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I'd say the secret to winning the war is to outhink your competition, and that's not by doing the tit for tat stuff. Bidding wars are crazy, don't go there, but I'd bet money there is some virgin inventory that none of you guys bid on, so they won't hit it if they don't know about it.
All PPC search engines can act if you provide them with the detailed information that they need. Everything is possible. The first thing is to get the information, prove the identity of the perpertrator, approach them first (it may be more than one party) ask them to refrain, then approach the PPC provider with the information. Don't let them win, and don't play their games, the fact they do this is testimony to the fact you get to them.
As for e-mail campaigns, sure they work, it's a no-brainer with a house list. If you go outside to list brokerages be very cautious with your expectations.
I have been running a permission marketing strategy for about 4 years now using e-mails as the primary method (all op-in, off course!)
It takes a long time to build a good list and the trust from the readers you need. If you can afford the long-term investment it can become a very valuable asset. The longer you work on it the more valuable it gets - the more subscribers you get and the higher persmission level you gain.
I can recomend it highly to everyone that think long-term. Personally I have had great success with the method and now, after years oif work, have an increadible ROI.
And the great thing about trust and permission: Noone can take it away from you :)