• by Gavin O'Malley , December 8, 2008

Seattle-based Smith-Harmon, an email marketing strategy and creative services agency, recently appointed Chad White as its research director. White will be expected to conduct extensive research on retail email marketing practices, along with industry outreach and client support. Before his schedule gets too hectic, Online Media Daily had the opportunity to drill White on some critical issues facing email marketers today.

OMD: On the heels of Cyber Monday, what industry trends are emerging for this holiday season?

Chad White: There are two big trends: (1) We're seeing record retail email volumes. On Cyber Monday, 70% of the top online retailers sent at least one email--up from 68% last year when Cyber Monday was the most popular day of the year to send retail emails. And on Black Friday, 59% of retailers sent email--up from 41% last year. So volumes are up.

And (2) we're seeing heavier discounting, more offers of free shipping, and more special incentives. For example, this week Neiman Marcus offered triple reward points for credit card holders for the first time ever.

OMD: What are the key issues facing the retail email industry today?

White: Because of the economy, the retail industry is under heavy pressure right now to perform, and email marketers are certainly under pressure to send more email. The direct cost of sending more email is very low, and CXOs know that. However, what many companies have not calculated are the indirect costs of sending one more email--higher list churn, higher ignore rates, higher spam complaints, and deliverability problems. Every subscriber has a lifetime value and an acquisition cost. If your email practices cause your subscribers to tune you out or opt-out before you have recouped your acquisition cost, then your email program could actually be costing you money and you may not know it. Too many marketers still measure the value of their email program on a per-campaign basis rather than taking a more holistic approach and measuring value on a per-subscriber basis.

OMD: Borrell Associates just predicted that spending on email marketing will decline by 18% next year. Is that overly pessimistic?

White: I think that it is. I tend to believe other recent surveys that show email budgets growing slightly next year for two reasons: (1) The top online retailers that I track are sending more email. For instance, last week's email volume was up about 19% over the comparable week in 2007. More emails generally mean that more resources are required to design, code and send them.

(2) I'm seeing gradual improvements in subscription and unsubscribe processes and the launch and build-out of preference centers. These changes take time and resources to implement--and are vital to keeping up with the changes in the industry.

And (3) the economy is causing marketers to rethink their allocations to bleeding-edge channels and media that are hard to measure. While marketing budgets are contracting, what's left is being allocated to high-ROI, highly measurable channels like email marketing, search, direct mail, etc. This is an economic environment when the strength of email really shines--as evidenced by the increase in email volumes this year.

I asked Lisa (Harmon, principal at Smith-Harmon) to share her thoughts on this question as well. She says:

"I do believe the 18% is overly pessimistic. I'm seeing these dramatic types of spending decreases in traditional media--like TV and print--as well as in experimental media, like social and video. Email is such a low-cost, high-ROI channel that it's keeping a healthy slice of the budget allocation pie."

OMD: Are you particularly excited about any advancements being made in the area of retail email?

White: New channels like social are forcing retailers to wake up to the fact that they have to give consumers more control over the promotional messages they receive in terms of both content, frequency and format. I'm seeing retailers make great strides in this regard in their preference centers and during their unsubscribe processes, when some are now giving subscribers the option to reduce the frequency at which they receive emails and to update their content preferences rather than leaving. Retailers are definitely paying more attention to relevancy, which is key to the future success of their programs.

OMD: Has the general email marketing calendar--of build, segment, attach template, send--changed at all over the past several years?

White: Lisa is closer to the production process, and therefore a better person to answer this question. She says:

"Of course it varies greatly from sender to sender--but in general, yes, there has been a change. Production timelines have diverged into two opposite directions. Batch-and-blast mails are produced much more rapidly. Calendars used to span one month to three weeks. Now they generally span from two weeks to (in some cases!) two days. On the flip side, building 'smarter' mails like triggered messages and automated series tend to happen along longer, one- to-two-month timelines."

OMD: Amid all the breakthroughs in social networking and open media platforms, some companies--Thrillist for one--appear to be thriving as email newsletters. Is their luck destined to run out, or will that distribution model remain secure?

White: Email will remain a viable distribution model because of its near-universal adoption and increasing portability. But I'm definitely seeing retailers become more channel-agnostic. You'll now find retailers active on Facebook and Twitter and providing content through RSS feeds. When you go to subscribe to the email programs of Sears, for example, you'll be presented with the opportunity to get SMS text alerts, subscribe to RSS feeds and download a desktop widget. Over time, email subscription centers will become unified subscription centers, giving consumers options on how they want to communicate with retailers. Giving consumers choices is definitely a good thing.

However, there are two issues here: (1) For now, most of these alternative channels are tiny compared to email and other established channels. And (2) research from ExactTarget and others has shown that consumers are much more open to promotional messages via email and direct mail than via other digital channels like social. So if you're looking for a direct marketing channel to send your promotional messages, then email and direct mail are your only two really viable channels. Every channel has its strengths, and you have to play to them.

OMD: Do you see any end in sight to the widespread over-mailing of promotional messages?

White: When pushed too far, subscribers will vote by hitting the "unsubscribe" or "report spam" button. Retailers that respect the permission they were giving and try to re-earn that permission every time they send an email will do well. Those that don't respect it will see their best subscribers flee and their list size and productivity dwindle.

OMD: How do you personally deal with promotional emails in your inbox?

White: First of all, I only subscribe to brands that give me valuable content or exclusive deals--and that don't deluge me with emails. I like emails that help keep me on top of what's new, like EB Games' emails, which include lists of upcoming games, new releases and top sellers. Barnes & Noble also does a good job of keeping me up to date on new releases, plus they give me video interviews with authors that are frequently interesting.

I rely on subject lines to help me decide if opening an email is worth my time. For instance, I appreciate that MediaPost's event emails have very clear subject lines. If it's for an event that I'm not interested in, I just delete it. Subject lines are an opportunity to respect your subscribers' time by telling them what's inside the email.

And lastly, I don't always take action immediately or directly on an email. For instance, if there's a product featured in an email that I want to see in person or want right away, I'll go to my local store and buy it there--sometimes foregoing a discount. I also tend not to save or forward emails. Instead, I click through to the Web site and the landing page or email the link to the product to my wife or to a friend. I often take actions that aren't easily tied back to the email that sparked the action, so when I see ROI figures for email I always consider them to be fairly conservative because of email users like me.