• by daniel.c , Melinda Krueger , February 20, 2007

I am trying to find the average cost of acquisition for an email address. Obviously it depends on the type of business, etc. but I see lots of data on average pay-per-clicks and the price of buying an email list, but nothing on what the cost is for acquiring the email addresses of your "customers" to build your database. Any thoughts?

Michelle Novak, Saga Communications

Dear Michelle,

An important principle to keep in mind is that while you can buy an email address, you can't buy permission to send email to that address. Without permission, you're just another unwelcome interruption in the inbox.

With current customers, you can get both the address and the permission essentially for free. Assuming you have other interactions with these customers, a request for email address and permission can tag along. For best results, offer (and then deliver) solid benefits from your email program. You can offer incentives, such as a discount or gift, but quality will decline if the incentive is something the customer will want regardless of whether they are interested in your email program. If your email program is about coupons, a special coupon offer will ensure you are reaching the target consumer (email-responsive/interested in coupons), whereas a free T-shirt may have a more general appeal, and people will sign up to get the shirt and then opt-out, either literally or figuratively. General appeal offers may bring you more email addresses, but from people who will not be responsive members of your database.

You may also wish to invest in an email append to your customer list. But here again, be careful -- you have not gained customers' permission. To avoid damage to your brand and existing relationships, ask for permission to send email, and provide good reasons and possibly an incentive to obtain the opt-in.

What's the final cost to acquire the email address of a current customer? That depends on the objective of your email program. If the purpose of email is to drive sales, your cost per new email address is:
(cost of address acquisition program + cost of incentive + cost of permission mailings - incremental sales revenue from new opt-ins)/# of new opt-ins

If the purpose of your program is more for awareness or to drive Web traffic, your cost per new email address is:
(cost of address acquisition program + cost of incentive + cost of permission mailings)/# of responsive opt-ins

For prospects, you simply add in the media costs, whether it is PPC, co-registration, email list rental or "other."

The reason you can't find a rule-of-thumb is that the costs can vary widely, as can the incremental revenue or what is considered a responsive opt-in. To address the "responsive" question, it is best if you have a sense of your average response. It's even better if you can track results from your most- and least-responsive customers. Put your newly acquired people into a separate segment by source (PPC, list A, November appends, etc.), and track their response over time, then compare it to your average or best/worst. This allows you to adjust your actual number of responsive opt-ins into your calculation.

The quality of your new opt-ins will vary by source, but also depends on how you treat them. As Stephanie Miller, vice president of strategic services for Return Path, points out, "Hand in hand with lead quality and valuation should be a deeper effort to treat new subscribers from EVERY source (including your own Website or ecommerce system) with a different level of outreach and messaging than folks who know you well. Many marketers send a welcome message, but few customize by source, and fewer still think about an engagement series in the beginning of the relationship. Why not send your best stuff or send the type of messages that will most appeal to a new subscriber?"

In a recently published report, "The Value of an Email Address," the email experience council provided survey results from other marketers grappling with this issue.

Good luck!

The Email Diva

Send your questions or submit your email for critique to Melinda Krueger, the Email Diva, at emaildiva@kd-i.com. All submissions may be published; please indicate if you would like your name or company name withheld.