Bull's eye: targeted online marketing

From targeted banner ads that pop up when they recognize your customers, to personalized e-mail and newsletters, to direct mail inserts aimed at online buyers, the Internet puts you instantly in touch.

1. Outsource it
2. Make customers click
3. Full-service treatment
4. Size doesn't matter
5. Win-win situation
6. Service is your business

For the National Football League, establishing an e-mail newsletter wasn't about selling more products; it was about building a better relationship with fans. The NFL went with e-mail marketing specialist e-Dialog, which every week creates a different newsletter for every team. If the recipient is a Broncos fan, for example, the newsletter is branded with Broncos graphics and leads with information about that team. The service analyzes the click-through behavior of each recipient, then modifies future content accordingly.

Are e-mail newsletters effective? YES

Since the newsletter launched in 1999 the subscription rate has quadrupled to nearly 1 million readers. "You can sit around an office and think you know what people want, but unless you talk to them you can't know," says Evan Kamer, the NFL's new media director of business development. "We've got 900,000 people who give us information about themselves."

As the NFL discovered, Web marketing lets you reach out to customers in new ways—and it also helps businesses save time and money. Consider that a traditional one-time direct mail campaign costs tens of thousands of dollars for the creative materials, labor, and mailing. Plus, it takes several months to pull together. Web marketing—including e-mail, newsletters, sweepstakes, and other campaigns—can be done in a few days or weeks.

While a large-scale Web marketing venture can easily cost $10,000 a month, a smaller business can get into e-marketing for as little as $500. Purchase services or software to handle these chores in-house, outsource it all, or do a little of both.

Why outsource the job instead of having your marketing team handle it in-house? Two reasons. First, the cost of setting up your own dedicated server, T1 line, and support staff could easily run from tens of thousands to hundreds of thousands of dollars. Second, experience is critical. There's a lot more to Internet marketing than compiling or purchasing a mailing list and sending out e-mail. Internet marketing companies have the expertise to make sure you are sending the right messages to the right people at the right time.

"Consumers have a love-hate relationship with advertising," says Ann Marshman, a GartnerGroup analyst. "They always have. On the positive side consumers want information about products, services, and companies, but they want only the information they are interested in and only when they need it." That wariness is understandable, considering the number of marketing messages sent over the Internet last year: 17 billion, according to Jupiter Media Metrix.

One key thing to keep in mind when working on the Web is the growing importance of marketing only to customers who have actively requested information. A customer who has opted in is much more receptive to your message. "Permission-based marketing is now a given. You won't be around in a year if you don't practice it," says Jeff Schline, director of corporate communications for @Once, a Web marketing service provider.

Walter Janowski, research director at GartnerGroup, points out that the trend brings with it new obligations. "Any responsible company needs to keep track of its database and the permissions that have been granted," he says, especially because a growing number of restrictions regulate e-marketing.

And the responsibilities don't end there. Internet marketing is not merely about sending information to your customers; it's about building a relationship with them. Tracking their behavior to see if they opened your message, clicked on a link inside it, or made a purchase as a result of it are essential to a successful e-marketing campaign.

Regardless of the size of the company, a good starting point for experimenting with Internet marketing is sending out a customized e-mail newsletter. By letting your customers subscribe to a newsletter and then modifying it according to the links they click on, you can begin to build a relationship with them and better understand their interests.

Several factors are critical to success, emphasizes Trevor Lam of GartnerGroup. "Whether your e-mails result in a customer clicking through to make a purchase depends on the company doing your campaign, the quality of your mailing list, and how compelling your offer is," he says.

When Borders.com decided to outsource its customer newsletter, the company was looking for a provider with expertise in e-mail marketing as well as high standards and ethics. These traits were important to Borders, because the loss of an online customer due to spam or a broken link "is also the loss of the brick-and-mortar customer," says Mary Campbell (pictured right), the company's manager of online marketing.

Borders chose Digital Impact, which created preference pages that link to Borders.com. These pages let site visitors subscribe to Borders.com newsletters as well as change preferences for which of the 11 newsletters they receive. So far, Borders has been happy with the results. "We have seen an incredibly high click-through and a very low unsubscribe rate," Campbell says. "We also know that customers are using the newsletters to make purchases online and in the store."

Digital Impact's services start at $10,000 per month, with an additional fee per e-mail depending on the volume of messages and the complexity of the entire campaign.

If your company is a larger one looking for creative ways to reach new customers, working with a full-service agency might be the best way to go. It can handle e-mail campaigns, Web media placement, and other Web marketing strategies, as well as take combined approaches that use both online and offline marketing solutions.

Gina Sobel, interactivae account manager for Omaha Steaks (pictured right), wanted to find new ways to promote the company but didn't have the staff or time to do it in-house. Although Omaha Steaks has over 50 retail stores and a thriving $200 million catalog business, its Web site staff numbers just five.

So the company teamed up with @tomic Response Media. The agency aims to reach consumers known to buy on the Web with its eVguide, a booklet filled with online offers that's inserted into Web orders from e-tailers. A company can advertise in the entire print run of 1 million booklets for between $45,000 and $70,000 (depending on the size and positioning of the ad) or in 500,000 booklets for between $22,500 and $35,000.

Another full-service firm specializes in direct marketing online and off. Directech | eMerge can help you generate sales leads, create online seminars, and manage your direct mail database.

But what if your business is smaller, with several hundred, not several thousand, dollars a month to spend on online marketing?

Mike Culwell, owner of the Culwell & Son upscale men's clothing stores, wanted to find a way to shift the emphasis of his marketing from direct mail to e-mail. e2 Communications helped him do just that with its e2Mail Center service. Culwell now easily creates and sends out e-mail campaigns and manages his inbound e-mail by logging onto e2's secure Web connection.

When customers go to the site and join Culwell's eClub, it automatically sends them a $25 savings certificate within an hour. Culwell also uses the service to update customers on new stock or specials and to send a $50 gift certificate on their birthdays.

"You have to add value. I want my customers to feel good about our having their e-mail addresses," Culwell says. The gift certificate drives people into the store, where they spend an average of $264 each visit. In the six months since Culwell started using e2's services his e-mail list has increased more than fivefold.

You're in charge of your mailings via the e2Mail Center. Cost for the service is $1,250 per month, which includes all setup, a series of live Web-based training sessions, and 100,000 messages a year. For an additional fee e2 also monitors and analyzes customers' click-through behavior.

And e2's services can grow with your company. For example, e2 client JCPenney uses the service to send millions of messages per month.

While most Internet marketing campaigns focus on building long-term online relationships, you can also use the Internet to create one-time promotions, like a sweepstakes when you launch a product or service. Along with generating publicity and awareness, a sweepstakes offers a way to gather information about your customers. When people have the chance to win something they're more willing to share personal information. Specialty providers like Promotions.com or IQ.com can help you create sweepstakes, contests, loyalty-reward programs, and coupons.

The Phelps Group, a marketing communications agency, called on IQ.com to set up a sweepstakes for its client Crystal Cruises. "Crystal Cruises won Condé Nast Traveler magazine's Best Large Ship Cruise Line award for the fifth year in a row, and they wanted to celebrate with a sweepstakes that would also drive traffic to their new site," explains Jennifer John, the Phelps Group's team manager (pictured right). By the time Crystal found out it had won the award there wasn't much time left to promote it in a timely fashion.

IQ.com rapidly set up two sweepstakes. The first offered consumers a chance at a grand-prize cruise for two to Alaska. The contest was a scavenger hunt, which allowed Crystal to harvest personal information as part of the registration process. The second sweepstakes offered travel agents the chance to win a Panama Canal cruise. It came with an extra incentive: For every reservation that agents booked for Crystal Cruises, they earned five additional entries.

The pricing for an IQ.com sweepstakes begins at $17,500 and increases depending on the size and expense of the prize and the number of winners. You'll pay an additional fee if you want the company to collect and analyze marketing data during the sweepstakes.

By bringing in more sales for your dollar, Web marketing can save time as well as money. While a single call to a customer service representative will cost an average of $53, answering an e-mail message about the same problem will cost only $3, according to the Software Support Professional's Association.

Online jewelry retailer Blue Nile hoped to lower its customer support costs while also better marketing to online customers. For help in achieving these goals it partnered with Talisma, which focuses on customer relationship management.

Now customers can contact Blue Nile by e-mail or text-based chat when they have a question or problem, and Blue Nile can in turn use the service to alert its customers about special offers and sales. One of the best parts about outsourcing the setup? The system was up in just five days, including training for Blue Nile's in-house staff members who would handle customer interaction. Talisma can also handle this part of the job if companies don't have their own customer service staff. Talisma setups typically run in the $30,000 to $150,000 range.

"The system has tremendously simplified our communications with our customers," says Bob Paquin, Blue Nile's chief operating officer and chief information officer (pictured above). "We can handle much higher volume at much lower cost and can turn around e-mail in an hour instead of a day."