New marketing strategy required in China as local ISP’s introduce new regulations
Many Chinese eCommerce companies still perceive email marketing as an acquisition tool. This is evidenced by the large number of local ESPs who sell/rent lists purely for acquisition purposes. Unsurprisingly, this leads to large amounts of spam and has been the cause of conflict between ESPs and ISPs.
In China specifically, ESP’s traditionally relied on the “relationship” they have with ISPs. The term “relationship” (关系) is a fundamental aspect of the Chinese culture; most, if not all eCommerce companies still “buy it”. Even so, in order to protect their customers, Chinese ISPs “declared war” on the junk mail epidemic. Their initial efforts showed some success – a Return Path report indicates that in Q3 2012, China had no more than 9% spam, a relatively low statistic when compared to the 39% of emails that were blocked.
This is great news for customers – over the last three years, Chinese ISP’s have been blocking spammers based on sender reputation. Tencent (QQ), the biggest ISP in China, is leading the way by applying a threshold on sending volumes. The volume limitation is the biggest pain for those who have bought lists with the aim of mass email acquisition. As a result, email marketing is slowly losing its efficiency as a tool for acquisition. Those who still send non permission-based emails and/or target non-active customers without following best practice guidelines are now experiencing a serious drop in ROI.
This has left email senders in China with two options:
- Follow the old strategy – Give up on the ISP relationship and use multiple IPs and domains in order to “fool” ISPs in an attempt to overcome the sending volume limitation. This practice provides unstable results, since the sender uses at least two providers at a time and switches providers on a regular basis. Poor deliverability rates impact sender reputation and emails will be blocked.
- Embrace the new strategy – Comply with ISPs regulations in order to build reputation, enjoy higher daily permitted volume at QQ as well as high conversion and retention rates. Of course, as bad as the results we are currently experiencing are, by investing more time and effort we will improve reputation.
A few weeks ago, 163 (网易) the second biggest ISP in China, initiated a new, even more radical policy. 163 is now advertising the daily volume limitation of each ESP that applies for 163’s feedback loop. The calculation is based on actual sending volume using the registered IPs, open rates and complaints. The only way to increase this daily volume limit is to make sure open rate and complaints are in correlation to 163’s new regulations. If the volume goes up but open rate and complaints are not in correlation, the daily volume limit will be decreased.
It’s worth noting that if the sender (using a third party or in-house solution) did not register its IPs for 163’s feedback loop this policy does not apply. But keep in mind that if you want to hit the “inbox” (阅读箱) instead of hitting the “junk mail” or even being blocked, you have to register your IPs to 163’s feedback loop.
This new policy and its transparency mark a new era in the way Chinese ISPs are fighting the junk mail epidemic. When it comes to 163, the sender has to play according to their rules. There is very little room, if any, for short cuts. I do hope that QQ will follow suite and make it impossible for short cuts to take place (wishful thinking). Once they do follow with their own strategy, email marketing in China will be used less as an acquisition tool and more as a powerful retention tool to maximize engagement and ROI.
It all comes down to this: the techniques used a few years ago have lost their efficiency. Email marketers that follow best practice guidelines provided by ESP’s that comply with ISPs regulations will be the only people reaping the rewards of email marketing.
Local ISPs will continue to monitor sender domains and IPs based on their customers’ engagement with the sender itself. Sooner rather than later, eCommerce sites in China will end up realizing that it is not the provider that they need to change if they are being blocked by ISPs, but their strategy. On the other hand, providers will have to lead the way in understanding ISP requirements and make sure the customer is complying. Those who will comply with ISP regulations sooner will be one step ahead of their competitors.