Email Marketing's ROI Probably Closer To $130 Than $43.52

For better or worse, email marketers have long touted the channel's fantastic return on investment. According to the Direct Marketing Association, email marketing is projected to generate an ROI of $43.52 in 2009, more than twice search and other marketing channels. But that's probably just the tip of the iceberg for most companies.

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.

10 comments about "Email Marketing's ROI Probably Closer To $130 Than $43.52".
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  1. Barking Unicorn, July 14, 2009 at 10:22 a.m.

    "email marketing is projected to generate an ROI of $43.52 in 2009"

    What does that mean? Each dollar spent on email marketing returns $43.52? Define your stuff, man!

  2. Chad White from Litmus, July 14, 2009 at 10:54 a.m.

    Sorry for any confusion, Barking Unicorn. Yes, ROI means return on each dollar spent.

  3. Tom Francoeur from Communispace, July 14, 2009 at 4:42 p.m.

    Chad - this is a great article - thanks!. Especially the recommendations for marketers who use and believe in email. If CFO's aren't getting the ROI message, we all have to do everything we can to get the word out. Especially with social media channels growing. This is all to the benefit of email - but corporate execs may get caught up in the confusion and not understand email's role or strengths among the growing number of online marketing channels.

  4. Kurt Johansen from Johansen International, July 14, 2009 at 7:19 p.m.

    Hi Chad, I totally agree with your comments regarding budgets and ROI's. We recently achieved a sales figure of $39,000 for a client with just 3 emails. It's his BIGGEST sales and marketing campaign ever and his staff could not believe the success. They were of the opinion email marketing was useless but now have swung around to it. The fact is we need to keep telling people about successes and we need to have faith in our abilities.
    Cheers - Kurt Johansen - Australia's Email Marketing Guru -

  5. Paula Lynn from Who Else Unlimited, July 14, 2009 at 8:51 p.m.

    OY! "Kill all the CFO's" (lawyers maybe not so much.)

  6. Frank Rix from dialogue1 GmbH, July 15, 2009 at 6:16 a.m.

    Great article, Chad.
    I would add the increasing number of email forwarders ("tell a friend") e.g. social sharers to the untrackable manners you mentioned.

  7. Kristin Hambelton from Neolane, July 15, 2009 at 11:51 a.m.

    This article raises some very good points, especially regarding the new pressures facing marketers who need to defend budgets and protect allocations to drive effective cross-channel marketing programs, of which email is usually a significant part. Everyone talks about measurement and ROI, but despite available technologies, we agree, it is still difficult to do. With long campaigns and multiple touch points, it can be overwhelming to determine where and at what point in a cross-channel marketing campaign to focus on measuring. To keep it simple, we suggest marketers pick a few metrics they can easily manage throughout the campaign to establish benchmarks. Then use those benchmarks to track how prospects move through to the pipeline. Suggestions can include email open rate, web page views, repeat web visits and collateral downloads. Ultimately, conversions to the pipeline will give you a good sense for how well the campaign performed. And, performance, as you point out, is something your CFO will surely understand.

  8. Chad White from Litmus, July 15, 2009 at 6:57 p.m.

    Frank, that's a great point. As social sharing grows that will definitely become a larger part of email's unmeasured ROI.

  9. david Baker from RedPill, July 22, 2009 at 9:13 a.m.

    this would be more fascinating if you backed it up with direct insight from VP Marketing Roles that allocate the budget .. seems you skipped a group in who gets budget allocation... the CFO will rarely make a decision on a channel's use or investment's thereof, unless it is an infrastructure need.

    I imagine you'll get a bit different view from those allocating the 5% marketing budget amongst the channels and since most don't do attribution and ROI is so non-descript in it's purest form (since many elements influence a purchase, not the last channel to touch the customer)... so, I'd actually agree ROI is higher, but the elements that drive the purchase still need to be divided by the supporting elements (customer service, site, search, original method of acquisition)... but it's a good start....keep up the thinking...

  10. Joe Melle, August 23, 2011 at 2:39 p.m.

    Hi Chad,

    I realize I am reading and responding to this article quite some time after it was published, and while I do agree with some of what you wrote, I also feel that you did not provide enough information which I outlined in my article on my blog, which you can read and respond to if you wish at

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