Ads in Emails: Some New Ideas

Published May 13-20, 2024

The Combo

Both email and digital ads have been around for over 25 years, and yet ads in emails have not taken off except for publisher newsletters. Of course, one could argue (as I have) that most brand emails are ads! But that aside, given that ads are conquering almost every corner of our lives, it is a surprise that ads and emails haven’t been mixed and matched. By my estimate, about 2 trillion business-to-consumer emails are sent each month. Digital advertising is the most important business model of the Internet, generating $500 billion annually. So, can the twain meet? Can ads in emails open new opportunities for advertisers, brands, and consumers? My short answer: Yes, the time has come.

There are five reasons why change is coming. First, AMP in email can change the format of ads. Instead of clicking through on a display banner to a landing page, ads can become interactive, and the engagement can happen without shifting attention to a new context. Second, with 2024 being the year of the third-party cookie deprecation, advertisers will want better targeting. What better place than an email footer where the PII (email ID) is known? Third, a solution to the email open problem has the potential to dramatically increase open rates and therefore attention. Fourth, with brands facing pressure on profitability, there will be interest in new revenue streams. Finally, new ad formats can create exciting opportunities for advertisers beyond what’s possible with the traditional digital ads we have become so used to.

Email ads are a topic I have discussed in the past. In Reimagining Email Ads, I wrote: “There are three innovations in email which can enable a big leap in email advertising – AMP, Atomic Rewards and the Email Footer. AMP, a technology introduced by Google, is about making emails dynamic and interactive. It enables the creation of mini-websites and apps within the email itself, thus reducing the need for clickthroughs and landing pages. Atomic Rewards brings in micro-incentives to nudge actions… While AMP and Atomic Rewards (in the form of Mu, a pan-brand token for attention and data) can be used within the email body, the footer is where the possibilities can be widened… For brands and consumers, Email 2.0 ads can be the next leap beyond programmatic. With billions of daily emails already being sent, the traffic and attention is there. What is needed is innovative thinking to reimagine the power of email ads. There are five possible use cases: Search, Sale, Say Yes, Survey and Second Life… f we estimate that each ad could generate at least $1-10 in revenue, the opportunity for email ads could be about $25 billion annually – 3 times the size of the email service provider market. In fact, ESPs could let brands send emails for free in return for a cut of the ad revenue generated!”

In a subsequent essay Can B2C Email Become Free?, I asked and answered many questions about email: “What would it take to offer businesses a million free emails monthly (100,000 contacts x 10 emails a month)? How disruptive could that be? And what if the emails sent could be made more engaging – more opens, more in-mail actions, more engagement? Would such a free service work? Or would it be too good to be true?! What else could be added to make it a compelling switching proposition? From a service provider’s view, what would it take to offer such a free service – and do so profitably? Could it be scaled to every business irrespective of email volumes and database size?”

A combination of free B2C emails where ESPs (email service providers) monetise via ads can create win-win opportunities and connect consumers, marketers, and advertisers. It will require a fourth entity – a forward thinking email service provider – to make it happen. In this essay, I will put forth some ideas on how it can be done.

Recent Writings

Here are excerpts from three recent essays which are relevant as we think about how to rethink ads in emails.

Solving the Email Open Problem: “Think of the fun page in a newspaper. Even now, many newspapers have a page of puzzles, astro quotes, comics, and more. It is to create a habit that makes people pick up the paper and open it. As they do so, they see the ads. Email marketers need to think similarly. A “game” magnet is needed in the email subject and a “fun” magnet is needed in the email footer to drive engagement… What the footer does is create something I find “useful” – always. For these few seconds that I engage, I get something interesting. Or it just serves as an attractive distraction in the busyness of daily life. Different strokes for different people. The key objective remains the same: no email unopened.”

I discussed “Action Ads”: “Brands can also have ads in the email footer. They can be ads promoting internal products or external non-competing brands. There are four attributes that set these ads apart: they are linked to PII (personally identifiable information) so they can very targeted, they are in “push” messages and thus don’t want for user action, all actions are in-place (and not requiring a clickthrough to a landing page), and they can support payments which means the ads could drive impulse purchases.” Think of these as the 4 Ps – PII, Push, in-Place, and Payments.

Emagining E3 Ecosystem: Every Email Engaged: “E2 is about how to make the email body more engaging with forms, carousels, accordions, and shopping carts. E2 is about eliminating the clickthrough to a landing page. E3 is a bigger idea, solving the problem of attention recession and converting AdWaste to brand profits. E2 is for a single brand to adopt; E3 is about transforming the business model of email. E2 and E3 complement each other perfectly…[E3] is the universal solution to ensuring every email is opened and engaged, thus taking email open rates from 10% to 100%. This is because the E3 packaging is made for the recipient, the person behind the email address. In doing so, E3 also creates a digital media network for monetisation of attention – just like Google and Meta have done. E3 providers can subsidise the cost of sending the email and in fact share ad revenue with brands (list owners), thus turning the traditional cost structure on its head and fostering a new era of monetised engagement, creating a new revenue stream for email senders (brands) and email service providers (ESPs).”

FAB: A New Model for Enterprise Software: “FAB [is] a model which challenges the traditional B2B enterprise software paradigm: Free, from paid, Alternative business models, which help with monetisation for the software vendor, and Better, meaning that the free product offering is superior to the paid solution… E3 enables monetisation by allowing brands to include interactive ad formats within emails, facilitating in-email actions like form submissions or payments… [It] introduces an alternative business model for email marketing via an “email media network” that generates revenue through embedded interactive ads (built around 4P: PII, push, in-Place, Payments), and thus democratises access to quality email marketing for brands of all sizes.

I added: “E3 is a win-win for consumers who find something useful in every email and for brands who can now build hotlines with their existing customers and thus reduce their dependence on adtech for customer acquisition and reacquisition. It is an excellent example of the FAB approach in action, particularly in the B2B space, where such innovative models are less common. By offering a free, engaging, and superior user experience, E3 challenges traditional email marketing paradigms and introduces a new way for businesses to connect with their customers. The alternative monetisation strategies within E3 not only benefit ESPs and marketers by creating new revenue opportunities but also enhance the user experience by making emails something to look forward to, rather than just another message (or more correctly, an ad) in the inbox.”

We now have the foundational thinking to do some new thinking about ads in emails.

The key to opening up the world of emails to ads which are relevant for consumers is E3, a new kind of email which subsumes the brand content (which in reality is an “ad”) with a gamified, incentivise-laden content wrapper. 4 As define E3:

Atomic Rewards: Mu in the email subject signals that this is an email that is different from the other emails with the content serving as an attractor for the recipient. A Mu catalog in the footer also helps drive the earn-burn flywheel for the micro-incentives.
AMPlets: These are the AI-powered magnets which ensure that consumers will want to open every E3 email they receive. Be it a news AMPlet, a quizlet, or a gamelet, they will receive in the email footer “made-for-me” surprises. For example, a student could receive dynamic flash cards (in the form of quizzes) for their forthcoming exams. A variety of puzzles could keep the mind engaged and fill life’s empty moments.
Action Ads: These response-driven ads are the monetisation engine which can enable “zero CPM” (free) brand emails.
AM: E3 emails are sent daily at the same time to enable habit formation.

Here is a futuristic view from an E3 world: “Reflecting on his E3 inbox, Arun is genuinely impressed by how transformative the experience has been. What was once a routine task of sifting through emails has now become a highlight of his day, filled with anticipation and excitement. The seamless integration of learning, play, and brand interaction has not only enriched his daily routine but also reshaped his perception of email as a medium. He appreciates the clever use of µ to signify value beyond conventional marketing, fostering a sense of reward and engagement. The E3 model, with its dynamic AMPlets in the footer and interactive ads, has effectively blurred the lines between entertainment, education, and commerce, making Arun look forward to each new discovery that awaits in his inbox. This reinvention of the email ecosystem has not only captivated Arun’s attention but also elevated his expectations of digital communication, setting a new standard for how brands connect with their audience. The spam still makes its way into the inbox but for him the µ signal is the key; those are the emails he doesn’t ever want to ignore.”

The key to unlocking this future is to ensure that “Action Ads” generate response for the advertiser, relevance for the publisher (email list owner), rewards for the consumer, and revenues for the ESP. Let’s see how the 4 Ps of E3 Ads bring “good things to life” (to borrow a line from a GE Ad in the 1980s and 1990s).

4 Ps

PII, Push, in-Place, and Payments are the 4 Ps which are at the heart of the E3 Ads.

PII: Personally Identifiable Information refers to any information that can be used on its own or with other information to identify, contact, or locate a single person, or to identify an individual in context. Examples of direct identifiers include names, passport numbers, mobile numbers, and email addresses. Indirect identifiers may require more data to identify an individual. Examples include date of birth, place of birth, cookies, IP addresses, and mobile device IDs. In the E3 context, the email address to whom the Action Ad is directed is known. The ad is being shown on a brand’s owned channel where the recipient has an opt-in. PII info can be highly valuable given that the adtech industry is moving in the opposite direction of hiding PII info when it comes to ads.

Push: Almost all digital ads we see today are shown on “pull” channels – where users have to do an explicit action (do a search, request a web page, open an app) before an ad can be served. Email is part of a category of push channels where the brand initiates the messaging. What recipients need to do is to engage with the message for the ad to be viewed.

in-Place: Another differentiating factor with E3 Ads is that every action can be done in the email itself. For a brand, this is extremely important because the recipient is not leaving the email (and therefore unlikely to return in the same session). The response mechanism is tied to the ad and part of the Ad AMPlet. Be it a form, an email subscription acceptance, or an “Add to Cart – all of it can be actioned in the email itself. This is a novelty – almost every ad on the Internet that we see today involves a clickthrough to the advertiser’s website. While this can be done with email ads also, the aim is to imagine a new format – a “blue ocean” which is an uncontested marketspace.

Payments: In-place, one-click/tap payments can be a gamechanger – the way Amazon has done for shopping. If a recipient has a wallet (and therefore a cash balance) with either the advertiser, publisher, or ESP, small payments can be made in an instant. The PII (email address) is already known, and therefore so is the shipping address in the case of a physical product. This enables frictionless purchase, which can power a whole new category of ads.

The thinking behind E3 Ads is to create new formats and experiences which delight consumers. The best ads are those where the readers/viewers don’t think of them as ads but as content that is of value to them. This is what we will discuss next.

Examples

I just browsed a book on an online store but did not buy. Instead of showing me an ad for the book (which will now become almost impossible with the third-party cookie deprecation), imagine an ad which I see in the footer of a brand email saying “Sign-up to receive 7 days of excerpts about the book”. A single tap (which is an opt-in) and I am done. For the next week (or until I buy in the interim), I receive a daily E3 email with an excerpt and a magic cart to allow me to buy in the email itself.

When I see an ad which says, “Tap to receive 7 days of summer fashion tips”, the probability of me wanting to subscribe is much higher than simply seeing an ad with a logo and an invitation to click to a product or category page.

We can run through more such examples. The underlying theme is to leverage the E3 format for a new class of ads:

An invitation to subscribe to content
Content sent as a “micron” (micro newsletter) for a week – same time each day
Each micron can have a form in the footer to gather zero party data (with Mu as incentive)
This provides multiple opportunities to see (imprint the brand logo on the consumer’s mind) and sell
All of this is done in email – think of it as inbox commerce / in-channel conversion

For the advertiser, this is like showing a pop-up on a website for new visitors inviting them to give their email ID in return for a discount on their first purchase. In the case of E3 Ads, the email ID collection is very simple: a tap to subscribe since the email ID is already known. (This is similar to how Meta runs ads enabling a click-to-WhatsApp action.) What is also new is the focus on content as an attractor – a soft-sell. In the effort to do a hard sell, brands end up with wrong acquisitions: a display ad is clicked but the consumer goes away without leaving any identifying information.

Email subscription ads are just one example. In situ form fills can also remove the friction for lead generation ads requiring a clickthrough to a landing page. The PII info can also help with targeted ads for reactivation and remarketing. A search box with a magic cart is yet another example where the ad actions can be completed inside the email. The key is to think how the unique features of E3 can be used to improve the ads and give them a content feel, making them more relevant for the email recipient.

I had discussed more examples in Part 5 of Reimagining Email Ads.

Moreover

In the 1980s, I remember readings magazines and seeing ads which had a number at the bottom of the page. There was a postcard in the magazine where one could circle the numbers of the ads for which one wanted more information and send it to the publisher. This was an early form of “response” ads. Print and TV ads then had toll-free numbers one could call to show interest. Then came the Internet with keyword search ads and other innovations. The world of email stayed largely untouched through all these upgrades in the world of advertising.

Atomic Rewards and AMP can be gamechangers. Atomic Rewards can enable a magnitude increase in email opens, while AMP can bring in interactivity. Together, the 4 As of E3 and the 4 Ps of E3 Ads can open new vistas for advertisers and list owners.

But there are challenges. The E3 ad formats we have discussed do not lend themselves to integration into existing ad exchanges which are all made for banner ads and a URL. E3 Ads will necessitate the creation of a new matching engine – think of it as an “Email Media Network” – which can connect list owners (brands / publishers) to advertisers (with PII targeting). The more the focus on content-focused ads and relationship building via the use of microns, the greater is likely to be the impact.

In fact, think of the following scenario:

An advertiser pays 1 unit (say 10 cents or Rs 10) for an email opt-in
Over the next 7 days, the advertiser pays an equivalent amount each day the subsequent emails (now sent from the advertiser’s domain) are acted on
If all 7 emails see engagement, the payment for the ad goes up to 8 units (80 cents or Rs 80).

The medium makes it own formats. Email is one of the most important channels on the Internet for brands to engage with their customers. It can now also become an equally important platform for brands to acquire new customers and reactivate dormant customers. The prize is the $250 billion AdWaste on account of wrong acquisition and reacquisition. E3 Ads can do away with both leading to much better ROAS.

With E3 Ads, the business model of email can also be transformed – from “some CPM” to “Zero CPM”. E3 has the potential of being the single channel to address all use cases: acquisition, engagement/retention, and reacquisition. It can do it far more efficiently than current methods. Success with E3 is what can help brands in their Profipoly quest. It can also give the email channel a much-needed makeover for the newer generation of customers.

Summary and Critique

ChatGPT

Summary

The essay discusses innovative approaches to incorporating ads within emails, positing a future where email advertising becomes a significant and interactive medium. It introduces the concept of “E3” – a new kind of engaging, interactive email that integrates ads seamlessly with content, leveraging technologies like AMP (Accelerated Mobile Pages) and Atomic Rewards. The author estimates a potential $25 billion annual opportunity in email advertising, driven by interactivity, personalization, and incentives. The essay suggests that email ads, particularly in the footer, could become more targeted and effective as they’re linked to Personally Identifiable Information (PII), offering a solution to the deprecation of third-party cookies. It proposes a transformation in the email marketing landscape through innovative ad formats, creating value for consumers, advertisers, and email service providers alike. The essay also envisions a model where Business-to-Consumer (B2C) emails could become free for brands, subsidized by ad revenues, thereby creating a win-win situation for all parties involved.

Critique

While the essay presents a forward-thinking and potentially transformative vision for email advertising, it raises several points of concern and areas requiring deeper examination. Firstly, the reliance on PII for targeted advertising in emails could raise significant privacy concerns, especially given the increasing scrutiny on digital privacy and data protection laws worldwide. The balance between personalization and privacy needs to be carefully managed to avoid backlash from consumers wary of intrusive advertising.

Secondly, the essay assumes a high degree of consumer engagement and acceptance of ads within emails, which might not universally hold true. Consumer fatigue with digital ads is a real phenomenon, and adding more advertising content, even if interactive and personalized, might not be welcomed by all.

Thirdly, the technical and operational feasibility of implementing such a complex system across diverse email platforms and service providers could pose significant challenges. Integration with existing ad exchanges, compatibility issues, and the need for a new matching engine for E3 ads could complicate adoption.

Lastly, the essay does not adequately address the potential impact on email as a communication medium. There’s a risk that increasing commercialization of email space could undermine its primary function as a tool for direct, personal communication, leading to decreased user engagement over time.

Claude

Summary

The essay proposes a new concept called “E3” (Every Email Engaged) which aims to make emails more engaging and open up new advertising opportunities within emails. The key components of E3 are:

Atomic Rewards: Using micro-incentives and gamification to encourage email opens.
AMPlets: Interactive AI-powered content like quizzes, puzzles in the email footer to create anticipation.
Action Ads: Response-driven ads that enable actions like form fills, payments within the email itself without leaving it.
AM: Sending E3 emails daily at the same time to build habit.

The core idea is to use the 4 Ps of PII (personal identifying information), Push (emails as push channel), in-Place actions, and frictionless Payments to create new engaging ad formats that feel like content rather than ads.

This would enable a shift from the traditional CPM model to a “Zero CPM” model where brands can send emails for free, and ESPs monetize via these Action Ads. It envisions an “Email Media Network” to facilitate PII-based targeting between list owners and advertisers.

Critique

Pros:

Novel idea to increase email engagement and open rates via interactive content and incentives
Tapping into the vast email channel and existing sender-recipient relationships for advertising
Proposing creative new ad formats focused on content, interactivity and in-email conversion
Zero-CPM model for brands can be attractive if executed well

Cons:

Creating the entire Email Media Network ecosystem from scratch is a massive undertaking
Overcoming inertia and convincing brands to try a new email ad approach will be challenging
Privacy concerns around using PII for targeting, even if from opted-in lists
Relying heavily on habit formation which can be difficult to achieve at scale

Overall, it’s an ambitious and thought-provoking vision that tries to reimagine email advertising from first principles. While it has significant potential if executed successfully, it also faces major hurdles in terms of infrastructure build-out, scalability and driving widespread adoption across brands, ESPs and consumers.

Gemini

This essay argues that email advertising has a lot of untapped potential. The author proposes a new system called E3 (Email Engagement Engine) that uses gamification and micro-incentives to encourage users to open and engage with emails. E3 emails would contain AMPlets, which are interactive elements like quizzes or games, and Action Ads, which are targeted ads that can be acted on directly within the email.

The author argues that E3 Ads would be beneficial for consumers, advertisers, and email service providers (ESPs). Consumers would benefit from more engaging emails and the chance to earn rewards. Advertisers would benefit from better targeting and higher click-through rates. ESPs would benefit from a new revenue stream from advertising.

The author acknowledges that there are challenges to implementing E3 Ads, such as the need to create a new matching engine for email ads. However, the author believes that the potential benefits outweigh the challenges.

Overall, the essay is a well-written and persuasive argument for a new approach to email advertising. The author has clearly thought through the potential benefits and challenges of E3 Ads.

Here are some strengths and weaknesses of the essay:

Strengths:

Clearly identifies a problem (ineffectiveness of email advertising)
Proposes a well-defined solution (E3 Ads)
Explains the benefits for all stakeholders (consumers, advertisers, ESPs)
Acknowledges challenges and proposes solutions

Weaknesses:

Does not discuss potential downsides of E3 Ads (e.g., email overload, privacy concerns)
Relies on future technologies (e.g., AMP) that may not be widely adopted
Does not provide any data to support the claims about the effectiveness of E3 Ads

Overall, this is a strong essay that makes a convincing case for a new approach to email advertising. However, the essay would be even stronger if it addressed the potential downsides of E3 Ads and provided more evidence to support its claims.

Additional Ideas

ChatGPT

Privacy-First Approach: Emphasize a strong commitment to user privacy by adopting privacy-by-design principles in email ad innovations. This includes transparent opt-in mechanisms for users to control their data and ad preferences, ensuring compliance with global data protection regulations like GDPR and CCPA.
User Control and Customization: Provide users with robust controls to customize their ad experience within emails. This could include options to select the types of ads they see, the frequency of ad-related emails, and even a feature to turn off ads completely for a premium, subscription-based email service.
Content Relevance and Quality: Stress the importance of high-quality, relevant content that provides genuine value to the recipient. This could involve advanced AI and machine learning algorithms to match ad content not just based on user demographics or behavior, but also on the context and content of the email, ensuring that ads complement rather than disrupt the user experience.
Innovative Engagement Models: Explore new engagement models that go beyond traditional ads, such as sponsored content that fits seamlessly into the user’s interests and needs, interactive mini-games, or challenges within emails that reward users with discounts or other incentives.
Ad Performance and Transparency: Include mechanisms for transparent reporting on ad performance and user engagement, allowing advertisers to see the value of their investment and enabling users to understand how ads support the email service. This transparency can build trust and acceptance of ads as a part of the email ecosystem.
Ethical Advertising Standards: Develop and adhere to a set of ethical advertising standards to ensure ads are not only relevant and non-intrusive but also socially responsible. This includes avoiding misleading content, respecting user attention, and ensuring that all ads contribute positively to the user experience.
Collaboration with Privacy Advocates: Engage with privacy advocates and organizations to gain insights and feedback on how to responsibly integrate ads into emails. This collaborative approach can help in identifying potential pitfalls and in designing ad models that respect user privacy and preferences.
Email Client Innovation: Work closely with email client developers and service providers to ensure that new ad formats and technologies are supported and rendered correctly across different platforms and devices, providing a consistent and user-friendly experience.
Pilot Programs and User Feedback: Before a full rollout, conduct pilot programs with a diverse user base to gather feedback on the new ad formats and engagement models. Use this feedback to refine and improve the offerings, ensuring they meet user needs and preferences.

Claude

Case studies and data points: The essay could benefit from including real-world case studies or data points that demonstrate the potential impact of concepts like Atomic Rewards, AMPlets, and Action Ads in increasing email engagement, conversions, and revenue. Even pilot tests or A/B test results showcasing lifts in open rates, click-through rates, etc. could lend more credibility to the proposed ideas.
Survey evidence of consumer sentiments: To support the premise that email recipients would welcome and engage with incentivized, gamified interactive content, the essay could cite survey data highlighting consumer openness to such experiences within emails from brands they have relationships with.
Examples of similar models in other channels: While repositioning email as an advertising channel is novel, drawing parallels with successful advertising models in other push channels like mobile apps could strengthen the core premise of combining content/services with advertising.
Technical roadmap and ecosystem considerations: The essay touches upon the need for an “Email Media Network”, but further fleshing out the technical roadmap, integration challenges with existing ad-tech, identity resolution approaches, and how the ecosystem could evolve can make it more convincing.
Pricing and revenue share models: Exploring potential pricing models for Action Ads, revenue share between ESPs and brands, incentive structures for recipients, etc. could provide a more comprehensive view of the new economic model proposed.
Addressal of counter-views: The essay could directly address potential criticisms like the implementational challenges, brand willingness to try new models, regulatory hurdles around use of PII, etc. and provide countermeasures.
Outlook on future innovations: The essay could paint a broader vision of how the Email Media Network and engagement ads could evolve further with technologies like web3, AR/VR, etc. to make a bolder case for reimagining the email channel.

Gemini

Data and Statistics:

Include statistics on the current state of email advertising: open rates, click-through rates, and overall effectiveness compared to other channels.
Research existing data on user engagement with gamified elements and micro-incentives.
If possible, conduct a pilot program or A/B test to gather data on user response to E3 Ads compared to traditional email ads.

Addressing Downsides:

Acknowledge potential downsides of E3 Ads and propose solutions:
- User overload: Discuss ways to ensure E3 emails don’t become overwhelming, such as frequency caps and unsubscribe options.
- Privacy concerns: Explain how E3 Ads would collect and use user data responsibly, following all privacy regulations.
Briefly address potential concerns from ESPs who might see E3 as a threat to their core business model.

Strengthening the Argument:

Include case studies of successful gamification campaigns in other industries to show the potential for E3.
Briefly discuss the technical feasibility of AMPlets and how they would overcome limitations of current email technology.
Address how E3 Ads would integrate with existing email marketing automation platforms.

Additional Ideas:

Explore the potential for personalization in E3 Ads, tailoring content and rewards to individual user preferences.
Discuss the ethical considerations of using gamification techniques in advertising, ensuring it’s engaging and not manipulative.
Briefly mention the long-term vision for E3, how it could evolve beyond advertising and become a more general framework for interactive email experiences.

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