SEC Filings Section 16 Filings Only
 
PFSWEB INC filed this 8-K on 08/13/2010.
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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 you’re 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 they’ve got other marketing avenues that they’re 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 we’ve been able to go to our clients and say — what things could we do to help you mitigate this while we’re 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 they’re available today, they’re in limited quantity, limited time deals and we want to make that announcement to our customer base because I don’t know if you’re 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 we’ve had on a daily basis.
Many of our brand clients as Mike was talking about, because they have other off line activity that they’re doing out there don’t have the same frequency schedule in terms of sending e-mail. One of the things that we’ve, that’s 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 that’s got other active marketing channels or an inventory message that isn’t moving as rapidly as the eCOST inventory messages and that’s allowed their relevancy score to stay above the gateway if you will that’s determining whether you should be delivered or not delivered. That’s really the message that we’re trying to carry to these guys is wait a minute the nature of our business is a daily e-mail that says here’s what’s available.
And the fact that the guy doesn’t look at it today because he’s not in the market for a technology product isn’t relevant, because I don’t know whether a week from Tuesday you’re going to be looking for a toaster and when my e-mail arrives it’s there. And so if it gets filtered away, the message doesn’t happen, the impulse doesn’t happen and it’s basically destroyed the market place. The response you get from the ISP’s 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 ISP’s 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 financial standpoint.
<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 that’s the first time in a little while that that’s happened. Is that directly the result of what happened this quarter?
<A — Mark Layton>: Yes, and then the fact that we’re having to use other channels that we’re paying. It’s got to go up because I’ve got in invest more money in off line advertising than what I

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