FTC Ban on Pre-Recorded Messages

The direct marketing world received a bomb-shell when the FTC made sweeping changes to the Telemarketing Sales Rule and drafted new policy on the use of Pre-Recorded messages earlier last month.

What surprised me the most was how the media latched onto this story and it was on every major news network for days. I personally never received many Pre-Recorded messages aside from the occasional one in Spanish. I guess someone has me flagged as being bi-lingual... I'm not. They need to do some list cleanup. The majority of the PRM's I did receive were on consumer surveys for Sprint, political messages and other transactional type messaging. However, these were few and far between. I don't ever remember receiving a Non-EBR (established business relationship) PRM Spam message on my phone.

This hits me particularly hard in how I market and interact with our customers. This is by far the cheapest marketing channel with the largest response of any other channel I'm using. In 2007, over 30% of my lead generation was produced from audio broadcasting to our house files. We could produce upwards of $100,000 in revenue in one week from these campaigns...

You could argue that email is cheaper to communicate, but the Audio Broadcasts can get up to a 3+% response rate. If you consider on email or direct mail, around 1% response is considered respectable depending on your strategy and list quality.

The Lawyers

There was clearly alot of confusion surrounding the use of the pre-recorded messages for at least one year. Our own Marketing Prevention Team otherwise known as legal suggested up to a year ago that using this channel was "illegal". Well, we now know it clearly was not... and technically still won't be as long as it's used properly.

I'll always wonder if my friend in legal was the one to call the FTC to inquire whether it was ok for our company to send these messages out... It's too coincidental that the first person to notify me of this ruling was him :)

What this means

There is no question, within a few months... this marketing channel will be considered less effective and more costly. I'm not worried, there are too many other opportunities. We need to shift focus, get ahead of the curve and figure out how to effectively market via SMS or other channels and push that lever until it breaks :)

The New TSR Amendments (courtesy of ftc.gov)

Specifically, the TSR amendments adopted by the Commission and announced today:

• Expressly prohibit telemarketing sales calls that deliver prerecorded messages, whether answered in person by a consumer or by an answering machine or voicemail service, unless the seller has previously obtained the recipient's signed, written agreement to receive such calls;
  
• Permit sellers to obtain the required permission for prerecorded message sales calls from a consumer in any manner permitted by the Electronic Signatures In Global and National Commerce Act (E-SIGN Act);
  
• Exempt healthcare-related prerecorded message calls that are subject to the Health Insurance Portability and Accountability Act (HIPAA) from the prohibition on telemarketing calls that deliver prerecorded messages;
  
• Exempt from the written agreement requirement all charitable solicitation calls placed by for-profit telemarketers (telefunders) that deliver prerecorded messages on behalf of non-profits to members of, or previous donors to, the nonprofit, but require that such calls include a prompt keypress or voice-activated opt-out mechanism;
  
• Require that, by December 1, 2008, sellers and telemarketers provide, at the outset of all prerecorded messages, an automated keypress or voice-activated interactive opt-out mechanism so that consumers can opt out as easily as they can from a live telemarketing call;
  
• End the FTC's current policy of forbearing from bringing enforcement actions against sellers and telemarketers who place prerecorded calls that meet certain specified conditions that would be inconsistent with the new requirements; but
  
• Permit sellers, as under the forbearance policy, to continue for one year after the rule's publication to place calls delivering prerecorded messages to consumers with whom they have an established business relationship, after which no prerecorded message calls can be made to consumers without their express permission.

The one decent thing out of this entire ordeal is the fact that the FTC is granting a grace period so we can adjust our strategies. We have an established business relationship with our customers, so we'll have one year from the time of the ruling 08/08-08/09 to adjust and put all new measures in place.

Adjustments I'll make in the coming months:

• Ensure we implement the opt-out mechanism in all messages, we already include that at the end. It appears we have to move it toward the beginning of the message. Compliance required by 12/1/08
  
• Develop an opt-in strategy that we can implement on the front-end and with our offers and lead generation partners. It has to be a clear optin, can't be embedded in the privacy policy.
  
• Craft message copy so we don't raise customer concerns / complaints in the next 10 months while these changes take effect.
  
• Increase our usage of transactional messages. We can use these messages to increase teleconference and webinar attendance, deliver account updates and other transactional messaging.

It's been a great ride... There were definite opportunities to improve and make Pre-Recorded messages even more effective, however I'll have to focus my attention on email and live events which are producing at an incredible rate.