Peak Spam

Tyler Durden's picture

The Borg collective formerly known as the US middle class may have no money left (and its credit cards have long since been maxed out), but at least it has every internet-connected gizmo known to man and Klingon. Not surprisingly, this development has not been lost on the very same retailers who are competing dollar for dollar with the vendors who sell these same faddy gizmos to the same Borg collective. For now retailers are losing. But, like stock traders and the administration they are full of hope. And spam. And will make it known. As SM reports, spam emails from retailers "jumped 20% in the first half of the year over the same period in 2011, according to a survey released this week by Responsys, a California-based marketing software company. In June alone, these stores sent an average of 18 emails per subscriber, up 21% on last year." Expect this number to only go up until virtually every email coming into one's inbox is a groupon ad, a penis enlargement device, a PFG "try us for 30 days for free" offer, or a 90%-off "one time only" for the latest value investing congress. Because the only cost associated with spamming people is printing extra email lists. The Fed Chairman can vouch for the sunk cost associated with hitting CTRL+P. So how long until iPhone spam filter makers are more profitable than Belgian caterers?

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Why the jump in email blasts? There’s been a lot of “hand-wringing” over the efficiency of social networking platforms, says Chad White, research director at Responsys. Retailers are growing impatient with Twitter and Facebook and want to see an immediate return on their time and money, he says. In fact, only 20% of Fortune 500?s 100 largest companies engage with their customers on Facebook, according to a new survey by marketing consultants Bluewolf, and those that do tend to use the platform primarily for customer service.

 

Some retailers say email remains a more effective marketing tool than social media sites. “The world is still trying to figure out how to use social media the best way,” says Jonathan Johnson, president at Overstock.com. (Overstock.com is one of the 500 retailers in the survey.)

 

Tablets and Smartphones make consumers a moving target for click-happy retailers on national holidays and weekends, experts say. People weren’t accessible on these days in previous years, but that’s rapidly changing: The number of people using their mobile phones to open email has risen 28% over the past year, according to market researcher ComScore Inc. “Memorial Day and 4th of July were a sniffle last year compared to the number of emails sent out this year,” White says.

 

But email blasts do encourage consumers to click on offers, experts say. “The fastest growing category in retail is online sales,” says Howard Davidowitz, chairman of Davidowitz & Associates, a New York-based retail consultant and investment bank. Recession-scarred consumers are more likely to make impulse purchases online, he says. In fact, recent studies show that online retailing has been thriving – in sharp contrast to the rest of the sector. Online retail spending in the U.S. rose 17% on the year in the first quarter of 2012, the 10th consecutive quarter of growth, according to ComScore.

 

And given lackluster store sales, aggressive emailing is also a particularly cheap way for retailers to reach existing customers compared, White says. “The recession has made retailers renew their focus on keeping the customers they have rather than attracting new customers,” he says. “For retailers already suffering slower sales, the latter is a far more attractive proposition.” June retail sales grew by 2.5%, the slowest pace in more than two years, according to data released this week from 18 retail chains tracked by Thomson Reuters

Furthermore, as various electronic gadgets become more and more context and location sensitive, look for desperate retailers to start bombarding users with "offers" when one is merely in proximity to various retail fronts.

So while everyone's dream of being intimately hooked up into the borg slowly comes true, the only outstanding item is to feed the now endangered US (and global) middle class with fresh pieces of green linen/paper with pictures of dead presidents on the front. This, however, will hardly be a challenge for the Chairsatan: as the earlier minutes showed, the FOMC is studying "new tools for easing." Among these most certainly will be projectile cash deployment by way of C5 Galaxy.  But fear not: "pundits" tell us record debt issuance can only bring to even more negative nominal rates. Which only means that infinite spending will soon lead to even more deflation.

Bring on peak spam then!