Silverpop - A Cautionary Tale for Big Brands
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A Cautionary Tale for Big Brands

Bill Nussey, Silverpop
by: Bill Nussey (@bnussey)
25 April 2005

Last week, MSNBC published a story about a small California ISP that has sued Kraft Foods over alleged spam. The ISP, HyperTouch, claims that Kraft has sent out thousands of unsolicited emails promoting its Gevalia coffee subscription service. Hypertouch says the messages are not CAN-SPAM compliant, nor are opt-outs being processed.

The issue isn't so much about Hypertouch's huge damage claim ($11.7 million, if you're curious), as it is about Kraft's brand being dragged through the mud. It will take Kraft a long time to shake its "spammer" moniker, and doing so will likely drive the company to assume such an apologetic stance, that it will curtail many otherwise-great e-marketing programs.

For me, the real question is: how did this happen? I don't have any facts here, but I suspect some zealous marketers somewhere in Kraft, or its agency, decided to cast a wide net for new leads for Gevalia. They may have gone to a host of agencies and affiliate marketers and offered compensation on a pay-for-performance type basis. That is, "If you send us a lead, or drive a person to our site, we'll pay you." The moment someone associated with Kraft said this, its brand was out of its control, and some damage was inevitable.

Many pundits will claim that the issue here is online marketing or email marketing. Unfortunately, they would be missing the point. The real story is that someone who controlled lead budgets for Kraft took the easy route, and traded brand control for cost savings. It's that simple. The affiliate marketers have no major allegiance to Kraft or its brand; they are simply in it for the money. Once Kraft put out a wide call for leads, it was almost certain to stumble across a few firms that pushed the envelope and did exactly what was asked for, regardless of the real price to Kraft.

The biggest irony in all this is that the company sending out those emails likely is some nameless mom-and-pop marketing shop. It may get fined, or even go out business, but in the greater scheme of things, the impact will be small. Kraft, on the other hand, is stuck with a reputation as a spammer that may take years to shake. In fact, it may well go down in history as the first Fortune 500 company to be sued for spamming. Unless Kraft generated several billion dollars in revenue from the Gevalia affiliate advertising, I suspect it will conclude that the whole incident cost far more than it was worth.




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