Sourcing Data from Co-Registration Sites is Like Dealing in Sub-Prime Mortgages:
Proceed at your own Risk

I don’t mean to simplify the reasons for the current sub-prime mortgage mess, but I see some telling parallels for email marketers who source data from co-registration sites.

1. Both are too good to be true.

Applicants were enticed to apply for unaffordable mortgages by the promise of low — or no – short-term interest rates and the promise of increased equity from higher and higher house prices (Buy now because it is going up!).

Similarly, sub-prime data-collection sites entice people with the promise of free stuff. What most do not say are all the steps, time, and information that the subscriber will have to provide before meeting the requirements for these gifts. Even the folks who muster the energy to complete the application process, will undoubtedly be less than appreciative when they receive seemingly endless streams of additional offers from email marketers.

2. Both follow the money.

Mortgage credit representatives are commissioned on the sales they bring in, not who they turn down – even though an appropriate rejection is positive to the bottom line in the long-run. A good mortgage company, will have a credit department that will use readily available risk metrics to scrutinize the mortgage opportunity brought in by the sales representatives.

Email marketers, however, have a much more difficult time to accurately assess the quality of subscribers and generally must rely more on the reputation of the co-registration company: How long has it been in business? Does it have good referrals? What does thesign-up site look like? Would subscribers really want to receive content from you? Most co-registration agreements are priced around the number of subscribers provided – the more subscriber names, the more revenue generated. For the co-registrar, not for you.

If you are not asking the right questions, you are not going to achieve email deliverability and marketing success. What’s worst – you risk involving yourself into legal problems (e.g. CAN-SPAM) should you not do your homework.

3. Both use bad data.

Contributing to the sub-prime mortgage crisis was that loan risk assessment checks — debt-to-income ratio, credit history, long-term prospect of meeting interest payments — were ignored. Similarly, email marketers often don’t evaluate the data suitability from a co-registration site. Is a check done to confirm that the email address is valid? Is a check done to validate the accuracy of the data (e.g. does the zip code fall in the state indicated?); how many other marketers are receiving the subscribers information?; what information is collected? What content is the subscriber truly interested in receiving? You will not cultivate a good company and IP reputation with AOL, Yahoo, and the other ISPs you are sending to if you send to the wrong people, uninterested people, or non-existent people.

4. Both are – er, sorry, no bailout for email marketers.

Sure, governments are stepping into the breach with bailouts for mortgage lenders and investment banks. But if you use co-registration names, don’t be expecting anybody to bail you out anytime soon.

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Andrew O’Halloran is manager of privacy and ISP relations at Cypra Media, an authority in permission-based email marketing and email delivery, based in Montreal. He may be contacted at a.ohalloran@cypra.com.