• Geometric growth in the number of households with TiVo/DVR devices that are now in control of the commercials they watch;
• High level and growth of penetration of commercial free satellite radios (XM and Sirius);
• CAN-SPAM Act limits the use of email SPAM (from legitimate companies);
• Do Not Call registry exceeds 60% of US households;
• Mobile marketing becomes an opt-in only medium.
  

Here’s the bottom-line: Customers are now selecting the companies they want to hear from.

Attitudes about marketing have changed and the customer has virtually unlimited mediums and channels to choose from, making them even more selective.

Meanwhile, customer trust of marketing is at an all time low. (See our white paper “Media Fragmentation and the Erosion of Customer Trust”)

SmartReply has developed a solution that embraces the FTC changes, addresses media fragmentation and builds customer trust.

FTC ISSUES THE CATALYST

As mentioned above, SmartReply has been actively working to develop a business model that allows consumers to select how they choose to receive marketing messages.

To be honest, however, we didn’t expect that the government would be the catalyst to bring this revolution to life. We feel fortunate to have nearly a year of research and strategic planning under our belts to guide our clients into the new era.

On October 3^rd, 2006, the FTC announced a new ruling as it relates to pre-recorded marketing calls, or what we commonly call voice marketing.

In the FTC document titled, “TSR Prerecorded Call Prohibition and Call Abandonment Standard Modification, Project No. R411001,” the FTC explains and asks for commentary regarding the use of voice marketing after January 1, 2007.

The FTC denied a petition from 2004 that would have allowed voice marketing messages to be delivered to customers under the Existing Business Relationship exemptions found in the FCC guidelines.

As a result, we believe that the industry is taking a revolutionary turn for the better and following regulations for text/mobile marketing by requiring express consent for voice marketing campaigns beginning in 2007.

In its document, the FTC provides two important exemptions for our retail clients while stating that “live ear calls” can no longer be delivered using a pre-recorded message, they can only be delivered using a live call center agent.



Exemption #1: Express Consent.   Express consent is the marketer’s new competitive advantage. Express consent is a legal term describing when your customer gives you permission to contact them. In marketing terms, we generally call this ‘opt-in’.

Unfortunately, this is a relatively vague and untested term. The FTC seems to be defaulting to the FCC language that express consent is when a customer has either met the guidelines of a digital signature and/or written permission, such as can be found on loyalty and credit card applications. However, this is not definitively clear, though the precedent of electronic confirmation has been successfully tested with mobile marketing and email regulations.

So, in this case, most loyalty, credit card, and many database marketing programs already have express consent. In addition, several states are reviewing the phone number capture at point of sale as a form of express consent. Other examples will likely include the wake up calls, scheduled reminder calls, and customer alerts that are becoming common in our client’s campaign portfolios.

Exemption #2: Informational Calls. The FTC regulates only marketing calls. Marketing calls are those that relate to the sale of goods or services. Informational Calls provide information without promotional selling. We most commonly see these as calls reminding customers to pick up photos at the photo department, to confirm receipt of their store credit card, etc.

These changes to the regulations are planned to take effect beginning January 2, 2007.

Nothing is changing until after the holiday period so quarter four marketing plans remain valid and secure.

ACTIONS

SmartReply is enacting an immediate, three-part, simultaneous plan on behalf of our clients:

PART 1: Gain an Extension and Define Terms. In Part 1, we will push for an extension to the January 2, 2007, implementation date. If nothing else, an extension allows for greater understanding of the terms and definitions, and also allows for the FTC to reconsider some of its proposal details.  

So, while this extension gets under way, we are working with a diverse consortium of associations, companies, and attorneys and the regulators to clarify the compliance guidelines and postpone the implementation date so that our clients are as prepared as possible for the express consent future.

PART 2: Plan to Abide by the New Regulations. Be prepared for full service delivery of all existing SmartReply services in a compliant manner. We already know how to do this and have begun an assessment of the most practical, reliable and feasible system changes to specifically meet and exceed the letter of the law. Once we have these systems in place, we will detail them out for our clients.

PART 3: Aggressively Support Express Consent. In 2007, SmartReply planned to kick off a “year of transformation” to provide unique and turnkey solutions for our clients to develop fully opt-in/express consent customer databases that are forever compliant for voice, mobile, and email marketing and are driven by customer preference.

THE FUTURE OF MARKETING

We’re incredibly energized to lead this new age of marketing. We will shortly be introducing you to a number of innovative ways to develop express consent customer relationships in a more streamlined manner than you have today.

We’re very excited about this new solution set which you will see and experience over the next two months.

We’re entering the busiest time of the year for retail.  Our company is committed to generating significant incremental response to your marketing programs, driving higher marketing ROI and delivering flawless execution. 

None of the proposed FTC changes will take effect in 2006, so we will continue to make this an amazing holiday season of success.

SmartReply will keep you constantly updated on any new developments. We are likely to recommend some minor changes to your current campaigns that will further enable express consent customer relationships in 2007.

Each change in regulation has provided an opportunity for SmartReply to lead with higher standards and provided a competitive advantage to our clients.

Your Strategic Services Group representative will be in contact regarding these changes.

CONTACT

You are welcome to contact me for further details. You can reach me at 949-340-0739 or by email at eholmen@smartreply.com.