The Good News
As measurable as email marketing is, there are many areas where tracking actions is difficult, if not impossible. For instance, it's not easy to track subscribers who go to their local store or phone your call center to take action on products and services learned about in your emails. And depending on your messaging and business, you may have a lot of subscribers reacting offline in an untrackable manner.
According to Epsilon, 67% of subscribers say they've purchased products offline as a direct result of receiving an email from a retail company. In fact, email marketing is nearly as effective at driving action offline as it is online, with 44% of all subscribers inspired to take action online versus 41% offline, according to Forrester Research. Barcodes in emails -- particularly, unique barcodes -- can bridge that gap, but based on my tracking of major retailers' email campaigns, adoption of barcodes in emails has a long way to go.
Even online, where it's easiest for email marketers to track the path of subscribers, we're not getting credit for much of the action that our messages drive. That's because 33% of permission-based email recipients say they usually visit sites directly, instead of clicking on an email link, according to Epsilon. This means conversions may be undercounted by 50%.
Taking into consideration the action that email drives offline and directly to Web sites, email marketing's ROI is probably closer to $130 -- about three times the DMA's estimate. And that's clearly ignoring email's ability to drive interest and actions in other channels like catalogs and social networks.
The Bad News
Unfortunately, most CFOs don't care if email marketing's ROI is $43, $130 or $330. According to the most recent ANA/MMA Marketing Accountability Survey, nine out of 10 finance executives said they don't use return-on-investment metrics to set marketing budgets in the annual budgeting cycle. Two-thirds instead take a predetermined percentage of revenue or simply adjust last year's budget. For whatever reason, CFOs don't believe the numbers.
Considering that CFOs give so little weight to ROI when making budget decisions, it shouldn't be a surprise that companies also don't try very hard to measure ROI in the first place.
According to the Conference Board, more than one-third of companies haven't made any efforts to measure marketing ROI. Thirty-seven percent have been measuring ROI less than a year; 40% have been measuring ROI over the last one or two years; and less than a quarter have been at it for more than three years. Among the remaining companies, which had implemented programs, none have yet achieved their goals in measuring ROI, with the major of those companies saying they found the process harder than anticipated.
Even with the difficulties in measuring ROI, it's shocking to me that companies' financial gatekeepers place so little stock in performance and visibility -- essentially, so little stock in basing their decisions on real numbers. Looking on the bright side of our nation's current economic troubles, it has started to put more emphasis on performance. And in that light, email marketing really shines.
Despite the recent upturn in email marketing's fortunes, there's still a gaping chasm between email's performance and its budget allocation. It's up to email marketers to continue to advocate for the channel, to continue to stress the financial triumphs of their efforts -- and how much more money the channel could be making if more were invested in it.
Be sure to trumpet your successes and the email marketing successes of your peers and competitors. If financial self-interest doesn't motivate your executives, then perhaps the sense that their competitors are pulling ahead of them may.