continue to e-mail or Short Message Service (SMS) on an ‘opt-out’ basis.’
Businesses that continue to send unsolicited digital marketing material to consumers that have not ‘opted-in’ will be breaking the law. Yet in spite of this, the survey shows that 37% of respondents are not sure what to do, or are planning to do nothing.
‘Many of these businesses don’t know how to change their working procedures to ensure they meet new rules. They are often unsure of where they can receive guidance on how to plan for such legal changes, and the rules on technology and content can be complex,’ states Mike Watson, Managing Director, Direct Marketing, of Harte-Hanks. ‘As a result, businesses shy away from tackling new regulations and associated industry codes.’
In fact, as the survey shows, only 33% of organisations are completely or reasonably aware of digital marketing rules and industry codes. These include the CAP code, which is drawn by the Committee of Advertising Practice and enforced by the Advertising Standards Authority and the Code of the Direct Marketing Association (“DMA”) which binds DMA members.
Stephen Groom, Partner at Osborne Clarke, states: ‘I find this result extremely worrying as it highlights a lack of awareness and understanding of the importance of these codes. They are not optional. The CAP code is obligatory for all UK-based marketers and marketing campaigns. It has been designed to ensure marketing communications are legal, honest, decent and truthful, as well as to ensure consumer confidence is maintained. If you are a DMA member, compliance with the DMA code is also compulsory.
‘Once the new rules are in force, those that do not comply face enforcement action by the likes of the Office of Fair Trading and the Information Commission. Fines by the Independent Committee for the Supervision of Standards of Telephone Information Services (ICSTIS), and from 2004 the Office of Communications (OFCOM) could run into tens of thousands of pounds.’
Perhaps more worrying, according to the study’s authors, is that as little as 38% say they plan to implement new practices to comply with the legislation or to follow marketing codes, and only 25% plan to review their marketing practices to ensure they meet new rules.
Groom points out: ‘One of the reasons why these figures are so large may be attributed to who is responsible for compliance within a business.’ The survey shows that senior marketing decision-makers are most frequently given this role. ‘This is a huge responsibility and, more often than not, these marketing experts do not have the necessary legal/compliance knowledge to make informed decisions.’
While many of the businesses surveyed see complying with this new legislation as hard work, those organisations that take the time to understand and comply with the rules will find that the new directive can enable marketers to provide value-added and focused services.
‘Many marketers are afraid that the new ‘opt-in’ rules will turn customers away,’ states Watson from Harte-Hanks. ‘However, by agreeing to receive information from a particular supplier, this consumer is in effect telling a firm that he or she is interested in the organisation’s products and services, making this a significant contact waiting to be exploited.’
He continues: ‘These customers can be pots of gold and, once they have ‘opted-in’, marketers can reach out to them in a number of ways, blending their approach accordingly.’
New rules, based on geographic location and Web traffic data, will further enhance digital marketing. ‘Marketers will be able to use this information to provide clients with tailored messages, helping to cement the relationship between supplier and the ‘opted-in’ customer,’ Watson said.
Effective and compliant programmes
To ensure that businesses are compliant and can maximize the benefits of new rules, the survey organisers suggest that companies carry out a number of audits on their current practices:
Legal and compliance audit
This should involve a front-to-back legal health check on all systems used for marketing purposes.
‘Audits should look specifically at what information is recorded, the methodology used and the way it is maintained to make sure systems meet new legislation,’ states Groom of Osborne Clarke.
Data and database quality audit
‘This will identify the quality of data held, ensuring address fields are correctly mapped and appropriate quality standards are adhered to,’ claims Watson of Harte-Hanks. ‘Mailing lists will be checked and historical data analysed and sorted according to the new regulations.’
It is clear that those businesses with good back office systems will be able to use the ‘opt-in’ system effectively. Xpedite’s Godman states: ‘Technology must be able to record and categorize those that have ‘opted-in’ and those that have ‘opted-out’. If a consumer has ‘opted-out’, they must remain out of the chain.’
Marketing contact audit
A marketing contact audit will ensure that marketing material targets consumers appropriately and effectively. ‘The aim of such an audit is to re-address the key messages a business wants to put out into the marketplace to gain maximum take-up,’ states Godman.
‘The process should involve analysing the ‘look and feel’ of communications and play an important role in mapping out the company’s marketing objectives,’ he adds.
Collectively, these audits will not only ensure that a company meets new regulations, but they will help businesses develop and deliver best practice in e-mail marketing, the study authors report.
Summary of the new legislation.
The new Directive:
- replaces existing definitions for telecommunications services and networks with new definitions for electronic communications and services to ensure technological neutrality and to clarify the position of e-mail and use of the Internet;
- enables the provision of value-added services based on location and traffic data, subject to the consent of subscribers (for example, location-based advertising to mobile phone users);
- removes the possibility for a subscriber to be charged for exercising the right not to appear in public directories;
- introduces new information and consent requirements on entries in publicly available directories, including a requirement that subscribers are informed of all the usage possibilities of publicly available directories – for example,. reverse searching from a telephone number in order to obtain a name and postal address;
- extends controls on unsolicited direct marketing to all forms of electronic communications including unsolicited commercial e-mail (UCE or Spam) and SMS to mobile telephones; UCE and SMS will be subject to a prior consent requirement, so the receiver is required to agree to it in advance, except in the context of an existing customer relationship, where companies may continue to e-mail or SMS on an ‘opt-out’ basis;