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E-mail marketing is a form of direct marketing which uses electronic mail as a means of communicating commercial or fundraising messages to an audience. In its broadest sense, every e-mail sent to a potential or current customer could be considered e-mail marketing. However, the term is usually used to refer to:

Sending e-mails with the purpose of enhancing the relationship of a merchant with its current or old customers and to encourage customer loyalty and repeat business.
Sending e-mails with the purpose of acquiring new customers or convincing old customers to buy something immediately.
Adding advertisements in e-mails sent by other companies to their customers.
E-mails that are being sent on the Internet (E-mail did and does exist outside the Internet, Network E-mail, FIDO etc.)

Advantages

E-mail marketing (on the Internet) is popular with companies because:

Compared to other media investments such as direct mail or printed newsletters, it is less expensive.
Return on investment has proven to be high when done properly and e-mail marketing is often reported as second only to search marketing as the most effective online marketing tactic.[2]
It is instant, as opposed to a mailed advertisement, an e-mail arrives in a few seconds or minutes.
It lets the advertiser "push" the message to its audience, as opposed to a website that waits for customers to come in.
It is easy to track. An advertiser can track users via web bugs, bounce messages, un-subscribes, read-receipts, click-throughs, etc. These can be used to measure open rates, positive or negative responses, corrolate sales with marketing.
Advertisers can reach substantial numbers of e-mail subscribers who have opted in (consented) to receive e-mail communications on subjects of interest to them
Over half of Internet users check or send e-mail on a typical day.[3]
Specific types of interaction with messages can trigger other messages to be automatically delivered.

Disadvantages

Many companies use e-mail marketing to communicate with existing customers, but many other companies send unsolicited bulk e-mail, also known as spam.

Illicit e-mail marketing antedates legitimate e-mail marketing, since on the early Internet (see Arpanet) it was not permitted to use the medium for commercial purposes. As a result, marketers attempting to establish themselves as legitimate businesses in e-mail marketing have had an uphill battle, hampered also by criminal spam operations billing themselves as legitimate.

It is frequently difficult for observers to distinguish between legitimate and spam e-mail marketing. First off, spammers attempt to represent themselves as legitimate operators, obfuscating the issue. Second, direct-marketing political groups such as the U.S. Direct Marketing Association (DMA) have pressured legislatures to legalize activities which many Internet operators consider to be spamming, such as the sending of "opt-out" unsolicited commercial e-mail. Third, the sheer volume of spam e-mail has led some users to mistake legitimate commercial e-mail (for instance, a mailing list to which the user subscribed) for spam — especially when the two have a similar appearance, as when messages include HTML and flashy graphics.

Due to the volume of spam e-mail on the Internet, spam filters are essential to most users. Some marketers report that legitimate commercial e-mails frequently get caught by filters, and hidden; however, it is somewhat less common for e-mail users to complain that spam filters block legitimate mail.

Companies considering an e-mail marketing program must make sure that their program does not violate spam laws such as the United States' CAN-SPAM Act (Controlling the Assault of Non-Solicited Pornography and Marketing Act)[4], the European Privacy & Electronic Communications Regulations 2003 or their Internet provider's acceptable use policy. Even if a company follows the law, if Internet mail administrators find that it is sending spam it is likely to be listed in blacklists such as SPEWS.