Commentary

Is Email Recession-Proof?

One of the advantages of going before heavy hitters like David Baker and Loren McDonald in the Email Insider lineup is that I get first crack at hot topics. Like this week's for instance: email and the recession. Loren and David were both lining up to make some comments on the topic, and hopefully my brilliance won't intimidate them too much from chiming in on their own columns this week. And actually, even I'm not the first to talk about it: Elie Ashery was first up with a column this week on the Email Experience Council blog:

My theory is pretty straightforward. While a recession is certainly not good for anybody, it may have a beneficial effect on email marketing. Or at the very least, email should be less affected by a recession than other marketing channels. Because of email's low cost, high ROI value and the fact that it is a proven medium, marketers might see themselves directing more marketing dollars to this channel as a sure thing, and away from less proven (mobile marketing, RSS), less direct (banner advertising) or less costly (SEO) channels. Good old email: it works, it's cheap, and my return is high. It's a safe harbor in troubling times.

To see if my theory held water, I posed it to the Inbox Insiders list, a private list of high-level email marketers I run. Here is what they had to say:

Josh Baer, founder of Skylist and now CTO of Datran Media: "I think we saw this happen in 2000-2001 when the bubble burst - we saw 300% growth from 2000-2003... I always thought of it just as you describe - online marketing was the only safe place to spend because the ROI is high and measurable and because you can test it out at a low cost of entry."

Matt Blumberg, CEO of Return Path: "I think email will fare better if there is a recession now than it did in 2001-2003 (note I say if, not something more definitive).  The channel is more proven and mature and demonstrates results.

However, I don't think a recession will really be good for anyone.  It's not like online marketing, or even email as a low cost option, are truly countercyclical."

Industry Insider Joe Rueckert: "I think existing use of email infrastructure (read: more campaigns) would increase as campaign dollars shift from more expensive mediums (direct mail, etc) to online. However, I'm concerned about the spending on infrastructure to bring email campaigns to more effective heights. This is the investment in system integration, head count, new medium testing (mobile, etc) that we need do email marketing better and not just more. I hope we truly are able to get more of those dollars -- and less of the dollars that simply lead to more volume.

As Matt stated, I don't think a recession will be good for anyone."

David Baker, from Avenue A/Razorfish: "I'm a believer that in tough times, consumers will flock to the Internet. Use of email will increase for all the social values we read and talk about.  While retailers, financial services and multichannel venues may suffer from conservative spending patterns, I believe the measurable channels will benefit and budgets will shift even more so..

I think we are smarter today about monetizing email than we were in 2000...the channel is a more mature consumer channel than it was back then. 

Will the dollars shift to online?  Not necessarily, as online will suffer if spending is down as well, but I don't see email marketing taking a huge hit for all the benefits we tout that will become even more important when marketing groups are truly tasked to ‘perform' and ‘measure' performance, which is a weak spot in the vast majority of companies I see today.

I'd bet on consumer trends over financial and market trends for our channel, any day."

Michael Mayor, senior vice president at Aptimus: "I think the better question is ‘will email marketers be more empowered to act more properly in a recession than they were 7 years ago?,' because that was a ship wreck that email barely survived. One storm was created when marketers halted acquisition and churned their databases into the ground (and many vendors, too). Another storm, of course, was spam, which was just a tropical storm at the time. In the middle were many of us good guys on the tiny swordfish boat in the North Atlantic looking at crappy weather readouts. It was ugly. Live and (hopefully) learn."

Aaron Smith, principal at Smith-Harmon: "I concur with the general consensus that a recession is a bad thing for everyone. To follow up on the point Joe made about doing email better not just more, I see a lot of potential for our industry to get itself into hot water considering the dynamics of a recession. The following scenario is quite plausible if we don't as an industry continue to police ourselves and control the urge to overmail when numbers in other channels are down:

  • Marketers hit with bad numbers will try to make up the revenue by increased focus on high ROI channels like email
  • More mailings going out means more inbox clutter and more customer churn, leading to even more mailings in hopes of improving the decrease in ROI (the classic downward spiral)
  • We already know that in many cases, over the long-term, dramatically increasing the number of mailings leads to flatter or lower overall revenue for email programs
  • In addition, dramatically higher mailings across the industry would likely prompt the ISPs and/or FCC to respond with more prohibitive restrictions, leading to more time and effort invested for increasingly lower returns on investment
  • Imagine the general public response if email marketing volume on a daily basis was as high as those days during the early December holiday push -- not pretty!

It could be bad for all of us. Not saying that's where we're headed, but it's a possibility we should be aware of. Let's hope as an industry we are able to resist the urge to overdo it and shoot ourselves in the collective foot."

Feel free to chime in with your own thoughts on the Email Insider blog.

 

 

 

 

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