In the GartnerG2 report "E-Mail Savings Threaten a $196.8 Billion Direct Mail Market," analysts said e-mail marketing has become a more cost-effective way to acquire and retain customers. The research shows e-mail advertising revenue is projected to reach $1.26 billion in 2002, up from $948 million in 2001. By 2005, e-mail advertising revenue is forecast to total $1.5 billion.
Denise Garcia, research director, says "Direct mail has reached its peak and will account for less than 50 percent of mail received by U.S. households by 2005, down from 65 percent in 2001. As e-mail use, familiarity and trust increases, consumers will become more comfortable with accepting advertisements through their computer."
On average, it takes four to six weeks to complete a direct mail campaign vs. just seven to ten business days for an e-mail campaign. Responses to direct mail take an average of three to six weeks, while responses to e-mail take an average of three days. Garcia said "the entire cycle time of the e-mail campaign from creation to delivery and response is one-tenth the time of traditional direct mail."
In addition, e-mail campaigns are significantly less expensive to execute than the traditional direct mail campaigns. Currently, e-mail costs range from $5 to $7 per thousand while direct mail costs range from $500 to $700 per thousand.
GartnerG2 analysts said that permission-based and opt-in marketing strategies are critical to higher e-mail response rates. In general, response rates measured by action taken from direct mail are the same as e-mail, hovering at 1 percent. On permission-based e-mails, the average click through rate is between 6 percent and 8 percent.
The report suggests the following steps:
- Use advanced personalization to address customers
- Allow customers and prospects to provide feedback
- Limit the number of e-mails to no more than two per day for consumers, and three per month for business audiences
- Develop mailing lists from addresses collected through opt-in means
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