• by October 29, 2001

At a time when direct mail is undergoing some frightening changes, email marketing is set to emerge as a viable alternative. To that end, Jupiter Media Metrix today released a report forecasting that email marketing spending will grow to $9.4 billion in 2006, with retention-based email constituting the largest portion of the industry.

Jupiter says that while approximately one-third of companies plan to spend more than 5% of their marketing budgets on email marketing in 2001, almost the same percentage plan to spend less than 2% on this method. These percentages are roughly consistent with spending on e-mail marketing in 2000, JMM says, but given the tightened purse strings at many companies, it is surprising that more marketers have not shifted some of their direct marketing and online advertising budgets to an email marketing budget. Jupiter believes that as budgets are trimmed further, marketers will begin to explore how email marketing can become a cost-effective replacement for direct mail in some cases.

Additionally, JMM says that spam email will clutter consumers’ in-boxes to the tune of 1,400 messages per person in 2006, and companies should maximize selling opportunities by using their house list, because the cost of acquiring customers via email marketing has grown over the past year. In addition, marketers should allow consumers to set the parameters of communications they expect to receive from the company; in this way, marketers can avoid alienating many current and potential customers.

So how can marketers ensure that the information they send is the information customers want? How much will companies spend on e-mail marketing? What is the future of rich media e-mail? How should marketers measure the effectiveness of an e-mail campaign?

Jupiter says that optimizing email campaigns will make house lists more valuable. Researchers suggest that marketers should focus on maximizing selling opportunities by using their house list, because customer acquisition through e-mail marketing has become more expensive over the past year. Many companies are missing opportunities to use e-mail to optimize their communications with customers.

Also, although HTML-formatted e-mail will account for only 25% of marketing email messages sent in 2001, HTML will be the most prevalent format for such messages by 2006. Jupiter also cautions that marketers should allow customers to set the parameters of communications they receive from the company, because a marketer that sends mass email messages every week can alienate nearly one-third of its customers. Companies must use email marketing to cross-sell and up-sell products to customers. Moreover, marketers should consider employing rich media email to promote high-margin products.