Delivering Episode 2: The Evolution of the Email Industry

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In this episode of Delivering, host Jason Rodriguez digs into the history of the email industry—from the first spam message to recent mergers and acquisitions. See where we came from as an industry and, perhaps more importantly, hear about where we’re all going.

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Episode Transcript

Where are we as an industry? How did we get here? And, more importantly, where are we going with email marketing?

These are three questions I’ve been asking myself lately. While email marketing has been around for a long time, it’s changed a lot—especially in the last few years. But what do those changes mean for those of us in the industry?

Welcome to Delivering, a podcast about email marketing and it’s place in the world. I’m your host, Jason Rodriguez. As always, Delivering is sponsored by Litmus. See how Litmus can help you send better emails—and make subscribers happier—at litmus.com.

I guess we need to start at the beginning, which I always hear is a very good place to start.

The first email was sent in 1971 by Ray Tomlinson. It featured the first use of the @ symbol and was the first time someone started sending messages between different computers. Before Ray came along, messages could only be sent between users on the same time-share computer.

Oddly enough, his invention didn’t seem revolutionary at the time. It wasn’t even sanctioned by his employer. When showing off his work to a co-worker, Ray apparently said, “Don’t tell anyone! This isn’t what we’re supposed to be working on.”

As we all know, though, Ray’s simple invention would eventually take over the world.

It wasn’t until 1978 that email was first used for marketing purposes. In early May, Gary Thuerk sent a message to about 400 people advertising new computers built by his company, the Digital Equipment Corporation. Although he likes to think of himself as the father of “e-marketing”, most of the recipients didn’t see it that way.

The Defense Communications Agency, which ran the internet’s precursor—Arpanet—went so far as to call Thuerk’s boss to complain about the message. Regardless of people’s reactions, the first spam message seemed to work. Thuerk claims that the message—and subsequent event it was advertising—resulted in $13-$14 million in sales.

This tension between email marketing, its effectiveness, and people’s perception of it is something we’re all familiar with.

In recent years, reports have shown as much as 180 billion spam messages being sent every day. Back in 2004, Microsoft founder Bill Gates was reported to receive four million emails per year, the vast majority of which is spam. And, according to a 2017 report from the FBI, businesses lost $676 million dollars to fake vendor and spam emails that year.

Since Gary Thuerk’s first spam message, dozens of spam filters have been created to help filter out the good emails from bad.

Fortunately for email marketers, consumers’ definitions of spam have evolved. Modern email users are now accustomed to receiving marketing messages. Largely in part to the release of Hotmail in 1996, which popularized free email services, marketers were now able to directly reach millions of consumers.

The 1990s shepherded in the era of “batch and blast”, which saw companies scooping up email addresses and sending the same message to everyone on that list. Little thought was given to creating personalized messages for each subscriber, or segmenting lists based on behavior or demographics beyond simple categorizations.

The combination of email marketers and spammers sending billions of messages led to a massive reaction from consumers and various governments. In 1998, the Data Protection Act was introduced which required email marketers to include an opt-out method. In 2003, the CAN-SPAM law, with which we’re all familiar, was enacted. This more clearly defined what is a marketing email, what’s transactional, and what can be considered spam.

The anti-spam legislation trend continues today. In 2014, Canada instituted the Canada Anti-Spam Law, or CASL, which more clearly defined implied versus express permission from subscribers. And, in 2018, the European Union introduced the General Data Protection Regulation, or GDPR. Both laws more strictly define what’s acceptable when it comes to email marketing, and gives governments the power to levy large fines from companies that ignore the legislation.

While email marketing is one half of the story, the other is the tools used to send those campaigns. Admittedly, I’ve had trouble figuring out which email service provider was the first in existence. What I can tell you is that, starting in the late 90s and early 2000s, email marketers saw a proliferation of tools to make collecting subscriber email addresses and sending emails extraordinarily easy.

Email service providers—or ESPs for short—like MailChimp, Campaign Monitor, Constant Contact, ExactTarget, AWeber, BlueHornet, Cheetah Mail, Responsys, and Bronto pioneered the marketing platforms we’re familiar with today.

While some focused on bulk email sending, others figured out how to leverage audiences more effectively. Introducing features like email analytics, advanced segmentation, and scripting languages—like ExactTarget’s AMPscript—this new breed of email tools allowed marketers to send more targeted, personalized, and dynamic campaigns than ever before.

Since then, the email service provider landscape has exploded. EmailVendorSelection.com currently tracks over 400 ESPs. New remixes on an old idea crop up every year, with newer players like Mailjet innovating with coding frameworks like MJML, or companies like ConvertKit tailoring their services to specific audiences like bloggers, writers, and creatives.

At the higher tiers of the email industry, some massive mergers and acquisitions have rocked the industry. Since 2010, we’ve seen over $18 billion dollars in M&A activity. Companies like Responsys, Marketo, Emma, and ExactTarget have been assimilated into larger marketing platforms from the likes of heavy hitters like Adobe, Oracle, and Salesforce.

Along the way, tools from large and small companies alike continue to evolve.

All of this history begs the question: What’s next for the email marketing industry?

That will largely be the focus of this very podcast. Over the course of future episodes, we’ll dig into some of those changes we’ve seen in the past few years, as well as innovative trends that are just now coming to the forefront.

For now, I can say that there are a few things likely to happen in the email industry.

When it comes to tooling, email marketers can expect email platforms to evolve to be more focused on collecting and analyzing subscriber data. That data will then be used to create more dynamic email campaigns that are highly-personalized and largely automated. While bulk newsletters will still be a big part of email marketers’ lives, we’ll likely all be working on figuring out ways to trigger personalized emails to individual users, ones that are tailored to their behaviors, preferences, and desires.

There will be more mergers and acquisitions. While email platforms will consolidate, they’ll be called on to integrate with ever more services. If you’re not sick of “omnichannel” as a buzzword yet, just wait.

Email marketing is far from dead. Litmus’s own State of Email research has shown that email’s value is only increasing. The average return on investment is up from past years to $42 in return for every dollar spent on email marketing. Savvy businesses will seek to leverage that value by integrating email with other marketing channels. Expect to be working with an increasingly diverse set of tools, data, and teams in the coming years.

At Litmus, we’re excited to see all of the change happening in the industry. While the history of email marketing is fascinating, and one we’re proud to be a large part of, the future is looking brighter than ever. We can’t wait to see what happens next.

That’s it for today’s episode of Delivering. Be sure to follow along on iTunes or in your podcast app of choice. If you liked today’s episode, leave us a review on iTunes. Although we don’t expect to see a podcast about email marketing in the iTunes Top 100, an email geek can always dream.

Until next time, cheers!