Behind the Numbers: Bang for Your E-Mail Bucks

If you're going to do it, do it right

Web 2.0 techniques may be capturing all the attention these days, but most online marketers continue to use e-mail as the foundation of their online strategy, and they're growing their use of this tried and true medium. Ninety-seven percent of marketing executives recently surveyed by Forrester Research say they use e-mail marketing, while around 72 percent of respondents surveyed by Datran Media say they plan to up their e-mail marketing budget.

"Our clients are definitely spending more," says Melinda Krueger, principal of Krueger Direct/Interactive. "I think everybody is recognizing that it's a really useful tool. The naysayers are jumping on board, especially with the clear return on investment, and suddenly everybody wants to send a lot of e-mails."

Overall, e-mail marketing spending will rise a slow but steady 16 percent over the next five years to $1.65 billion in 2011, up from $1.43 billion in 2006, according to a recent eMarketer report. 2007). That figure includes e-mail advertising, payments to e-mail service providers, list rental and the cost of in-house e-mail.

E-mail marketing continues to do well because it still offers a high return on investment. In a December 2006 Advertisers Worldwide survey, e-mail marketing ranked third out of the top five highest returns on advertising spending at 12 percent, behind paid placement (30 percent) and organic search (22 percent). House e-mail marketing (56.4 percent) ranked second behind search engine optimization (68.7 percent) for best ROI, both in product marketing tactics and in lead generation tactics, according to MarketingSherpa.

Yet, while the industry is mature in size, many marketers are still ignoring basic best practices. "E-mail as a marketing medium appears far more simple than it is," says David Hallerman, senior analyst and author of the eMarketer report. "That's a core problem. Some companies acquire names on sign-up lists but they don't respond. They sit on the list, and I can't think of a more positive self-targeted customer or prospect than someone who signs up for a list. Here's someone saying I want to hear from you and then a company doesn't communicate."

E-mail's low cost tempts marketers to give it short shrift, he feels, noting that to execute e-mail properly requires a certain amount of manpower and commitment, including a high level of manual labor required for standardizing messages and keeping lists clean.

Part of the problem, Krueger feels, is companies don't fully understand how to utilize the medium to maximize its potential. "Everybody's trying to figure out how to gather the right consumer information to target e-mail correctly, but it's difficult to do that without burdening the customer to tell you a million things about themselves. There's a balance between reading someone's mind and asking them to create profiles and preference pages and tell you lots of things about themselves."

Proper measurement also still needs work. "The higher results today tend to give a less accurate picture," Hallerman feels. For instance, "11 percent of marketers say 'delivered' equals what they mailed, rather than using it to define how many e-mails actually made it into the inbox. A stricter definition subtracts mail that ends up in the spam box."

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