Nick Martin discovers email marketing is poised for strong growth this year, at the further expense of traditional offline channels.

In FEDMA’s first European Email Marketing Benchmark report, published in April 2010, 19 per cent of the respondent Email Service Provider (ESP) base expected their clients to increase volume of email marketing between a quarter and a half, year on year; a continuation of the shift from offline to digital channels.

Hardly surprising when you consider the results of the Ipsos Mori poll for the Chartered Institute of Marketing’s report, The Shape of Digital to Come?

One question was, which activities gave the best return on investment? Top was customer relationship management (CRM), by some margin, followed by online advertising (12%) and email marketing (11%). Those activities considered to deliver the worst return were direct mail, sponsorship and internal marketing, mirroring the evident shift in spend.

Econsultancy’s Email Marketing Census 2010 also predicts a net increase in email marketing over the course of the year, with the greater proportion coming from retention marketing, where 71 per cent expect to ramp up their activities in this area and only one per cent expect to reduce activity on email marketing activity to their customer base. This reflects growing recognition that email marketing is the perfect medium for customer management and development, and a key component within integrated multichannel consumer engagement.

To that end, newsletter and related customer management activity is likely to be a key growth area over the next 12 months. This is reflected in the difference in click-through rates reported in FEDMA’s benchmark report between newsletter and sales or product/service information campaigns, which average 17 per cent higher.

Marketers should plan use of email more strategically to gain greater payback from ongoing customer engagement and up and cross sell opportunities. For example, 53 per cent of FEDMA’s report respondents do not use email for customer or product (development) surveys. Those who do, get excellent results.

The majority of companies do not use email marketing for win-back campaigns after the loss of customers – those who do, see conversion to sale or action of between two and five per cent. Nor do they systematically use transactional emails for cross and up selling.

In both cases, clearly, opportunities are missed, which again suggests email marketing is deployed typically as a series of standalone activities, in some cases integrated with online and other channels, but generally not implemented end-to-end or integrated with other channels.

Rigorous testing

While users overwhelmingly believe email marketing to be strategically important, that belief is yet to translate into a rigorous approach around execution. Poor visibility of conversions to sale and to action, and the lack of testing around aspects such as creative templates and frequency, suggest much more critical measurement and insight are needed. Practitioners would do well to test more rigorously each element of an email campaign, beyond the generally adopted focus on subject lines, sender name, time of day and week, and spam filter scoring.

Continued growth may well be anticipated and planned for by the majority of respondents, but it should not be assumed at any cost. The future growth and health of email marketing will depend on some key factors:

• Better targeting, measurement and the use of properly permissioned and managed customer information databases; the relevancy of campaigns and careful application of local laws. 
• Careful stewardship of customer data and developing its use into the consumer/buyer engagement process. The impetus to increase volume and activity can only be achieved where it remains engaging.
• Delivery to inbox, which will be increasingly seen as a barrier to overcome, especially in B2C. 

While deliverability rates are optimistically expected to improve or remain the same, this raises a key question of how deliverability is measured. 

Most practitioners will determine deliverability primarily as delivery to Internet or to mail server, but delivery to inbox or Inbox Placement Rate (IPR) is an increasingly key metric – IPR is tied in with reputation: If reputation is poor, due to indiscriminate use or poor targeting, groups of consumers belonging to the same ISP domain will not receive bulk email from that source into their inbox. As much as seven per cent of email marketing campaigns go missing. 

Marketers must understand what their reputation is and, in the same way they improve their click-through rates, they must monitor, manage and improve their reputation. If ISPs migrate from identifying sender by IP range to identifying the sender by their domain name, as some commentators believe may have already started to happen, this issue could become even more significant.

Nick Martin analysed the benchmark poll for FEDMA (Federation of European Direct and Interactive Marketing) and wrote the analysis in the report.

Nick Martin is a regular columnist for DMI. Email him: martin.nick@btinternet.com

Read his blog here: marketingpages.typepad.com/marketingpages