Wednesday, January 7, 2009

I Don't Get Spam

I don't get how spam can be profitable.

Somebody needs to get to the bottom of this (if you're one of my students, this is a big hint). For regular email spam, the best analysis I know is this one. In it, the authors claim that the conversion rate (the fraction of dopes who actually buy things from spam emails) is well under 0.00001% (that's 1 in 10 million!). On the other hand, this article claims that it costs about $80 to send one million spam emails through a botnet. Putting these two together, it seems to cost about $800 to make a single sale via spam advertising. That makes no sense!

It makes even less sense when you consider all the hoops that modern Web sites make you jump through before you can send spam inside them. Most social networking sites, for example, make you type CAPTCHAs repeatedly if you send too many messages from a single account. This adds significant cost to spammers -- even if they hire cheap labor in developing countries, they pay ~$2 for every 1,000 manually solved CAPTCHAs. That's a few thousand dollars per million. Again, it doesn't add up.

Hypothesis: Spam is not financially viable and the main reason it continues to be sent is because spam delivery companies (i.e. "the advertisers") have tricked "sellers" into thinking that spam advertising pays off.


  1. This article comes to a similar conclusion for Phishing.

    It says that Phishing is like fishing ( with real man and boats) in the sense that a "free" resource with limited ability to regenerate (fish/idiots) is being sought after first by few than by many and by doing so lowering the returns of everybody. At the end it becomes a low-skill, low-reward business (like the real fishing).

    Eventually the small (f/ph)ishers will have to give up but the fishing/phishing never ends as long as there are fish/idiots.

    I guess the same holds true for Spam.