E-Mail Marketing

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E-MAIL MARKETING

The term e-mail marketing covers a wide range of e-mail used to deliver commercial messages. It includes e-mail newsletters that deliver news, information, or content that people have specifically requested. These newsletters typically contain advertising messages targeted to the interests of the newsletters' readers. At the other end of the e-mail marketing spectrum is unsolicited bulk e-mail, often referred to as "spam."

When e-mail became a part of people's daily routine, using it as a marketing medium became an opportunity that marketers couldn't ignore. According to a mid-2001 Gallup Poll survey, 97 percent of Internet users agree that e-mail has made their lives better. According to the survey, e-mail is the most popular online activity, with e-mail users (96.6 million) outnumbering Web users (87.9 million) by 10 percent. In the United States alone, more than 1 billion e-mail messages are sent daily, according to eMarketer.

eMarketer also reported that e-mail message volume increased from 394.2 billion messages in 1999 to 536.3 billion in 2000. Volume was projected to reach 677.1 billion messages in 2001, 840.1 billion in 2002, and more than 1 trillion in 2003. In early 2001 Jupiter Media Metrix predicted that by 2005, the average online consumer in the United States could get as many as 950 e-mail messages every day.

E-MAIL MARKETING VS. TRADITIONAL DIRECT MAIL

Marketers have found that e-mail marketing is cheaper and more effective than traditional direct mail. A 1999 study by Jupiter Research (now Jupiter Media Metrix) estimated the cost per piece of e-mail to be $.25, compared to $2 per piece sent by regular U.S. mail. eMarketer estimated that in 2003 some $2.2 billion would be spent on e-mail marketing, compared to $40 billion on traditional direct mail. Jupiter Media Metrix estimated that companies would spend $1.3 billion in 2001 to send 43 billion commercial e-mail messages.

A 2001 study by Opt-In News found that direct e-mail was considered the most responsive marketing method worldwide by some 50 percent of media buyers, and e-zines or e-mail newsletters were ranked the most responsive by 23 percent. Only 11 percent of media buyers surveyed said that direct mail was the most responsive marketing method, while eight percent voted for TV and radio.

E-mail is more targeted, custom, and flexible than traditional direct mail—and it comes at a fraction of the cost. This is largely due to the use of marketing databases. During an e-mail campaign, available technology can capture and track individual responses, provide marketers with the information to learn more about customers from response and purchase behavior, and refine and update customer profiles for future communications. These types of services typically are available from messaging solution providers. The flexibility of e-mail marketing makes it possible to change an offer the next day if a special discount doesn't bring in enough traffic right away.

Marketers conducting e-mail marketing campaigns have access to packaged e-mail marketing software and outsourced e-mail marketing services. A company can use its own customer database to deliver personalized messages based on one or more database attributes and specific e-mailings can be targeted to customer groups based on past purchase and response behavior.

Opt-in e-mail campaigns, in which recipients have asked to receive information, are conducted to achieve different objectives. They can be used to prospect for new customers outside of a company's established customer base. The low cost of e-mail makes it possible to test market new products and services more quickly and inexpensively. E-mail marketing campaigns also are used to drive traffic to a company's Web site.

For existing customers, e-mail marketing can help to build relationships through more frequent contact. E-mails can be used to alert customers to new products or services, special promotions, or discounts. They also can be customized according to online and offline purchase patterns. Such messages help to build customer loyalty. Additionally, as surveys e-mails can be used to get feedback from customers. Such surveys typically include an incentive to get customers to participate.

Opt-in e-mail lists are available from list brokers and managers as well as from some online ad agencies. Online ad agency DoubleClick became the biggest e-mail marketing message distributor in early 2001 with the acquisition of Toronto-based FloNet-works. The acquisition enabled DoubleClick to expand its distribution capability from 150 million e-mails per month to more than 600 million. As of mid-2001 DoubleClick had 32 million e-mail names under exclusive management and brokered an additional 55 million names. Chicago-based Yesmail.com is a fast-growing company that specializes in e-mail marketing solutions. As of mid-2001 it had more than 25 million e-mail subscribers and was acquiring new names at the rate of more than 500,000 per month.

OPT-IN AND OPT-OUT METHODS

"Opt-in" and "opt-out" are two kinds of privacy mechanisms that have been adapted to e-mail marketing. With the opt-in method, consumers must actively agree to receive commercial e-mail messages, usually by clicking a box or making some other type of positive response. Under this system, consumers only receive commercial e-mail messages after they have expressly given their permission. Therefore, opt-in e-mail lists consist only of e-mail addresses for individuals who have given their permission to receive commercial e-mail messages. Double opt-in means that, after giving their permission, consumers must also send in a confirming e-mail.

Under the opt-out method, consumers are given the option of not receiving any further promotional e-mails after they have already received one. Under this system, messages are sent to individuals until they ask to be removed from the mailing list. A similar system, known as passive consent or negative opt-in, allows marketers to add consumers to their lists if they do not click or unclick a checkbox on a Web page in order to avoid receiving commercial e-mail. The fairness of such systems has become a matter of debate in some circles, the argument being that the necessity to actively opt-out places an undue burden on consumers who may routinely visit numerous commercial Web sites, for example.

According to a 2001 study by Opt-in News and reported in eMarketer, opt-in was the most frequently used method to acquire customers. The study found that 54 percent of the companies surveyed used optin, while 32 percent used opt-out and 14 percent used double opt-in to prospect for new customers. One problem with using the opt-out method was that, in many cases, the unsolicited messages might be perceived as spam. In the absence of express permission to send e-mail, marketers are more likely to send irrelevant and intrusive e-mail that consumers will ignore.

ACCEPTABLE TO CONSUMERS

E-mail marketing appears to be more acceptable to consumers than banner advertising. A consumer survey conducted by Valentine Radford from September 2000 through March 2001 found that 75 percent of online consumers thought banner ads were annoying, and only 30 percent believed they provided essential information. More than half of the surveyed consumers felt that e-mail advertising was enjoyable, and more than 80 percent said they enjoyed receiving e-mail newsletters.

E-mail also appeared to be the preferred medium for consumers to receive discount offers and coupons. Some 55 percent of online shoppers preferred to receive coupons through e-mail, compared to 29 percent who preferred newspaper coupons, and 16 percent who preferred to receive them through regular mail. With respect to content, 72 percent of online shoppers said that they enjoy rich media, while 60 percent preferred HTML over text. A very large number of consumers (80 percent) would rather receive a link to rich media content in an e-mail message.

Although e-mail marketing was preferred by many, business-to-consumer (B2C) e-mail marketers must be careful because e-mail is a much more personal medium than banner ads. Marketers can avoid alienating existing and potential customers by making certain the e-mails they send are relevant. Consumers will perceive relevant offers as less intrusive than e-mails that are not relevant to their needs. E-mails that take too long to read may cause consumers to ignore future messages from the same source. Additionally, although consumers appreciate personalization in commercial e-mail messages, marketers must be careful not to appear to have too much knowledge about their lives.

BUSINESS-TO-BUSINESS E-MAIL MARKETING

E-mail is a cost-effective way to generate high-quality sales leads in business-to-business (B2B) marketing. Compared to B2C, B2B has a much smaller target audience, and one that generally is more sophisticated. The objective usually is for a company to generate qualified sales leads and then distribute them to its sales force. An integrated e-mail campaign includes planning, media choices for outbound messages and inbound responses, list acquisition, developing an offer, providing incentive options, and copywriting and design.

A key element of an integrated B2B e-mail marketing campaign is to obtain targeted opt-in e-mail lists. Selections are based on criteria such as title and annual budget. Enough e-mails must be sent to generate enough leads for the sales team to pursue. Testing also is part of an effective e-mail campaign—for lists, products, and creative elements. In order to test effectively, e-mails must drive traffic to a unique Web page that pitches the offer and any related incentives. Respondents can be qualified by asking them to provide basic information about their industry, annual revenue, and timeframe for needing a particular product or service. Leads can then be categorized and prioritized in terms of urgency.

According to DM News, click-through rates on e-mail lead generation campaigns for B2B commonly are five percent. Conversion rates indicate that 50 percent of those interested respondents who click through to the Web page will actually fill out response information, thus providing the sender with a desired lead.

A LOW-COST ALTERNATIVE FOR SMALL BUSINESSES

E-mail marketing isn't just for large companies. For small businesses, e-mail marketing offers a low-cost alternative to traditional direct marketing. At the local level, this marketing tool can be extremely targeted and highly personal. Ideally, e-mail direct marketing offers the opportunity to have a one-to-one conversation with each and every customer.

According to eMarketer, the number of U.S. small businesses adopting e-mail marketing will increase from 1.6 million in 2001 to 3.7 in 2003. The amount they will spend on e-mail marketing was projected to increase from $398 million in 2001 to $1.3 billion in 2003, compared to $211 million spent in 2000. A 2001 study by The Kelsey Group found that 11 percent of small businesses used e-mail marketing in 2000. By the end of 2001, the study predicted that 16 percent of small businesses would be using e-mail marketing. The study also projected that by 2005, approximately 42 percent of all U.S. small businesses would use e-mail marketing.

DUPLICATE E-MAIL ADDRESSES AND OTHER PROBLEMS

When the use of e-mail for direct marketing began in 1994, the e-mail industry adopted the standard practice of having list owners retain possession of their customers' e-mail addresses. Marketers who rented the lists had to rely on the list owners to send out their messages. When marketers rented e-mail lists from multiple vendors, there was a likelihood of duplication, with some customers receiving duplicate e-mails. In addition, marketers could not eliminate existing customers from the mailings. Finally, there was no consistency in message format among the different list owners, so marketers had difficulty comparing the results from different lists.

As of 2001, list owners continued to refuse to release e-mail lists to mailers, and problems with duplicate mailings continued. Proposed solutions include shipping the e-mail files to a trusted third-party service bureau so that duplications and existing customers can be removed from the files to be mailed. Other solutions are being developed to merge and purge e-mail files in order to eliminate duplicates from multiple lists and suppress mailings to a marketer's existing customers.

Another problem plaguing e-mail marketers is the lack of a change-of-address system similar to the one in place for regular mail. According to DM News, only nine to 20 percent of consumers who change their e-mail addresses notify marketers and update their e-mail subscriptions to online newsletters, Web sites, and discussion lists. An early 2001 study conducted by NFO Research estimated that the annual rate of e-mail address changes was about 32 percent. Some 41 percent of consumers changed their e-mail addresses at least once during the past two years. To address this problem, Return Path Inc. was established in 1999 to provide an e-mail change-of-address service that optimized e-mail marketing lists and gave consumers an easy way to notify all of their personal, business, and commercial contacts of their new e-mail address.

REGULATING E-MAIL MARKETING

In June 2001, Washington's anti-spam law was upheld by that state's Supreme Court. The law had been challenged as placing an undue burden on interstate commerce. However, the state's high court ruled that the only burden the law placed on spammers was the requirement of truthfulness. Washington's law was designed to prevent e-mailers from using the Internet to distribute deceptive commercial messages. It bans unsolicited commercial e-mails from containing misleading information in the subject line, an invalid return address, and a disguised transmission path. The law allows for fines from $100 to $1,000 per e-mail.

As of mid-2001 spam was regulated by a patchwork of state laws, some of which were more effective than others. Bills to regulate spam were pending in both the U.S. House of Representatives and the U.S. Senate that would require unsolicited commercial e-mail messages to be clearly labeled as such, include a valid return e-mail address, and give consumers a way to opt-out of receiving future mailings. The proposed federal laws also would allow the Federal Trade Commission (FTC) to fine violators. State attorneys general would be allowed to take legal action against spammers on behalf of citizens.

The Coalition Against Unsolicited Commercial E-Mail (CAUCE), an organization that lobbies for federal anti-spam legislation, found that state laws generally were ineffective at stopping spam. CAUCE noted that states must avoid violating the interstate commerce clause of the U.S. Constitution, which prevents states from placing an undue burden on interstate commerce. Generally, the federal position on anti-spam legislation has been that state laws would put an undue burden on interstate commerce and thus be a violation of the U.S. Constitution. Marketers certainly would have difficulty complying with 50 different state laws, as compared to a single federal standard. According to E-Commerce Times, even the strongest anti-spam legislation would only require that e-mails be clearly marked and have opt-out information readily available.

The Direct Marketing Association (DMA) supports anti-spam laws that crack down on false and misleading commercial e-mail messages and e-mails that fail to give consumers a way to opt-out of future mailings. However, the DMA noted that legitimate e-mail marketers should not be categorized as spammers, especially when they provide consumers with a way to opt-out of future mailings. Other obstacles to effective anti-spam regulation included a lack of resources to sue spammers. Under the proposed federal legislation, individual consumers would not be able to sue spammers. Instead, they would have to rely on government agencies or Internet service providers (ISPs) to take legal action. That in turn would likely overload law enforcement agencies that did not have the resources to handle a large volume of anti-spam cases.

THE FUTURE: WIRELESS E-MAIL, STREAMING AUDIO AND VIDEO

According to eMarketer's 2001 eWireless Report, e-mail was by far the most popular Internet activity conducted over wireless devices. The report indicated that 69 percent of wireless Internet device owners in the United States used their devices for e-mail, compared to 32 percent for research, 26 percent for games, 25 percent for news, 24 percent for general entertainment, and 21 percent for shopping and buying. Other reported activities included obtaining sports scores, making travel arrangements, looking up stock quotes, and paying bills.

Wireless e-mail marketing has the potential to become the "killer application" for wireless devices. Special offers delivered by e-mail to wireless devices would enable a mobile user to purchase an item by clicking on a link within the e-mail message. Another potential wireless application would be to deliver commercial e-mail messages based on the mobile user's location. Among the technical issues that e-mail marketers must overcome to effectively market to mobile users is that e-mail delivered to a wireless device looks much different than e-mail delivered to a regular computer.

Future applications and features in commercial e-mail will include streaming audio and video. In May 2001, e-mail marketing firm Yesmail.com introduced software that would allow clients to add audio capabilities to their e-mail. As rich media content becomes more common in commercial e-mail messages, marketers can look forward to higher response rates and new ways to interact with customers and prospects.