Email Services
When you use a service such as mailchimp.com, constantcontact.com, campaignmonitor.com, or any other provider the images are links that pull the image from a web site.   This is proper coding of an HTML newsletter.

Default
By default, all modern email programs now do not show images by default.  They do this because every time an image is accessed, it allows for tracking of that image and basically confirming the user exists to spammers.

Privacy
So to protect privacy, images are not displayed from unknown senders.  Only approved senders or manually downloaded emails show images.  Of course, not a big issue if you are sending to people who know you.

CIDs
There is the ability to embed the images in Outlook using CIDs (or inline images).  However, CIDs can get tagged as spam and filtered out automatically.  They increase the message size.  Moreover, they create issues in other email programs and often you will just end up with code, instead of an image at all.  Here is a great chart by campaignmonitor.com:

• Apple Mail                Image displays inline and as attachment
• Entourage 2008     Image displays inline and as attachment
• Gmail                        Image will not display
• Hotmail                   Image will not display
• Outlook 2003          Image displays inline and as attachment
• Outlook 2007          Image displays inline and as attachment
• Thunderbird 2         Image displays inline and as attachment
• Yahoo! Mail          Image will not display

Since over 30% of the market share is Gmail, Hotmail and Yahoo, it’s a good reason in of itself not to use CID.

Email Services – Again
Most importantly, this is not how Mailchimp.com and other vendors send their email.  So your client would have to use their own Outlook to send email, if they want to go this route.  This creates all types of issues from being labeled as a spammer on their own firm IP, to having the firm have to send out via BCC (more delivery issues), and finally going through the training process on how to load the template correctly in Outlook.

If you would like to read more on this topic, check out these articles:

• http://www.mailchimp.com/articles/how_to_code_html_emails/
• http://www.campaignmonitor.com/blog/post/1761/embedding-images-in-email/
• http://www.campaignmonitor.com/blog/post/1759/embedding-images-revisited/
• http://support.microsoft.com/kb/843018
• http://amnesiablog.wordpress.com/2006/09/11/outlook-spam-with-embedded-images-cid/