Godin (1999) has proposed a new idea- permission marketing. Here, consumers provide marketers with the permission to send them certain types of promotional messages. This is seen as reducing clutter and search costs for the consumer while improving targeting precision for marketers.
Consumer interest is seen as the key dependent variable that influences the degree of participation. Consumer interest is positively affected by message relevance and monetary benefit and negatively affected by information entry/modification costs, message processing costs and privacy costs.
Introduction
Permission marketing (also called invitational marketing) envisions every customer shaping the targeting behavior of marketers (Godin, 1999). Consumers empower a marketer to send them promotional messages in certain interest categories. Typically, this is done by asking the consumer to fill out a survey indicating interests when registering for a service. The marketer then matches advertising messages with the interests of consumers
This is a new idea. Even though targeting appropriate customers has been recognized early on as a core marketing principle (Smith, 1956), most targeting today can best be described as “targeting on averages.” The advertiser obtains the average profile of the consumer (e.g., a marketer may identify the proportion of a show that meets a certain pre-specified demographic or behavioral category using Simmons data) and chooses, say, a TV show that matches the target consumer profile most accurately1. This leads to low targeting precision since not all consumers match the profile
Theoretically, direct marketing holds the promise of improving targeting2. One-on-one marketing proposes thinking about a segment of size one (Peppers & Rogers, 1993, Pine, Victor & Boynton, 1993). Given the new capabilities of addressing each individual (Blattberg & Deighton, 1991) the goal is to customize the marketing mix in accordance with the needs of a consumer. Relationship marketing takes a long-term orientation in targeting as opposed to a short-term transactional orientation (Dwyer, Schurr & Oh, 1987; McKenna, 1991, Sheth & Parvatiyar, 1995). The idea is to understand the lifetime value of the customer and allocate resources in accordance with these values (Day, 2000). The emphasis is on retaining existing customers rather than on obtaining new ones (McGahan & Ghemawat, 1994).
However, since one-on-one marketing and relationship marketing both propose marketer-initiated targeting, several problems arise. For example, consumers receive an excessive volume of proposals for relations hips with firms, they do not perceive control over the terms of the relationship and do not perceive much value addition from such relationships. As a result, these techniques breed consumer cynicism (Fournier, Dobscha & Mick, 1998). This is especially a problem with the Internet because the marginal cost of sending an additional promotional message is nearly zero for the firm (Shiman, 1996)
Permission Marketing and the Internet
Individuals may cope with the increased search costs by focusing on firm reputation (Choi, Stahl & Whinston, 1997, Chapter 6). For example, recently The Economist reported that 75% of all business to consumer e-commerce originates from five sites- Amazon.com, Buy.com, eBay, Yahoo and America Online (AOL). Hence, it is clear that these sites have established a reputation that is better than others 3. However, that does not necessarily ensure the delivery of relevant information since each of thes e sites contain a lot of information (For example, as of August 2000, Yahoo! had links to at least 1.5 million pages on its site- http://searchenginewatch.com/reports/directories.html) - not all of which is relevant to any single consumer. Moreover, consumers may be interested in newer sites whose reputation may not be fully established.Banner advertising and sponsorships were tools that were considered to have the potential to provide consumers with relevant information. However, despite the early promise detailed in pioneering research (Hoffman & Novak, 1997), the click-through rates have not improved4. Average rates are in the 0.5% range. Banner advertising is also plagued with measurement problems. Getting a reliable estimate of the number of consumers who viewed a banner is a big challenge (Dreze & Zufryden, 1998) and so is reliably identifying the top websites globally. Moreover, a recent eye-tracking study presents troublesome evidence that Internet users may “actually avoid looking at banner ads during their online activities” (Dreze & Hussherr, 1999, p. 2). If this is true, then placing banners around web content may be a poor way of delivering the message.
Permission marketing offers the promise of improving targeting by helping consumers interface with marketers most likely to provide relevant promotional messages. Many permission-marketing firms (e.g. yesmail.com- now part of the business incubator, CMGI) claim customer response rates in the region of 5-20% and since most use e-mail, they are not affected by the measurement problems of banner advertising. Since the ads arrive in the mailbox of the individual, it is likely that more attention would be paid to them in comparison to banners.
Even though permission marketing can be implemented in any direct medium, it has emerged as a serious idea only with the advent of the Internet. The two reasons for this are: (1) on the Internet, the cost of marketer-to-consumer communication is low (Hoffman & Novak, 1996; Shiman, 1996); (2) the Inte rnet has enabled rapid feedback mechanisms due to instantaneous two-way communication (Hoffman & Novak, 1996)
Another motivation for permission marketing on the Web has been the failure of the direct mail approach of sending unsolicited promotional messages. The prime example of this is unsolicited commercial e-mail or “Spam” (Cranor & LaMacchia, 1998). Senders of spam realize three things- the cost of obtaining a new e-mail address is minimal, the marginal cost of contacting an additional customer is nearly zero (Shiman, 1996) and it is easy to deceive the consumer. Spammers can easily obtain new e-mail addresses from websites and Usenet groups using software programs that “troll” the Internet. Individuals provide their addresses at these places for other purposes and hence, this violates their privacy rights (Bloom, Milne & Adler, 1994). In addition, marketers incur similar costs if they send out 1 million or 10 million e-mails. Moreover, there are now programs that enable the large-scale use of deceptive practices (e.g. forged e-mail headers). Due to these problems, Spam cannot be a legitimate form of marketing communication5. Using it would lead to an excessive message volume for consumers, weakening of brand reputation and a slowing of the entire network. Hence, permission marketing is seen as a feasible alternative for Internet marketing communication.
Permission marketing is now a large-scale activity on the Internet. A leading Internet business periodical recently noted that, “permission marketing was once a niche business. Now, everybody is doing it.” (Business 2.0, April, 2000, p. 176). In addition, permission marketing has been incorporated in leading texts on marketing management, e.g., Kotler’s millennium edition
Although the term “permission marketing” was coined by Godin (1999)6, the general idea of customer permission in direct marketing h ad surfaced earlier in the marketing literature, mainly in the context of privacy issues in direct marketing. For example, Milne and Gordon (1993) discuss the role of customer permission along with volume, targeting and compensation in the context of direct mail. However, their reference is to an individual's providing a direct marketer the permission to share his or her personal information with others. In other words, they see permission as a tool to establish privacy rights rather than to enhance targeting. Moreover, the privacy issue is different now since an infomediary (Hagel & Singer, 1999) retains all the personal information and supplies ads based on that information; the advertisers never see the information.
Recently, Sheth, Sisodia and Sharma (2000) have proposed the concept of customer-centric marketing, which includes what they call co-creation marketing. Co-creation marketing envisions a system where marketer s and consumers participate in shaping the marketing mix. In the authors’ own words, “Co-creation marketing enables and empowers customers to aid in product creation (e.g., Gateway computers), pricing (e.g., priceline.com), distribution and fulfillment (e.g., GAP store or GAP online delivered to the house), and communication (e-mail systems)”(Sheth, Sisodia & Sharma 2000, p. 62). Hence, permission marketing can be viewed as focusing on the communication aspect of a larger concept called co-creation marketing. Gilmore and Pine II (1997) had also earlier identified collaboration between marketers and consumers as one form of one-on-one marketing
Similarly, permission marketing may be a technique to reduce privacy concerns of individuals.
Permission Marketing Business Models on the Web
n order to understand how permission marketing is currently being practiced on the Web, we define a key construct: permission intensity.
Consumers define the boundaries of their relationship with firms in such businesses. In some cases, they give the business tremendous leeway and in others the firms are held on a tight leash. Formally, permission intensity is defined as the degree to which a consumer empowers a marketer in the context of a communicative relationship7.
Compare two scenarios. In the first case, the consumer provides a marketer his or her e-mail address and permits the marketer to send one promotional message a month. No additional information is provided. In the second case, the consumer provides detailed information about tastes and preferences and permits the marketer to target promotional messages at him or her. Clearly, in the second case, the consumer has provided a greater role for the marketer and hence, it represents greater permission intensity.
High permission intensity is chara
cterized by three factors: high information quantity, high information quality and information usage flexibility.
First, an individual recognizes that providing detailed information is in his or her self-interest. As a result, the individual is willing to participate in an exchange of information for a promise of better service in the future (Godin, 1999; Milne & Gordon, 1993). Second, the consumer realizes that his or her life will be most enriched if he or she presents high-quality information (Godin, 1999; Keller & Staelin, 1987). Providing inaccurate information about preferences will only lead to messages of little interest and will increase clutter. In other words, the individual realizes that this is an incentive-compatible (i.e., win-win) program. Third, the consumer will participate in the exchange with few constraints on how that information can be used by the firm to develop marketing messages.
The tradeoff in permission marketing is with breadth vs. depth. In the breadth strategy, a firm may develop relationships with a large number of consumers with a low level of permission intensity. On the other hand, in the depth strategy, a firm may focus on a smaller set of consumers, but th
ese consumers may provide detailed information about their preferences, values etc. , i.e., high permission intensity. Each firm will have to find the optimal value of the number of customers and the level of permission intensity.
In reality, we observe four business models as shown in Figure 1. Model 1 can best be characterized as direct relationship maintenance. Consider an example. Consumers can sign on for sales alerts from United Airlines. Very little additional information is asked for and hence, there is no sophisticated targeting being conducted here. This is seen as an additional service offered to customers to maintain a strong relationship. Hence, this is characterized by low permission intensity, direct contact with advertiser and minimal targeting.
Figure 1: Current Practice of Permission Marketing- Four Business Models
Model 3 can be described as an ad market. A consumer provides an infomediary (Hagel & Singer, 1999) with detailed information about his or her preferences and interests. The infomediary then uses this information to identify advertisers. The ads supplied by these advertisers are then carefully targeted to be consistent with the consumer’s tastes. Consumers win by reducing clutter and are paid to participate in the process, advertisers find target customers for their promotions with lower cost of targeting and the infomediary makes a profit by facilitating this exchange. Hence, here we have high permission intensity, contact through an infomediary and the potential for high targeting precision. Examples of this practice include mypoints.com and chooseyourmail.com
Model 4 can be described as a permission pool. Here, different consumers provide different firms with the permission to send them promotional offers. These firms pool the information provided by the consumer and then promotional messages are sent out targeting this larger pool. Examples of this practice include yesmail.com.
The difference between model 1 and the rest is that in the former, an individual firm directly transacts with its customers while in Model 2, an intermediary such as a portal plays this role and in Models 3 and 4, an infomediary matches consumer demand for ads with firm ad supply. Naturally, since it may be inefficient for a consumer to sign up with several firms in the manner of model 1, the other models are likely to be more common.
At this stage, it is important to contrast the notions of opt-in vs. opt-out. Opt-in refers to the case when an individual explicitly gives consent to receive ads ahead of time. Opt-out refers to the case when a marketer initiates contact and then provides individuals an option of not receiving future messages. Hence, permission marketing is opt-in rather than opt-out.
However, I argue that the traditional usage of these two terms is confusing. Opt-in refers to entry into a relationship and opt-out refers to exit. Viewed in this way, I argue that permission marketing systems are both opt-in and opt-out. In other words, customers enter the agreement on their own volition and are free to leave at any point.
Permission marketing models allow for two kinds of exit or opt-out strategies: partial or complete. In partial opt-out, the consumer indicates that he or she wants to stop receiving advertisements in a sub-category. For example, this may occur when the consumer may have been interested in a category for a short period of time only. New models now allow consumers to specify a date after which they will be automatically opted out of a category. In complete opt-out, the consumer decides to terminate a relationship with a particular marketer and hence, will not receive any more promotional messages.
Finally, a distinction must also been drawn between overt targeting systems such as permission marketing and covert targeting mechanisms. In covert targeting mechanisms, cookies8 are used to track the surfing behavior of individuals and to serve up banner ads, e.g. Doubleclick's DART system. Consumers are unaware of this tracking process. However, in over targeting systems such as permission marketing the consumer is an active participant in the targeting process.
Conceptual Framework
Next, a comprehensive cost-benefit conceptual framework is proposed to capture the consumer’s experience with a permission-marketing program. The goal was to develop a conceptual framework at a sufficiently high level of generality that would apply to all four business models described earlier.Based on this framework shown in Figure 2, a series of empirically testable propositions is presented. This framework can act as a guide for future empirical research in the area.
Figure 2: Conceptual Framework
Overall Framework
The central tenet of permission marketing is consumer-initiated communication followed by an active two-way exchange. Even though exchange is considered to be the bedrock of marketing theory (Bagozzi, 1975; Houston & Gassenheimer, 1987), most exchange is initiated by the marketer. Hence, consumers may not perceive themselves as legitimate partners in a relationship (Fournier, Dobscha & Mick, 1998). Since consumers are required to provide detailed information continually in a permission-marketing program, they must perceive some value in the relationship if it is to be successful.
Consumers care about receiving messages that are relevant to them (Milne & Gordon, 1993). Hence, they will continue to be interested in a permission marketing system if they perceive themselves as participating in a meaningful exchange that provides a tangible benefit. Therefore, the central dependent variable in the proposed conceptual framework is the level of customer interest in the program.
Consumer interest is defined as an individual’s overall judgment of the effectiveness of the program in adding value to his or her life. If an individual receives promotional messages that are not well targeted or if the promotional messages are for disliked brands, he or she may well conclude that the program is uninteresting. On the other hand, if the messages closely map the needs of the consumer, there will be interest.
The key difference between permission marketing and previous ways of thinking about direct marketing is that consumers are asked to do much more in the former. Unlike, say, direct mail, where consumers simply respond to what they receive, in permission marketing consumers must take the time and make the effort to provide considerable information about interests and preferences before a single ad is sent out. For example, My Points, a permission marketing service, requires consumers to fill out more than ten pages of questions. This increase in effort will only be seen as worthwhile if an individual perceives future value in return. If the messages do not appear worthwhile, the individual may decline to provide future information. Therefore, in permission marketing, establishing and escalating customer interest is the key managerial challenge.
Consumer interest is a broad judgement based on multiple elements of the permission-marketing program. Consumers may hold attitudes towards specific program elements, e.g., design of user interface or question format. Consumer interest is the overarching construct that takes these specific attitudes into account while assessing potential value. For example, a consumer may conclude that she hates the design of the forms she has to fill out, but she may still be interested in the program if she received a great deal on a product that matters to her. Consumer interest is distinct from satisfaction with the program since its focus is on potential value added to one’s life rather than assessment of a specific element of the program vis-à-vis expectations.
Consumer participation is defined as the extent to which an individual is willing to engage actively in a two-way exchange with the marketer. The lowest level of consumer participation is exit. The highest level of consumer participation is active engagement. This is characterized by two types of consumer actions. First, consumers make every effort to provide accurate and timely information to the marketer. Second, consumers attend to the messages and respond to the relevant ones appropriately. In between the extremes of exit and active engagement, there are several shades of gray. For example, some managers report that individuals “virtually opt out”. Here, individuals do not exit, but rarely attend to any message sent their way.
The level of consumer interest at any point determines the level of his or her participation in the program. If an individual feels that the program has the potential to add value to his life, he or she may participate enthusiastically. However, if the individual is disenchanted with the program, it is likely that he or she may simply stop responding to any messages. This leads us to the first proposition:
Proposition 1: The higher the level of consumer interest in the permission marketing program, the greater the level of participation in the program.
Overview of Benefits and Costs
An individual’s level of interest in a permission marketing program is positively affected by the benefits from the program and negatively impacted by the costs. There are two potential benefits: message relevance and monetary benefit.
The central reason that motivates individuals to join a permission marketing program is the promise of receiving relevant messages. Individuals value the relevance of promotional messages (Biel & Bridgwater, 1990; Grunert, 1996; Milne & Gordon, 1993; Reynolds, Gengler & Howard, 1995). At every point in their participation in the program, the consumer arrives at a judgment about how relevant the advertising messages are to his or her needs. If this judgment is negative, there will be a loss of interest in the program. If it is positive, there will be an enhancement in interest. Thus it is proposed that| Proposition 2a: | The higher the message relevance, the higher the interest of the consumer in the permission marketing program. |
Permission marketing programs realize that it is burdensome for individuals to go through messages. As a result, several offer consumers incentives to process messages. For example, consumers can earn points by reading a message at mypoints.com. These points can be redeemed for rewards ranging from airline frequent flyer miles to discounts for online purchases. Since individuals are interested in deriving some monetary benefit from direct marketing programs (Milne & Gordon, 1993), these incentives are likely to generate greater interest. Hence, it is proposed that:
| Proposition 2b: | The higher the monetary benefit, the higher the interest of the consumer in the permission marketing program. |
Most individuals are unlikely to join a permission marketing program simply to make some money9. The main attraction is to receive promotional offers consistent with one’s needs. Hence, we hypothesize that the message relevance moderates the impact of the monetary benefit. Specifically, we hypothesize that if the message relevance is high, individuals will be less likely to lose interest if the level of monetary benefit is low. In other words, if the promotional messages are highly relevant to an individual’s needs, he or she would be willing to accept little or no monetary benefit in exchange for participation. Indeed, some large permission marketing firms believe that providing relevant messages is sufficient to maintain consumer interest, e.g., Net Creations’ postmasterdirect.com and chooseyourmail.com. Therefore, it is proposed that:
| Proposition 2c: | The higher the message relevance, the lower the impact of monetary benefit on consumer interest in the permission marketing program. |
At the same time, individuals face three potential costs: information entry/modification costs, message processing costs and privacy costs.
The first two categories of costs are transaction costs that an individual has to incur to participate in a permission marketing program. The first type of costs refer to an individual's providing detailed personal information (e.g., product interests) to a marketer and the second category refers to the cost of processing a promotional message. Even though the Internet was initially seen as reducing transaction costs(Kambil, 1995), there is now a growing consensus that the Internet may add to the transaction costs faced by individuals (e.g., Beck, 1999). For example, one study found that students who were forced to receive classroom instruction using e-mail complained of information overload (Latting, 1994). We argue that understanding the impact of such transaction costs on consumer interest is vital for every permission marketing program.
High permission intensity programs will require individuals to provide detailed personal information. Moreover, individuals are expected to revisit their information and make sure it is current. This is a huge transactional burden on individuals. Therefore, consumers will find the act of entering or modifying personal information onerous (Blattberg, Buesing, Peacock & Sen, 1978; Oliva, Oliver & Macmillan, 1992). The more burdensome the data entry/modification process (e.g., longer forms, hard-to-understand questions), the lower an individual’s interest in the program. Hence, it is proposed that:
| Proposition 2d: | The higher the cost of entering or modifying personal information, the lower the interest of the consumer in the permission marketing program. |
In addition to the costs of providing new information or modifying information already provided, individuals are faced with the cost of processing all the promotional messages that they receive. Individuals will have to go through the message before determining if it is of any value. The decision faced by individuals is “scan and discard” vs. “scan and read more” and this places a cognitive burden on them.
If the design of the message is complicated and does not follow a logical sequence, greater cognitive effort may be required by the individual (Bajaj & Krishnan, 1999; Kim & Yoo, 2000). While consumers desire message relevance, the transactional burden of processing the messages can affect their interest in the program. The cost of processing messages described here corresponds closely to the contact costs described in Petty (2000). Thus it is proposed that:
| Proposition 2e: | The higher the cost of processing messages, the lower the interest of the consumer in the permission marketing program. |
Finally, individuals incur privacy costs. Privacy costs are defined as the mental burden of coping with the uncertainty of how one’s personal information is used by the marketer. Individuals have serious concerns about the privacy of the information that they provide to direct marketers (Equifax, 1996; Phelps, Nowak & Ferrell, 2000). Moreover, when consumers on the Internet are concerned about their privacy, they are much more likely to take actions such as providing incomplete information to web sites and notifying Internet Service Providers (Sheehan & Hoy, 1999). Individuals will differ in terms of how they cope with privacy costs (Milne, Boza & Rohm, 1999; Milne & Gordon, 1994) and some may place convenience ahead of privacy concerns (Swaminathan, Lepkowska-White & Rao, 1999). However, it is clear that most individuals will have some privacy concerns and if there are strong and credible assurances that will lead to a lowering of these costs, individuals are likely to be more interested in the permission marketing program. This leads to the following proposition:
| Proposition 2f: | The higher the privacy cost, the lower the interest of the consumer in the permission marketing program. |
Causal Antecedents to Message Relevance
Message relevance is influenced by two constructs: category-message fit and perceived attractiveness of advertisers.
Individuals provide permission marketers with information about their needs. If an advertisement is consistent with the information that they provided marketers, the level of category-message fit will be high. Consider a consumer who has indicated an interest in technology. If the consumer receives an advertisement for a new handheld computer, the level of fit is high. On the other hand, if the message is for a financial brokerage it is low.
Individuals who receive ads consistent with the information they initially provided feel that their initial effort was worthwhile. Hence, their interest in the program is likely to increase. On the other hand, individuals who receive ads that fit poorly with the information are likely to come to the conclusion that the marketer did not pay close attention to the information provided or was unscrupulous. In either case, the consumer is likely to lose interest quickly. Permission creep, for instance, is expected to reduce the level of message relevance.
This idea of fit is somewhat similar to the discussion in the brand extension literature where the focus is on the fit between the category of the parent brand and the brand extension (Keller & Aaker, 1992, Morrin, 1999)| Proposition 3a: | The higher the category-message fit, the greater the level of message relevance. |
Although individuals would like to receive ads in categories that fit their needs, they also care about the advertisers. If they receive ads only for brands that they perceive as less prestigious or of a lower quality (Keller, 1993), they may not value the permission marketing program very highly. For example, if a consumer only receives promotions for private label brands, he or she may not have a very high opinion of the program. Hence, if the permission marketing program disseminates ads of strong brands (Aaker, 1996), consumers are more likely to consider that the ads are relevant. Therefore, it is proposed that:
| Proposition 3b: | The better the perceived attractiveness of the advertisers, the greater the message relevance. |
Causal Antecedents to Monetary Benefit
Two antecedents to the perception of monetary benefit are proposed: the size of the incentive and the time to redemption.
First, obviously, the size of the incentive affects an individual’s perception of the monetary benefit. Previous studies have shown that the greater the face value of the coupon, the greater the redemption rate (Dhar, Morrison & Raju, 1996; Reibstein & Traver, 1982). Similarly, the greater the size of the deal offered by a retail store, the greater the sales (Blattberg & Neslin, 1990; Blattberg & Wisniewski, 1987; Wisniewski & Blattberg, 1983). Hence, it is proposed that:
| Proposition 3c: | The greater the size of the incentive, the greater the perception of the monetary benefit received. |
Permission marketing programs view incentives as a mechanism to encourage individuals to process more messages. Therefore, most incentive programs provide greater rewards if more messages are processed. Obviously, this leads to greater message processing costs as well (which we discuss later in the section on costs). Hence, it is proposed that:
| Proposition 3d: | The greater the volume of messages, the greater the perception of the monetary benefit received. |
Individuals will value rewards that can be redeemed instantaneously or in a short period of time in comparison to those that can be redeemed only after a significant period of time10. Many firms offer a point system (for example, mypoints.com) where individuals receive rewards for each message read. In this case, the rewards are mostly redeemable right away. However, if the firm instituted a policy where the rewards would be handed out at later points in time, it is likely to decrease consumer interest. Hence, it is proposed that:
| Proposition 3e: | The greater the time to redemption, the lower the perception of the monetary benefit received. |
Causal Antecedents to Information Entry or Modification Costs
High permission intensity entails providing a large quantity of high-quality information to the permission marketer. Individuals may have to fill out a detailed set of forms indicating very specific interests, brand preferences etc. This is a burdensome process that takes up time and requires effort from individuals| Proposition 4a: | The greater the permission intensity, the greater the information entry or modification costs. |
The promise of permission marketing is relevant messages (Godin, 1999) and consumers care about receiving messages relevant to their needs (Milne & Gordon, 1993). Hence, if the level of relevance of the messages is high, individuals will have little need to go back to their original information scheme and modify it. Therefore, it is proposed that:
| Proposition 4b: | The greater the message relevance, the lower the information entry or modification costs. |
The design of the promotional message matters. If the instructions are very clear and laid out in a simple and logical pattern, individuals will be able to navigate easily through the message (Bajaj & Krishnan, 1999; Kim & Yoo, 2000). If that is not the case, individuals may get confused and may spend a great deal of time and effort searching for the right screen or trying to interpret what a question means. Therefore, it is proposed that:
| Proposition 4c: | The better the instructional quality, the lower the information entry or modification costs. |
Causal Antecedents to Message Processing Costs
When individuals start receiving the promotional messages, it adds to their overall information inflow. The consumer will have to read each message, process the information and understand if the message is relevant to his or her needs. As a result, individuals bear the cognitive load of processing the text in each message (Shugan, 1980). Some consumers may relish the additional information made available to them (Takacs, 1997). However, we do not expect this group to form the majority.
We are not arguing that all individuals will have to cognitively process all the promotional information in the message. Rather, we are arguing for a “scan and discard” vs. “scan and read more” decision that will lead to a cognitive load. Hence, this will also be faced by peripheral processors of information (Cacioppo, Kim, & Yoo, 2000; MacInnis & Jaworski, 1989; Petty, 1985). Hence, it is proposed that:
| Proposition 5a: | The greater the cognitive load, the greater the message processing costs. |
When an individual receives an e-mail from a company, he or she has to read it and then decide to take an action. If an individual receives a lot of e-mails, the cost of processing increases monotonically. As the quantity of promotional messages go up, individuals’ attitude towards the promotional vehicle decline (Ha, 1996). This is especially true with e-mail messages since this is an intrusive form of communication (Ha, 1996). Moreover, receiving the same message multiple times leads to tedium in consumers (Tellis, 1997). Finally, direct marketing studies have shown that consumers care about reducing the volume of messages that they receive (Milne & Gordon, 1993). Hence, it is proposed that:
| Proposition 5b: | The greater the volume of messages received by an individual, the greater the message processing costs. |
We expect message relevance to moderate the impact of the volume of messages on message processing costs. Specifically, as message relevance increases, the impact of volume on message processing costs will decrease. The raison d ‘etre of a permission marketing system is message relevance (Godin, 1999). If a large proportion of the messages is relevant, consumers will not mind receiving a large number of messages. Hence, it is proposed that:
| Proposition 5c: | The greater the message relevance, the lower the impact of number of messages on message processing costs. |
When an individual receives a promotional message, if the instructions on the actions are very clear then that will require a low time and resource commitment from the individual. On the other hand, if the message has a number of instructions that the individual has to weed through, greater cognitive processing costs are incurred (Bajaj & Krishnan, 1999; Kim & Yoo, 2000). Therefore, it is proposed that:
| Proposition 5d: | The greater the instructional quality, the lower the message processing costs. |
Causal Antecedents to Privacy Costs
Privacy costs can be reduced if the firm provides consumers with the assurance the information that they have provided will be used responsibly. The Federal Trade Commission (FTC) has provided five elements that need to be present in such policies- Notice, Choice, Access, Security and Redress (FTC, 1998). Culnan (2000) provides a longer discussion of these elements.
Such privacy policies on the Internet are still not universal. Culnan (2000) indicates that “while approximately 67% of the sites sampled posted a privacy disclosure, only 14% constituted a comprehensive privacy policy”(p. 20) (i.e., did not incorporate all elements suggested by the FTC). Similarly, Miyazaki and Fernandez (2000) found that only about 42% of sites posted a privacy policy. Hence, if a permission marketing program provides a comprehensive and credible privacy policy, consumers are more likely to feel interested in the program.
| Proposition 6a: | The greater the internal assurance, the lower the privacy costs. |
In addition, there are several external organizations that audit the privacy policies of websites. The three leading companies in this arena are TrustE, Better Business Bureau Online and WebTrust. Consumers who view assurances from external agencies are likely to be much more interested in the program. Hence,
| Proposition 6b: | The greater the external assurance, the lower the privacy costs. |
B2C ( Business to Consumer )
Why B2C? Why B2c need marketing Permission?
B2B vs. B2C Marketing Differences
Once a decision is made to develop a business, whom the customer will be is the next decision to be made. Whom will the company target as a customer? Will it be a business? Or will it be a consumer? Business-to-business (B2B) marketing has differences from business-to-consumer (B2C) marketing practices. This paper will outline these differences between the two types of e-commerce business transactions.
'Traditional marketing in the business-to-business environment requires very different strategies from those campaigns directed towards the consumer market.' (ExtraVision, n.d., p. 1) 'Consumer competition can be a lot fiercer, with customer loyalty a constant battle.? (ExtraVision, n.d., p.1)
Routes of marketing in business today include e-mail, pop up advertisement, television and banner advertising. This paper will primarily focus on e-mail marketing. E-mail marketing is different when marketing to a business versus a consumer. Debbie Weil (2002) lists five ways business-to-business marketing is different from business-to-consumer email marketing. Weil (2002) says these five ways are:
· Distance from click to sale
· Permission
· Copyrighting Challenge
· Lists
· B2B: the more interesting option
Billions of dollars each year are now spent in business-to-consumer (B2C) e-commerce, with explosive, and even exponential, growth that is not predicted to slow down for decades to come. Using class-generated examples, an industry expert, who has spearheaded online advertising accounts with some of the Internet's biggest marketers, teaches you the tricks of the trade necessary to best position a new "cyberbrand" startup and/or a traditional bricks and mortar player in order to capitalize on this burgeoning opportunity.
Permission marketing, as it relates to email marketing, is a consumer-based approach centering strongly on consumer sensitivity. It is the opposite of unsolicited contact with consumers. A permission-based approach means the company marketing itself must have either a prior business relationship with the consumer it is marketing, or have confirmed permission from that consumer. Many companies have both.
This approach is rapidly gaining acceptance on both sides of business-to-consumer mass marketing. One example on the consumer side is the embracement of the national ‘Do Not Call’ list, a federally-backed plan to reduce the amount of unsolicited telephone calls consumers receive from telemarketers. Within 24 hours of the list’s opening, thousands of consumers flooded the Federal Trade Commission with requests to halt unsolicited telephone marketing to their homes
An example of permission marketing acceptance on the business side is the corporate reaction to the oversaturation of individual email accounts with unsolicited bulk email. Consumer ire has kindled the most aggressive anti-spam campaign by Internet Service Providers (ISPs) to date.
However, the resentment of consumers has directly inspired tough anti-spam legislation from both political parties and all levels of government. There is no shortage of elected officials willing to lend their names to the anti-spam cause, as many already have in several states.
While permission marketing evolves as the foremost approach for direct marketing, the direct marketing industry is making commitments to regulate itself before individual states, the federal government, and the international community instill anti-spam laws so strong that they affect email marketing as a whole.
Some analysts say permission marketing is the strata for an entire new model for the consumer-based segment of the economy. The “Permission Economy” theory refers to a “bottom-to-top” approach to engaging consumers, whereas the consumer decides when, where, how, and why they wish to view advertisements, engage content, and participate in the transaction being encouraged. In this model, it is the consumers, members, subscribers and customers who are the dominant force in determining the rules of engagement, and not the marketers.
While the Permission Economy model may still be several years away, companies using permission marketing today are seeing significantly positive response from consumers.
Permission email marketing is becoming the go-to approach for legitimate Internet commerce, as more consumers continue to sign up for email newsletters, coupons and even online magazines via opt-in email. To some, marketers and companies stepping up their processes of gathering permission email addresses from customers and prospects for use with their own email software represents the wave of the future of Internet marketing—if not the immediate future of online business-to-consumer interaction.
