How Email Marketing Will Change In A Post-Recession Economy

Now I’m no economist, but my wife -- who hates spending money and doesn’t even play Xbox – just bought us a 55” LCD TV. If that isn’t a harbinger of improved economic conditions, I don’t know what is. Judging from all the other huge TV boxes I’ve seen in front of neighbors’ houses on garbage day since the holidays, I expect my wife is not alone in her fiscal optimism. We have made it to the post-recession economy.

It isn’t just consumer spending that has changed, however. Several studies recently have pointed out how marketers are planning to increase budgets in 2013, with lifts in digital leading the way. So now that marketers have a little financial breathing room of their own, I believe they will approach email differently than they have over the past few lean years.

Here are some of the ways I envision email marketing changing in the post-recession economy:

1. There will be more of it. Marketers may have more money, but they also have more caution and wisdom. Like the boxer who recovered in the corner after getting knocked to the canvas last round, they’re OK now but they sure don’t want that to happen again. So instead of following the same budget allocations they used in the past, look to marketers to focus more on the channels with the highest ROI. Leading the way is email, at about $40 in sales for every $1 spent, according to the DMA. Do not be surprised to see email funds stolen back from social media, where the ROI is only about one-third as much.



2. ROI will be replaced by sales by channel. The whole concept of ROI stacks the deck for email if it only considers the direct expense of sending emails, managing lists, integrating various data sources and enhancing emails and their analytics with the various available third-party options. The real organizational cost of email is the years spent growing and nurturing a list of engaged and responsive subscribers, which rarely figures into the equation. Instead, a measurement I see marketers paying more attention to is sales by channel. Finding the common denominator for the ROI of email. social, search and online advertising is elusive, but the numerator -- how much in sales is able to be attributed to each channel -- is more within reach. I expect marketers to look at each of their channels and ask what they’ve done for the top line lately, and then begin shifting budgets accordingly. 

3. Scrimping on necessities comes to an end. One unlikely economic indicator signaling the recovery from a recession is a lift in the sales of men’s underwear. When money is tight, people put off restocking even necessary items, making do for as long as possible. Marketers are people too, and when they see a budget windfall, expect them to follow the same pattern of spending on the necessary items they have known they need but were unable to buy. I can't think of anything more necessary in email today than data integration: behavioral from website or transactions, CRM data, offline transactions, and other ways to segment and target as close to one-to-one as possible.

4. Investments in opt-in list growth. I am not referring to buying lists; rather, I think once marketers realize how profitable their email channel is -- particularly after they’ve enhanced it with the data integration in #3 above -- spending money for the express purpose of attracting new subscribers becomes entirely feasible. Marketers are already buying ads on Facebook to grow their opt-in fan base, then spending on sponsored stories for the right to reach these fans with their content. Yet social does not contribute as much to sales as email. A parallel scenario would be to spend money on Facebook or search with the express purpose of attracting new subscribers to a particularly effective newsletter. For many marketers, I think the math will work out to make this an attractive alternative to investing in external platforms and sites.

Has the post-recession economy already begun to affect your own or your clients’ email budgets and behavior? Let me know what you have seen in the comments.

1 comment about "How Email Marketing Will Change In A Post-Recession Economy".
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  1. Rama Ramakrishnan from CQuotient, February 8, 2013 at 11:34 a.m.

    Good article, Mike. Especially agree re: #2 and #3.

    In our experience, when the email team does a mail/holdout test, it is often shocking how much revenue the email channel drives. And it is eye-opening how much revenue is triggered by email but comes in through other channels.

    If you layer in hyper-personalization via data integration and smart algorithms, email's revenue impact increases even more.

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