responsive when you call them, and so I think this is early days of what will become a big issue
over the next few years.
<Q George Walsh>: And is this affecting as you talk about eCOST and as it affects the
services side of the business, is this an issue that is affecting your service clients and
operations there? Or what youre doing for them?
<A Mike Willoughby>: So, I think this is illustrative of one of the benefits that eCOST
brings to the Service side is we are able to get out ahead of this a little bit and actually go
proactively to our clients and talk about this phenomenon. One thing that most of our clients do
have as an advantage is that they are well-known brands and theyve got other marketing avenues
that theyre currently very active in such as offline advertising, things like that. So they may
not see the initial hit that eCOST took being primarily an e-mail marketing, but it still has an
impact. And so weve been able to go to our clients and say what things could we do to help you
mitigate this while were working through the issue with these ISPs? And I think that puts us in a
great position to be proactively helpful to our clients and not have them see a quarter hit before
they respond to the issue.
<A Mark Layton>: The challenge for the eCOST business is that we have a true daily message
much like a newspaper has. We acquire deals and theyre available today, theyre in limited
quantity, limited time deals and we want to make that announcement to our customer base because I
dont know if youre looking for a toaster or a TV, an mp3 player, an iPod, an iPhone, a computer,
and so, we make the announcements of the deals that weve had on a daily basis.
Many of our brand clients as Mike was talking about, because they have other off line activity that
theyre doing out there dont have the same frequency schedule in terms of sending e-mail. One of
the things that weve, thats been recently introduced has to do with this relevancy scores of
e-mails. And the denominator obviously, is the number of e-mails sent and the numerator in that
equation of e-mails opened.
Well, you can immediately affect your relevancy score by sending less e-mail and which could be
fine for someone thats got other active marketing channels or an inventory message that isnt
moving as rapidly as the eCOST inventory messages and thats allowed their relevancy score to stay
above the gateway if you will thats determining whether you should be delivered or not delivered.
Thats really the message that were trying to carry to these guys is wait a minute the nature of
our business is a daily e-mail that says heres whats available.
And the fact that the guy doesnt look at it today because hes not in the market for a technology
product isnt relevant, because I dont know whether a week from Tuesday youre going to be looking
for a toaster and when my e-mail arrives its there. And so if it gets filtered away, the message
doesnt happen, the impulse doesnt happen and its basically destroyed the market place. The
response you get from the ISPs after that is really well there are other paid search avenues
available to use to get that message across, which was my comment about the fact that what you see
is the major ISPs are controlling the majority of the e-mail addresses that are out there,
probably particularly consumer e-mail addresses.
And whether they intended it or not, the result of this action is to force more activity down the
paid channel versus the free or low cost e-mail marketing channel which does poorly from a
<Q George Walsh>: Okay. And speaking of which, I see the cost to acquire a new customer
did go up year over year. I think thats the first time in a little while that thats happened. Is
that directly the result of what happened this quarter?
<A Mark Layton>: Yes, and then the fact that were having to use other channels that were
paying. Its got to go up because Ive got in invest more money in off line advertising than what I