April 28, 2005

When used properly, e-mail is still a very efficient and powerful marketing vehicle, says David Hallerman, eMarketer Analyst and author of the recently-published report, E-Mail Marketing: How to Improve ROI.

"Despite the assault e-mail marketing endures from spam and phishing, even with the drag on delivery rates imposed by the filters, and regardless of the sheer e-mail overload in most people's inboxes, 71% of US online advertisers used e-mail marketing in 2004," says Mr. Hallerman.

"That's only six points less than the number of respondents using paid search — the current interactive marketing favorite — and 12% of advertisers plan to start e-mail campaigns in 2005."

"Not only do marketers like e-mail," Mr. Hallerman continues, "even consumers approve. According to a survey of US e-mail users surveyed by Quris, 45% of them see e-mail as a good way for companies to stay in touch with customers."

E-mail's endurance is partially built on its two-fold value: one, driving direct response results and two, cultivating ongoing relationships. Furthermore, while customer retention is the prime objective for most e-mail marketers, customer acquisition continues to play a smaller but significant role.

"Customer retention and increased loyalty is the main objective for e-mail marketing among 63% of the respondents in the chart below," says Mr. Hallerman.

"However, in a statistical dead heat, 62% see e-mail as a way to acquire new customers. That result is unexpected, at least among those who believe that because of consumer resistance to unsolicited commercial messages, e-mail's remaining strength is retention but not prospecting."

"It's not all smooth selling," warns Mr. Hallerman. "E-mail marketing faces many challenges. Spam, along with the filters individuals and companies install to combat it, is the chief problem."

E-mail volume continues to grow at a steady pace. According to eMarketer, e-mail volume in the US will rise from over 2 trillion message this year &mdash: personal, commercial and spam — to nearly 2.7 trillion by 2007."

"The growth rate for e-mail volume is still strong, at 14.3% this year over last," says Mr. Hallerman. "It will continue to reduce gradually through the rest of the decade, but e-mail is not going away; when the annual figures are in the trillions, a two-figure growth rate is still formidable.

Of course, high volume is also a problem for marketers, since the more e-mail there is, the more likely commercial e-mail — even permission-based e-mail &mdash: won't be read. That makes good targeting and good content more important than ever."

"E-mail marketing is effective, it still works, and the numbers prove it," says Mr. Hallerman. "A useful snapshot of the fundamentals comes from DoubleClick's ongoing study of delivery, open, and click-through rates across its large network from Q2 2002 through Q4 2004.

As marketers have become more assiduous at both list maintenance and working to get messages through spam filters, delivery rates have inched up from 86.4% to 90.6%.

"Open rates, however, have declined — most likely because many users feel swamped by both spam and the sheer growth of e-mail volume.

"But of those e-mails that get delivered and opened, the response rates based on clicks has remained healthy in the 8% range."

"The channel works," says Mr. Hallerman. "But the most important question any marketer has to ask is, 'Is my e-mail marketing program working — is it as effective as possible?'"

Source: eMarketer