• by March 19, 2002

In an effort to manage advertising dollars, many businesses are using email marketing campaigns instead of traditional direct mailings, according to GartnerG2, a research service from Gartner, Inc.

GartnerG2 analysts said email marketing has officially become a more cost-effective way to acquire and retain customers.

GartnerG2 research shows email advertising revenue is projected to reach $1.26 billion in 2002, up from $948 million in 2001. By 2005, email advertising revenue is forecast to total $1.5 billion.

“Direct mail has reached its peak and will account for less than 50% of mail received by U.S. households by 2005, down from 65% in 2001,” said Denise Garcia, research director for GartnerG2 covering the media industry. “As email use, familiarity and trust increases, consumers will become more comfortable with accepting advertisements through their computer.”

Email marketing campaigns have proven to be more efficient, and their success can be measured more easily. On average, it takes four to six weeks to complete a direct mail campaign vs. just seven to ten business days for an email campaign. Responses to direct mail take an average of three to six weeks, while responses to email take an average of three days.

“Within days of launching an email campaign, response can be measured and actions taken. Marketers can gauge response quickly and react by making adjustments on an email campaign before delivery of a direct mail campaign is complete,” Garcia said. “Thus, the entire cycle time of the email campaign from creation to delivery and response is one-tenth the time of traditional direct mail.”

In addition, email campaigns are significantly less expensive to execute than the traditional direct mail campaigns. Currently, email costs range from $5 to $7 per thousand while direct mail costs range from $500 to $700 per thousand.

GartnerG2 analysts said that permission-based and opt-in marketing strategies are critical to higher email response rates. In general, response rates measured by action taken from direct mail are the same as email, hovering at 1%. On permission-based emails, the average clickthrough rate is between 6% and 8%.

“Advertisers must begin to incorporate these types of personalized email strategies in conjunction with their traditional direct mail efforts in order to maximize the reach, penetration and effectiveness of their campaigns moving forward,” said Garcia.

GarnterG2 recommends that advertisers take the following steps:

1. Use advanced personalization to address your customers, making sure to acknowledge your relationship with specifics;
2. Always allow your customers and prospects to provide feedback, then acknowledge and use it to better your next communication;
3. Limit the number of emails to no more than two per day for consumers, and three per month for business audiences; and
4. When sending permission-based emails, develop the mailing lists from addresses collected through opt-in means and ensure that the email includes a working mechanism for opting-out.