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Caution has been the watchword of e-marketers since new e-mail marketing laws came into force late last year. Those regulations forbid companies from sending marketing e-mails to cold prospects without their prior permission, and caused something of a hiatus in e-marketing activity among UK companies as marketers worked out what they could and could not do.

Many big brand owners have been proceeding gingerly, says James Martin, head of UK e-business at Acxiom Consodata, which runs the Yoptin offers and rewards online data-gathering programme. Typically, he says, they have given the new rules to their own legal teams and asked them to rewrite them even more stringently to ensure they stay on the right side of the law. For e-mail data suppliers like Acxiom Consodata, this has meant a lot of bureaucracy.

"We have really had to jump through some hoops to ensure we stay on the right preferred supplier lists," says Martin. "We have always been whiter than white in terms of the legislation and best practice, so we know we will come out of this OK, but we still have to go through the process."

On a more positive note, however, Martin adds that, once the process has been worked through, "there are brand managers out there dying to get back to this medium that has worked so well for them."

Of course companies with their own customer databases, complete with e-mail addresses, are in a much better position. Not only are they largely untroubled by the legislation, which allows them to continue to communicate with these customers via e-mail as long as they are given the opportunity to request being removed from the process, but they also have much warmer prospects on their hands.

"Our advice generally is for clients to develop their own databases," says Sean Hanneberry, head of interactive at interactive agency Clark McKay and Walpole. "Cold lists are quite expensive and the results are generally poor."

E-mail records

The problem for many companies, of course, is that on a database of, say two million records, only a small percentage, perhaps 10 per cent or less, is likely to include the customer's e-mail address. So how do they boost these numbers?

"If you are really committed to using e-mail as a channel, you have to use every point of contact you have to secure the opt-in to communicate via e-mail," says Chris Combemale, chief operating officer of e-mail marketing technology company Emailvision.

This should include points of contact not previously considered. In the US, he points out, shop assistants in clothing chain The Gap hand out flyers at the tills inviting customers to fill in their e-mail address so the shop can send them details of special offers.

But Justin Anderson, managing director of digital marketing agency Frontwire, cautions companies in this position against panicking. "The important point is not that you don't have many e-mail addresses, but to recognise the fact that electronic communication is going to be a very important part of the communications mix for companies in the future," he says.

"We are only just putting down the foundations."

At the same time, however, Anderson says that e-mail marketing is growing up as a medium, as companies learn what works and what doesn't. For many of its clients, Frontwire is tending towards much simpler creative on the e-mail itself, making it interesting enough to encourage recipients to click through to a web site or a microsite specially-created around the offer. Once there, Frontwire can use much richer, more interesting content to close the sale.

Simplicity, it seems, is the key to good e-mail creative. For example, most practitioners caution against excessive use of Flash or video content in the e-mail itself, unless it is appropriate.

"If you're dealing with a high-tech promotion then do it," says Nick McConnell, sales and marketing director at Broadsystem. "If you're a cinema chain streaming video to convey your core proposition, that's fine.

But usually, the e-mail is just a gateway to the web site, so that's where the dynamic element should be."

The length of the message is important, too. "People make the mistake of trying to get everything in one e-mail," says Jeff Barnes, vice-president of digital marketing company Bluestreak International. "It's no different from a good piece of direct mail. You should try to keep it to one screen.

If you have more to tell them beyond that, you should be putting links through to the web site, otherwise you will lose them."

That's if you ever had them in the first place. Before anyone can choose whether or not to read your marketing e-mail, it has to get beyond the internet service provider's spam filters, a vital consideration in today's spam-ridden online world. Most of these will judge the e-mail in its entirety, but put things like exclamation marks, or words like "Free" in the subject line, and you might as well not bother sending it.

Put it to the test

The only sure way to find out what works and what doesn't, of course, is to test. But with so many variables, what should you test?

Everything you can, argues Karen Crimmins, sales director of IPT Direct, the list-rental arm of Interactive Prospect Targeting, which operates the Myoffers and OKMail data-collection web sites. "You can test lists from multiple owners, the day of the week or time of day the e-mail is sent, as well as different creative treatments and subject lines," says Crimmins.

"Companies don't test as much as they could do," she adds. "The larger companies and those using direct marketing agencies carry out extensive testing, but the higher-volume e-mailers probably see it as less critical."

According to Craig Morgan, group account director at Arc Interactive, the tone of the copy should vary according to the recipient.

The agency's e-mail and direct mail campaign to promote a Fiat "Open Door" dealer weekend recently won the 2004 Revolution Award for best overall use of digital media, with open rates of 50-60 per cent and a 3.14 per cent clickthrough rate for the e-mail element and an 8.73 per cent response rate for the direct mail element.

The campaign informed recipients that they could visit their local Fiat dealer the following weekend to check out the company's latest MPV. Almost 4,500 families visited their local dealer and almost 40 per cent of these took a test drive. Just under 600 vehicles were sold over that weekend.

The campaign targeted a mix of existing customers and bought-in names, and Morgan says Arc was careful to address each separately. "The length and tone of the letter should change from warm to cold data," he says.

"With the warm prospects, you can be more informal and talk to them for longer. We have also found that different headers for male and female recipients can work, too."

The Fiat campaign used e-mail and direct mail separately, but Emailvision's Combemale says companies are increasingly using the two channels together.

Using e-mail as a teaser a few days before a direct mail campaign starts, reminding recipients to check their post or respond to a call from the call centre, can boost response rates by anything between 15 and 40 per cent, he says.

"It's interesting, because it is moving e-mail away from being perceived as purely an online or a drive-to-web channel," Combemale points out.

"Now it's being used as a drive-to-call centre, drive-to-retail or drive-to-direct mail. It's our belief that every time a company runs a traditional direct mail campaign, they should seed it with an e-mail campaign."

It's an argument that is bound to find favour with Royal Mail, which has developed a portfolio of e-marketing products to complement its offline services.

"We see it as a good thing to integrate e-mail with other disciplines like SMS and direct mail," says Royal Mail head of multichannel retail and media markets Richard Roche. "Customers may have a preference for one medium over another, but they will respond via whichever is appropriate at the time. It's all about giving them the choice."

David Murphy is a freelance journalist

CASE STUDY: READER'S DIGEST

For its client Reader's Digest, digital marketing agency Frontwire created a series of e-mail campaigns designed to remind the recipient about the status of the current prize draw. They also give them a PIN number with which they can click through to a microsite to register their numbers for a chance to win the main cash prize.

Having arrived at the microsite, the customer is invited to take part in a prize contest to win a car. This involves taking part in a one-minute online quiz, with the questions based on a Reader's Digest book that is being offered for sale on the site.

The quiz is rich in graphic content, with colourful imagery of a numeric keypad used to answer the multiple choice questions, and Flash animation to bring the car to life. After completing the quiz, the customer is given the opportunity to enter the draw and buy the book.

"We have been running a number of campaigns like this for the past six months," says Frontwire managing director Justin Anderson. "It demonstrates the potential to take the medium to the next level by keeping the e-mail itself relatively simple."

Of course, not everyone has quarter-million-pound prize draws to use as an incentive, but there are alternatives, says Anderson. "Every company will be different in terms of what it can use to trigger a reaction," he says. "It could be money-off or, in the B2B world, information that is of value to the customer. The key thing here is that we are shifting the message into the site, where we can use richer content. We would not use Flash within the e-mail itself."

TOP TIPS ON... E-MAIL MARKETING

1 Read the Privacy and Electronic Communications Regulations and the Guidance Notes published by the Information Commissioner (www.informationcommissioner.gov.uk) to ensure you stay on the right side of the law.

2 If you are buying in lists of prospects, it is your responsibility to satisfy yourself that they have opted in to receive marketing e-mails.

3 Collect customers' e-mail addresses at every customer touchpoint.

4 Don't overdo it. Only send marketing e-mails when you have something relevant to say.

5 Keep your e-mail simple. Don't use Flash or video unless it's appropriate.

Use HTML to generate enough interest for recipients to want to click through to your web site, where you can use richer, more dynamic content.

6 Keep the copy to one screen length, with links to web sites.

7 Integrate e-mail campaigns with mail and other marketing activities to boost response. Send out teaser e-mails a few days before a mail campaign and "kicker" e-mails a few days afterwards, to encourage response.

CASE STUDY: METROPOLITAN POLICE

Every year, the Metropolitan Police receives 2.5 million emergency 999 calls. Of these, only around a fifth are genuine emergencies, which results in resources being wasted on following up non-urgent enquires, at the expense of the real crisis calls.

Moving online

Historically, the Met has publicised the problem using offline media such as posters and leaflets, but in the summer of 2003, it embarked on a small-scale e-mail campaign, with a budget of just £20,000, through digital agency Buongiorno UK.

E-mails were sent to an opted-in database of 225,000 Londoners. The e-mails presented a typical situation, such as a stolen bicycle, and asked the recipient to indicate whether they would call 999 or their local police station, given such a scenario.

Whether they answered rightly or wrongly, the recipient was then able to select their home borough from a drop-down menu, in order to see the phone number for their local police station. In addition, they could text the number to their own phones, and pass on a friend's e-mail address so that they could receive the e-mail.

Forty-three per cent of recipients opened the e-mail, with more than 18,000 recipients answering the question, equal to an eight per cent clickthrough.

Buongiorno UK head of advertising, Jonathan Smith, says: "The Metropolitan Police had never done anything like this online before, and I think the recipients found it interesting, because most genuinely did not know when you are supposed to phone 999, or, indeed, how to get hold of their local police station."