To Improve Email's Effectiveness, Lower Its ROI

 

Almost everything I read about email marketing here in MediaPost and the other trades, as well as all the case studies and panel discussions at the email conferences, and also the white papers penned by the email marketing companies, are about the same thing: how to make email easier, and improve its ROI.

But we've got it all wrong. In order to be more successful, we actually have to decrease the ROI of email.

By way of explanation, let me ask a question: what is the single largest impediment to the greater success of your own email marketing? You could search internally and lay some blame on list size or hygiene, your sender reputation, content strategy, competing objectives, or any of a number of other factors. But I think the biggest obstacle you face has nothing to do with your email marketing. Instead, your greatest inbox adversary is everyone else's email marketing.

Email's biggest asset is also its greatest liability -- the almost frictionless environment in which it operates. Give me a week and a thousand bucks, and I can clog the inboxes of a million of the subscribers you have worked hard to add to your own house list. Spam notwithstanding, even the efforts of legitimate and reasonable senders make your job significantly harder, since the expense associated with their sending just one more message is tiny, and often justified by an absurdly low response rate. So send we do, making inboxes fuller and all of our messages a little less effective.

The barriers to entry for email marketing are simply too low. I look at the challenges faced by email marketers and see parallels to the interactive advertising industry around 2003. CPMs were impossibly low and publishers -- desperate for revenue -- were perfectly willing to pile on more, larger and more intrusive ad inventory. The result was unbearable clutter, coupled with embarrassing creative quality. With CPMs so low, many advertisers could not justify allocating bona fide creative resources to a campaign. Hiring a designer to build even a few different creative executions for the several size ads within a campaign could effectively double the cost of the campaign. Better to just use the same cheap ad but compensate for its fatigue (and awfulness) by running it a few million more times.

It was a vicious cycle to break out of, but gradually CPMs began to rise, allowing publishers to constrict inventory a bit and requiring advertisers to put more energy into creative. That is, barriers to entry were established. They still do not exist in email marketing, and as proud as we are of the ease in which marketers can get started in email, I'm starting to think it's time to add a little necessary friction. The higher the barriers, the less clutter there will be, and the more the resourcefulness and skill of accomplished and strategic email marketers will show up in the results.

I can identify a few prospective barriers: ease of use, list procurement, expense. Of these, ease of use should not and will not be a barrier. With over 100 ESPs and some darn slick interfaces already in the market, that horse is long out of the barn. We've long wanted to make list procurement a barrier, but as long as the cost of sending is low, resources will be inevitably be devoted to suspect procurement.

So that brings us to expense. The undeniable truth is that if email were more expensive, inboxes would be less full, and the efforts of legitimate email marketers would be better rewarded. And an increased cost-per-message would likely compel email marketers to scrutinize their messaging strategy further, putting ROI analyses in place on newsletters and other content channels where no ROI tracking currently exists, or using email in conjunction with other channels, not instead of. List hygiene becomes more important as unresponsive addresses are suddenly expensive to keep. Play it forward and the actual annual expense of email for many marketers could remain unchanged, as prices rise but volume decreases. And the less cluttered inboxes and more strategic sending could keep results and therefore ROI at about the same level as well.

Where does this increased cost come from -- ESPs? It's true that ESPs can raise prices, but with over 100 of them operating currently, no rate increase will go unnoticed (or untrumpeted) by many hungry competitors happy to continue competing on price. A wholesale rate increase will not happen, nor am I advocating that it should. What about the possibility of fees imposed by ISPs or email administrators for premium delivery, or accompanying messages with branded preview pane icons. And as an email consumer, I also certainly wouldn't mind making a little coin every time an email marketer wanted my attention. There may be a business model that begins with the phrase, "If I had an email every time someone sent me an email..."

Every couple of years a new initiative along these lines crops up and is summarily dismissed because "email wants to be free." But email isn't free. It costs senders, ISPs, email administrators and consumers countless hours -- many of them wasted on unwanted, untargeted or wholly unsolicited messages. Isn't it time for the industry to take the long view of what's necessary to reassert email marketing as a strategic communications channel, and not another mass media based on sheer tonnage?

Tags: email
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4 comments about "To Improve Email's Effectiveness, Lower Its ROI ".
  1. Lori Bertelli from Bertelli Group , September 27, 2010 at 5:51 p.m.

    Nice perspective. Helpful email tips offered here from Pinpointe <a href=”http://www.pinpointe.com/blog”>B2B Email Marketing</a>

  2. Kurt Johansen from Johansen International , September 28, 2010 at 12:09 a.m.

    Hi Mike, I totally agree. I see many large corporations sending out 'brochures and flyers' as emails and calling this email marketing. I am more into the personal and direct message going to a businesses' customers where the message is relevant and welcomed. Email Marketing is about 1. The List 2. The relationship with your list and 3. The offer you are making to your list. Cheers Kurt Australia's Leading Email Marketing Strategist www.kurtjohansen.com

  3. John Caldwell from RedPillEmail.com , September 28, 2010 at 12:57 p.m.

    Wow....

    Regardless of the perception of email being free or cheap, doing email well is neither. Email done well is timely, relevant, provides value, and makes it to the Inbox more often than it doesn't; but that's not the point.

    ISPs service, not own, their users.

    When users start getting irrelevant crap because someone sending irrelevant crap bought access, and not getting the messages that they want because those senders don't pay-to-play, how effective do you think that's going to make email?

    I guess I just have a little more faith in both recipients and the organizations that respect them....

  4. Kristine Dobson from EmailDirect.com , September 28, 2010 at 3:12 p.m.

    Great article that reminded me of Jerry McGuire's mission statement, and the one thing no one in business wants to hear, "less money, more personalization".

    I've been in email since 2003 and remember the days of low CPM's. I wonder if the author, Mike May, has noticed a trend in over-sending of irrelevant emails, tied to the economy. As more businesses struggle with diminishing profits, they have turned to increasing the amount of email campaigns they send. I have clients who knowingly over-send to their subscriber lists because "it's the only way we can generate enough revenue to pay our employees on Friday."

    Borrow from Peter today to pay Paul tomorrow. Not a healthy long term email marketing strategy.