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Spam to Cost U.S. Companies $10 Billion in 2003

An ambitious new study attempts to attach a price tag to spam. Junk e-mail will cost U.S. corporations more than $10 billion in 2003, according to the report released this week by Ferris Research, a consulting firm specializing in messaging and collaboration research.

Spam is spreading faster than ever, according to the report's author, Ferris Research analyst Marten Nelson. "It has probably increased by 100 percent in the last nine months. We don't see anything breaking that trend currently," Nelson said in a telephone interview Thursday from his office in France.

Fueling the growth of spam are the profitability of spamming and the increasing sophistication of spammers' e-mail address harvesting tools, Nelson said.

The Ferris study, called "Spam Control: Problems and Opportunities," is based on surveys and interviews with IT managers, end users and anti-spam vendors.

The $10 billion estimate for U.S. companies in 2003 has three major components: loss of user productivity, consumption of IT resources and help desk costs.

Loss of user productivity is the largest component of the cost, coming in at about 42 percent in Ferris Research's model, according to Nelson. Based on interviews, Ferris arrived at an estimate that the average corporate user receives three spam e-mail messages per day. That number tends to be higher for executives and other users with highly exposed e-mail addresses, which can attract hundreds of spam messages per day.

Ferris estimates that a user averages between 4 seconds and 4.5 seconds to deal with a message. While most spam takes significantly less time to diagnose and delete, the higher estimate accounts for the tiny percentage of spam that causes a user to follow a link or the cases were legitimate e-mail was deleted as spam and must be tracked down.

Consumption of IT resources runs a close second place, at just short of 40 percent of the $10 billion spam price tag, Nelson said. The estimate includes the impact of spam on server capacity, server administration, bandwidth, disk space and other factors.

Nelson acknowledges that the report is aggressive in its estimation of such costs. "I think it's quite aggressive. It shouldn't be more than this," he said.

Part of calculating that cost is a Ferris' finding that 15 percent to 20 percent of inbound e-mail to U.S.-based corporations is spam. The firm found a higher percentage for U.S.-based Internet Service Providers -- around 30 percent.

According to John McGlinchey, president of DelcoNET.com, a suburban Philadelphia-based ISP, the Ferris' ISP estimate is not beyond the pale.

"The rate of spam coming into my Internet service is about 60 percent. Currently we turn away nearly 3,000 messages a day using our filters, which is more than we keep," McGlinchey said. "Bulk e-mail is paid by the ISPs who have to increase their bandwidth to accommodate it just to keep our services running."

The third major component of Ferris' spam price tag is help desk costs, which come in at roughly 15 percent of the total cost. The estimate is based on one spam-related help desk incident per user per year at a cost per incident of $15.

The study projects that increased volume of spam does not lead to a linear increase in cost. Ferris calculated the costs to U.S. corporations for spam in 2002 was $8.9 billion.

Other findings of the survey:

  • The European costs of spam in 2002 was $2.5 billion.
  • Most spam is written in English.
  • The anti-spam market will reach saturation in 2005-2006, and anti-spam penetration will become similar to anti-virus penetration.
  • The leading anti-spam vendors currently are Brightmail, MAPS, Postini, Trend Micro and Tumbleweed. Newcomers to watch include Cloudmark and MailFrontier.
  • Client-based anti-spam products cost $20-$40 per user.
  • Anti-spam service solutions cost $5 to $20 per user per year.

    When it comes to solutions to the burgeoning spam problem, the Ferris report concludes that anti-spam legislation is unlikely to be very effective because of jurisdictional limitations.

    "Legislation is not effective in controlling spam from non-ethical business people. But from an end-user's perspective, spam can also come from Amazon or Barnes & Noble or some other e-commerce site. These kinds of businesses will follow the law. At the end of it, probably even less than 10 percent of what users consider spam would come from ethical business," Nelson said.

    Nelson believes the most promising approach to reduce spam is some combination of user education, industry initiatives, legislation and technology, with technological solutions having the most potential.

    "These days, most anti-spam solutions use a combination of blacklists, whitelists, technologies that search for certain words and technologies that look for the structure of the e-mail header in order to see patterns. Those solutions assign a score, for example, this message is 80 percent likely to be spam. In the long run those solutions will be the most successful ones," Nelson said.

  • About the Author

    Scott Bekker is editor in chief of Redmond Channel Partner magazine.

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