As long as users are accessing their deals through email, it makes sense then that an email service provider, which already shows display ads, would show deal ads. This appears to be the logic fueling a new strategy by Microsoft.

According to Greg Sterling at Marketing Land, Microsoft is replacing the display ads in Hotmail with with deal ads. The company is reportedly doing this beginning with a limited pilot program before all users see the changes.

It doesn’t sound like a bad strategy, and I would not be surprised if Google took a similar approach with Gmail and Google Offers (which continues to frequently expand).

Hotmail reportedly has somewhere around 45.5 million users in the U.S. That’s 62.7 million for Gmail (comScore).

According to Sterling, who spoke with Dharmesh Mehta, Director for the Windows and Windows Live Business Group, the deals being advertised in Hotmail are coming from Microsoft itself, as well as from partners. Microsoft’s own Deals offerings include Bing Deals and MSN Offers .

Earlier this week, comScore put out new data on display ad providers. Facebook is dominating (again), but Microsoft is in third place. Still, the company’s share is under 5%.

Email marketing service provider Aweber, which boasts over 110,000 small businesses as clients, started using the beta in December.

Justin Premick, AWeber’s Director of Education Marketing, tells WebProNews, “In December 2011, AWeber began using Google AdWords’ email subscription beta through our account representative. We started out using it only for a segment of our campaigns, to minimize the risk of it cannibalizing link clicks and not providing valuable, converting traffic. Thus far, we haven’t seen a ton of traffic from the campaign, but we’ve learned a few things along the way to shape our future use.”

“Like other companies, we started using the ads to build our email list,” he adds. “While this is one way the service can be used, I believe the tool is most useful for sales teams in capturing and distributing leads among a team of sales representatives. In a situation with sales managers and representatives, the manager would presumably distribute leads among the representatives for individual follow up.”

“This is helpful for advertisers and prospects because it cuts one step out of the information request (and lead generation) process,” says Premick. “Instead of clicking through to the site, then filling out a form, prospects can fill out the form directly in the search results.”

The company said that after using the new AdWords feature for a month, it plans to continue testing and experimenting, moving away from automated follow up and towards individual outreach.

“Most importantly, this new AdWords feature points to the fact that email remains a key ingredient to marketing success, serving as a valuable tool for building relationships with both current and prospective customers,” an Aweber spokesperson said.

Indeed.

Now, Redbox is running a new campaign where customers can answer trivia questions for discounts on movies. Customers started receiving emails today that look like this:

Email marketing, by the way, appears to be a pretty powerful channel for Redbox, as the company’s kiosks require customers to enter their email addresses each time they rent a movie.

Notice that the trivia offering is powered by Scene It, a popular DVD-based movie trivia game.

It’s not set in stone yet. This may or may not become widely available to all advertisers, but I’d be surprised if it didn’t open up to a wider set. Here’s what the ads look like:

Notice the “privacy” link. If you click that, it says, “When you submit this form, your email address will be sent to the advertiser.”

The testing has been going on for a little while, but from the sound of it, it’s expanded a bit. Alexia Tsotsis at TechCrunch shared the following statement from a Google spokesperson:

“We’re currently running a small experiment of a new ad format that helps users sign up more easily for email subscriptions or other free newsletters. This new ad format contains a box within the ad that displays a user’s Google email address (if logged in). If a user chooses to click ‘Subscribe to newsletter’ then the email address is sent to the advertiser directly, which is clearly disclosed within the ad itself.”

Some email marketing firms like VerticalResponse, Constant Contact and AWeber are already using the ads.

While social networking continues to rise, email and search are still the most popular online activities, and these new ads take advantage of both. Look at this graph Pew put out a few months back. You can see how social media is growing, but look at how search and email are doing.

Social is not killing email, by any means.

But, interestingly enough, there is still a social element to these ads as well – the +1 button. Really, you’re getting the best of all three worlds (OK, maybe not the “best”. it would probably be better if they also had Facebook like buttons, retweet buttons, and StumbleUpon butons alongside the +1, but Google+ is growing like a weed, and the +1 has ramifications for organic search ranking).

These ads could be the best search-driven tool for driving email sign-ups ever available. We’re talking prime real estate on Google SERPs to drive an opt-in path directly to people’s inboxes.

This will no doubt be an incredibly popular ad format for Google, and I can’t imagine them not making it widely available.

Really, it should be a great thing for the entire email marketing industry. It may never even occur to people searching for various topics that there are even email newsletters related to what they’re looking for. They simply may never have thought to look for one. These ads will put them directly in front of users’ faces. This could very well lead to a lot more content being consumed by email at a time when many have suggested that social networks would all but kill the channel (clearly this is not happening).

Think about it. Let’s say you are a huge fan of the Detroit Lions (full disclosure: this applies to me). What if you were searching for Lions-related content on Google, only to discover that there is an amazing newsletter about the team that you had no idea existed. You might want to sign up for that.

We had an interesting discussion with Emily Keye, Marketing Strategist of email/mobile/social marketing platform provider Bronto Software about daily deals conversions that we thought would be worth sharing with WebProNews readers. The company recently released a set of best practices for daily deal services to stand out from competitors. First, here’s a quick look at those:

Segmentation is key – Sending out untargeted email blasts to deal subscribers is a big mistake when it comes to the daily deal industry. Receiving too many irrelevant offers is a chief complaint from many daily deal subscribers. Ask your subscribers key information beyond their location such as gender, age and interests through a manage preferences center. You can also gain information on their interests through click behavior, or you can conduct periodic surveys of your subscribers to gather more detailed profile information over time, continually improving your targeting by providing content tailored to their interests. Using these tactics, you will be able build a profile for each subscriber so you can segment your lists and provide members with deals targeted to their specific interests. Remember, the quality of the list is as important as its size.

Timing is everything – Email timing is also extremely important for daily deal companies. If people don’t open emails on time, they miss out on expiring deals and the company and merchant both miss out on a sale. When is the best time to send an email? Answering that question can be a challenge since optimal send times are a moving target based on many variables. Test your email messages to see when your subscribers are opening them. Your email service provider should offer send-time optimization capabilities for automatically monitoring and sending messages at the time a subscriber is most likely to open it. Timing is everything, so test, analyze and optimize. Given the timing competition around daily deals sends, also work on targeting inactive or unengaged subscribers by automating “win-back” messages. Test this message at different times during the day, typically later in the day, to avoid competing against other daily deal messages.

What makes these best practices the best practices?
 
“I think simplicity is at the root of the incredible success we’ve seen with daily deal sites,” Keye tells WebProNews. ”It’s a simple and effective way to connect consumers with great deals from merchants right in their neighborhood.  Now daily deal marketing practices are evolving to the next level.  Segmentation, deliverability and timing have been core online marketing best practices for years now and their value has been proven time and time again, especially with cross-channel marketing campaigns in which email plays a central role.”
 
“Let’s take a closer look at deliverability,” she continues. ”Reaching the inbox is essential for daily deal providers. Each undeliverable email means a lost sales opportunity.  You need to do everything in your power to ensure that deal emails get through.”

“Email deliverability depends on a complex array of factors, including close relationships with ISPs, which are the gateways for electronic message delivery,” she adds. ”Email authentication and reputation management also figure into the equation. Email Service Providers (ESPs) spend years establishing close relationships with ISPs as well as authentication and reputation management services in order to boost deliverability performance.  There are a host of other factors and best practices that influence deliverability, and ESPs make it their business to become best practices experts in these areas.  That’s why many daily deal services rely on ESPs as their message delivery platform.  It’s a core competency of ESPs that allows daily deal services to focus more attention on their subscribers and merchant clients.”
 
“Regarding segmentation and timing, we all know from experience that getting the right offer at the right time makes all of the difference in the world,” says Keye. ”Daily deal providers that analyze data and periodically survey their subscribers to learn more about them can better segment their lists by interest and preferences. For example, the golf enthusiast gets the 50% off deal for nine holes at a great golf course located between home and the office. In the dead of the New England winter that same subscriber receives a deal for golf swing lessons at an indoor driving range nearby.”

“These are great examples of segmentation and timing at work,” she says. “It’s also important to remember that beyond seasonal, holiday or calendar events such as birthdays, optimal timing for sending daily deal offers to the inbox is a moving target. At what time of day are deals most like to be seen and opened?  When do you get the most conversions? Is it first thing in the morning, or later in the day when you’re less like to bump into competing offers?  The only way to know for sure is to test, analyze and optimize. Try sending deals at different times of the day and analyze the results. Then make sure you revisit those same tests periodically as the optimal time to send is likely to shift due to a number of variables.”

Email vs Social

“Email is the primary gateway for daily deal sign ups and remains the primary delivery vehicle for offers, so it definitely plays a crucial role in driving sales,” Keye tells us. “Ultimately, it comes down to a consumer seeing a great deal targeted to their interests, and that can happen via email, social or mobile channels.”

“The benefit of social media is that your social connections usually know you well, so when people share deals via Facebook, Twitter or other social networks, they have a high likelihood of leading to a purchase,” she adds. “Also, you may be signed up to receive deals via email, but you also follow the provider on Twitter and Facebook. In fact, many people spend so much more time in social networks than on email, so it may be the first place they find a deal. You happen to be checking your Facebook page when the horseback riding lessons deal you’ve been waiting for pops up.  You click on the link and buy.  So, while email is the communications hub for daily deal offers and still the place where most deals convert, daily deal companies should leverage the mobile and social channels for even higher conversions and for better engagement with fans and followers.”       
 
On how deals providers can set themselves apart from the pack…
 
“As the recent Rice University study shows, consumer demand for daily deals remains very strong,” says Keye. ”This is good and bad news for providers. The good news is obvious.  The challenge is that competition for the consumer inbox is getting tougher and at some point, daily deal fatigue may set in, so only the most relevant, targeted and timely deals have a chance of standing out from the pack.”

“Geo-targeting by city was good enough at the beginning,” she says. ”But now consumers subscribe to two-three-four or more daily deal services – all with competing offers in their home town. That’s why forward-thinking providers are thinking beyond relying solely on location data and are learning more about individual subscribers in order to create more detailed consumer profiles.”

“You won’t have the best offer for every subscriber every time, but the more frequently you reach consumers with deals matched to their interests and preferences, the more you’ll set yourself apart and be remembered as the deal company that ‘knows what I like,’” she adds.

Well, the competition is certainly great, and there are some major players for the small ones to contend with, but as we’ve discussed in the past, there does seem to be room for plenty of verticals within the space.

“Since the Pew Internet Project began measuring adults’ online activities in the last decade, these two behaviors have consistently ranked as the most popular,” says Kristen Purcell for Pew Internet. “Even as early as 2002, more than eight in ten online adults were using search engines, and more than nine in ten online adults were emailing.”

“Email and search form the core of online communication and online information gathering, respectively,” says Purcell. “And they have done so for nearly a decade, even as new platforms, broadband and mobile devices continue to reshape the way Americans use the internet and web. Perhaps the most significant change over that time is that both activities have become more habitual. Today, roughly six in ten online adults engage in each of these activities on a typical day; in 2002, 49% of online adults used email each day, while just 29% used a search engine daily. ”

One very interesting aspect of Pew’s email data is that the people using email most are the youngest demographic surveyed (18-29). This is all the more interesting, considering claims once made by Facebook that email is “probably going away” because of younger generations gravitating more towards texting and social media. Of course that was before Facebook itself began offering email addresses.

“Email is similar to search (and many other online activities) in that the youngest online adults, the college-educated, and those in the highest income categories are more likely than others to engage in the activity,” says Purcell. “These demographic differences are considerably more pronounced when one looks at email use on a typical day. Moreover, while overall email use is comparable across white, African-American and Hispanic online adults, internet use on any given day is not. White online adults are significantly more likely than both African-American and Hispanic online adults to be email users on a typical day (63% v. 48% v. 53%, respectively).”

Social media is certainly growing as an online activity, though that growth has slowed tremendously over the last couple years, as you can see from the top graph. It’s still below buying products online, getting news online, and of course search and email.

However, the lines are getting blurrier among some of these things. People are, for example, getting more of their news through social network sites. Facebook is combining email and social media messaging into one “social inbox”.

It will also be interesting to see the impact Google+ has on Internet culture. While still in its very early days, it has been growing rather quickly, and the more people that use it, the more people will have access to Gmail, by simply having a Google account. How much they use it in relation to Google+ circles and streams remains to be seen.

For now, however, it looks like email is still king of the hill when it comes to online communication. That says a lot about the value of effective email marketing.

Ben Lerer, who is the co-founder of lifestyle website Thrillist, explained to us that a traditional media company creates content and sells brand advertising against that content. Although the company has evolved from its traditional roots, he still believes his company is a media company since it has the assets from the traditional side, a trusted brand, and an opportunity to sell advertising. Thrillist, however, is taking this model a bit further with the recent introduction of Rewards, a platform that is similar to the popular daily deals offered by companies like Groupon. So wait, does that mean that Groupon is a media company?

Do you consider companies such as Groupon and LivingSocial media companies or advertising companies? Let us know.

According to Lerer, Groupon and LivingSocial are media companies in this new media era. He goes on to say that more traditional media companies will evolve toward similar models going forward, just as Thrillist has done. For his site, in particular, he said that moving in this direction was a “natural transition.”

In a nutshell, Rewards from Thrillist are “localized experiences and offers curated specifically to our audience,” which is young professional men. For example, a recent Reward was called “Strip & Strip” and included both a lap dance and steak. Other rewards have included drag racing adventures, all-you-can-eat beef jerky outings, and more.

“It’s less about the fact that you’re getting a great deal, and more about the fact that we’re packing up or packaging an offer in a way that makes it feel a lot more like content than a sale,” he said. “We’re making sure that we’re creating a really great experience where the user feels not just a loyalty toward the thrills/Rewards, but also toward the establishment.”

One of the most interesting ideas behind Thrillist’s model is that its Rewards, a.k.a. deals, are targeted to a specific group of people. While the Groupons and LivingSocials of the world have created an impressive business model around deals, Lerer believes that other companies will chip away at this model and create more targeted services.

“I believe that we can provide a certain kind of person a far better experience than a LivingSocial or a Groupon can,” he said. “I read Groupon and Groupon doesn’t feel like it’s written for me. It feels like it’s written for every resident of New York City.”

He does think that the more traditional media companies, such as news brands, will have a harder time embracing this new approach. They are used to making a clear distinction between church and state. Nonetheless, let’s not forget that very traditional news brand The New York Times is trying its hand at this model with the launch of its deals service earlier this year.

“There are so many different ways that brands can go and spend their dollars that if you’re not able to go and make sure that you’re taking advantage of the relationship that you have with your consumer… then you may wake up one day and realize that you don’t have as strong a business as you once thought you did,” said Lerer.

He admits that it takes a lot of work but believes that it is the direction of the future. Social media’s dramatic impact on the media industry will also likely play a big role in this shift. Ironically, with the exception of Foursquare, social media has not played as big of a role in Thrillist’s success as one might expect.

Lerer told us that he recognizes its importance and thinks the company could do more with it, but that the more traditional form of email marketing has proven to be more effective.

“We built Thrillist before social media existed, and so we’re really good at getting people to forward emails and to use email as sort of social media versus leveraging the traditional networks,” he said.

Do you see traditional media companies adopting this model? If so, how critical of a role would social media play?

Epsilon claims to be the world’s largest permission-based email marketing provider, sending over 40 billion emails annually. It works with more than 2,500 clients, including 7 of the Fortune 10.

Among company’s affected were US Bank, Capital One, JPMorgan Chase, Citigroup, Best Buy, Kroger, TiVo, Walgreen’s, and Robert Half. Epsilon said in a statement:

On March 30th, an incident was detected where a subset of Epsilon clients’ customer data were exposed by an unauthorized entry into Epsilon’s email system. The information that was obtained was limited to email addresses and/or customer names only. A rigorous assessment determined that no other personal identifiable information associated with those names was at risk. A full investigation is currently underway.

US Bank said in an email to customers, “We want to assure you that U.S. Bank has never provided Epsilon with financial information about you. For your security, however, we wanted to call this matter to your attention. We ask that you remain alert to any unusual or suspicious emails.”

TiVo sent a similar email saying,

We were advised by our email service provider that the information that was obtained was limited to first name and/or email addresses only. Your service and any other personally identifiable information were not at risk and remain secure.

Please note, it is possible you may receive spam email messages as a result. We want to urge you to be cautious when opening links or attachments from unknown third parties.

We regret this has taken place and apologize for any inconvenience this may have caused you. We take your privacy very seriously, and we will continue to work diligently to protect your personal information.

Robert Half told customers:

We deeply regret this has taken place and any inconvenience this may have caused you. We take your privacy very seriously, and we will continue to work diligently to protect your personal information. We were advised by Epsilon that the information that was obtained was limited to email addresses only.

Please note, it is possible you may receive spam email messages as a result. We want to urge you to be cautious when opening links or attachments from unknown third parties. We ask that you remain alert to any unusual or suspicious emails.

At least no financial data or passwords were obtained by the attackers. Epsilon’s reputation may have taken a hit, however. It will be interesting to see if it loses any of its major customers as a result of the ordeal.

"We were on track to be acquired," Dreymann told the publication. "We got a terms sheet, and they left us at the altar at the last minute."

Five years ago, when Goodmail announced that AOL and Yahoo would implement their "pay-to-play" email authentication system, iEntry CEO and WebProNews publisher Rich Ord raised some interesting points about the company: "What exactly would publishers be paying for? Simply the right not to have their email publications distorted and made useless to subscribers by removing images and links? Paying a third party in order not to have my publications messed with seem a little bit too much like a Sopranos episode to me. As publishers we need to ask ourselves, does AOL have the right to distort our publications and damage our brands unless we pay?"

"Our newsletter subscribers asked to receive our emails," he added. "If an ISP takes on the service of offering email accounts, there is an expectation by the consumer that the ISP will not alter their email. An altered email deligitimizes a publishers brand and can cause the consumer to falsely report it as spam."

He then added, "What has become clear over the last few days is that Goodmail is not designed to combat spam. It’s sole purpose is to generate revenue for itself and partner ISP’s. The only companies who could afford to pay the Goodmail fee are the larger emailers which ISP’s already identify as non-spammers."

Criticism of the service was even able to achieve bi-partisan support. WebProNews later reported: "RightMarch and MoveOn hold diametrically opposite positions in the political spectrum. To bring these two rival political action committees to a common ground usually requires a staggeringly horrifying event taking place, like the launch of New Coke. This time, it’s the proposed fees for delivering bulk email to opt-in recipients that MoveOn and RightMarch find difficult to swallow." Still, even the White House would become a Goodmail client. After all, they want their messages to be received. 

Goodmail lost Yahoo support last year, and according to Dreymann, the acquisition that never happened would have addressed this, but when it didn’t happen, he says he had no choice but to shut down the service. "I could not sustain the losses," he said.  Gmail had resisted the use of Goodmail in the first place. Google said that the power of email filtering should rest in the hands of its users.

Goodmail reportedly sent customers an email saying that they were working with ISPs on a transition process.

Much of this trend has been based upon B2C offerings, however, and where B2C trends occur, B2B trends tend to follow. It’s happened with email, social media, and will likely come around again full circle with local and even local email. 

It’s all about the next Groupon or "the Groupon of…fill in the blank" these days, it seems. Google and Facebook, for example, have products on the way like Google Offers and Facebook’s Buy With Friends that could rival Groupon in the niche of localized deals and group buying. 

Everywhere you look, you see Groupon clones or some niche variation on the concept. For instance, you’ve got:

- "The Groupon for Good"
- "The Groupon for Casual Games"
- "The Groupon for Green Shoppers"
- "The Groupon for Travel"
- "The Groupon for Publishers and Bookstores"
- "The Groupon for Cause Marketing"
- "The Groupon for Moms"
- Etc. 
- Etc.
- Etc.

Groupon is about group buying, but even more so, it’s about localized content and email marketing. How do I know what Groupon offer is available in my area every day? I get an email from Groupon letting me know, and I know it’s personalized to me based on geography, which makes it much more likely to be something I’ll actually use, than if it were something available to all Groupon customers around the world. 

Now apply that concept on a B2B (that’s business-to-business) level – perhaps an office supplies vendor, a business that cleans uniforms. In fact, you can apply it to B2C businesses as well, because the businesses have employees, and they’re all consumers. 

B2B works for consumer-facing businesses too. A restaurant, for example, could offer a business a way to give their employees discounts on meals, or a golf club or gym could do the same with discounted memberships. 

In fact, the concept works even for national brands (which could spend a lot of money with such a service) that have local locations. Much of the appeal of local is on the consumer side anyway. A consumer (or business on the receiving end) is likely to feel a deal is more personalized to them as long as the local angle is there (this is an area Groupon could improve upon itself, by the way).

Email marketing works for B2B. It stands to reason that local email marketing, of the sort Groupon caters to, would work extremely well for small and local businesses. It also stands to reason that we’ll see more startups looking to fill this void in the Groupon-mania induced gold rush of 2011.  

Expect to see more "The Groupon of…" verticals aimed at local businesses. Groupon calls itself the "savior for small business". There’s room for such a savior for local B2B business too, which isn’t the kind of business you normally see in your daily Groupon emails.