The report finds customer retention e-mail campaigns accounting for the greatest share of non-spam e-mail marketing spending, and will continue to do so over the near-term. Strong spending on retention is driven by the dramatic cost effectiveness of e-mail as compared to postal direct mail.

David Daniels, a research director at JupiterResearch, suggests that marketers must manage their campaigns with skill to obtain the full benefits of online direct marketing. "Smart marketers have to manage their lists, test mailings against control groups and adopt behavioral targeting to get the biggest payoff," he said.

JupiterResearch forecasts that strong growth in spending for sponsored e-mail campaigns will continue as well, driven by rising CPM rates, increasing inventory, richer creative formats, and increased effectiveness resulting from more diligent targeting and testing. Acquisition e-mail marketing in the U.S. is also recovering, and will climb steadily from $720 million in 2003 to $1.8 billion in 2008.

According to the report, during 2003 the average U.S. online consumer received 3,920 unwanted commercial e-mail messages. This number will grow to reach an outrageous total of 6,395 by the end of 2008. However, contrary to popular belief, spam is not the greatest barrier to reaching consumers. Rather, it is the volume of messages sent by legitimate marketers.

Sponsored e-mail messages in the U.S. will grow at nearly twice the compound annual rate (19%) of total message volume (11%) between 2003 and 2008. In order to cut through the vast clutter of commercial messages, marketers should focus on timeliness and relevance over frequency in their e-mail messages to consumers, the report states.