Email Marketing ROI at 40 dollars

Direct Marketing Association released Power of Direct economic impact study in October. (The Direct Marketing Association (DMA) is a trade association of businesses using and supporting multichannel direct marketing tools and techniques. IT represents companies in the US and 48 other nations).

Email is bringing in $40.56 for every dollar spent on it this year, according to the DMA.

This is compared to

  • Catalogs’ ROI of $7.30,
  • Search’s return of $22.24,
  • Internet display advertising’s return of $19.72 and
  • Mobile’s return of $10.51.

Commercial email is expected to drive $63.1 billion in sales this year, compared to $57.8 billion last year, according to the study.

The DMA projects email to drive $67.8 billion in sales in 2012 and $82.2 billion in sales in 2016.

Here is one more source for more reading: The Magill Report

For all you evil generals who want to blow up the Email Marketing universe here is our revenge:

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Email Marketing ROI and Social Media

Unless you have been living under a rock, you as a marketer know that a new wave of Social Media has been invading the cyberspace.  In the last few years the popularity of  social media applications such as FaceBook, MySpace, YouTube  Orkut etc  has soared.  Twitter , which began as a small project as the “SMS for internet”, reached a tipping point in 2007 at the SXSW conference and has gained so much following  in the last three years that it was the single biggest reason for the Indian Premier League drama to unfold. If something this new could threaten an Indian politician into resignation and shake up the cricket conglomerates, it has to be powerful.  As business owners, we look at this tiny little application and wonder in awe like cavemen looking at a piece of burning wood picked from a forest fire.
Let’s go back 10 years, to the time before the dotcom, to the early 90’s. If you owned a chain of say, shoe stores across the metros and someone said that you could sell shoes online, what would have been your reaction? I was (and still am) very excited. The idea that you don’t need the showroom real estate to sell via a website and just need a warehouse located centrally was and still is appealing.  How much of that idea has matured in India in the last 15 years?  Consumers still need to try on your shoes, they still are hesitant to pay online,  payment gateways are still not as smooth to work with as we want,  logistics costs are still not insignificant and operations of customer  support, returns, exchanges etc is still an evolving process.  Meanwhile you  are swamped with persuasive pitches from digital agencies and blogs that you need to “get-on-board” with social media;  You must make facebook applications,  upload your ads/talks on YouTube,  tweet  about your  products or your “with-it-ness”,  make banner ads,  count the CTR on PPC,  and keep the search engine gods appeased.  There is a social media flood out there, isn’t it?
In this deluge one small little boat refuses to drown.  Email Marketing.  According to the  the Direct Marketing Association’s (DMA) Power of Direct economic-impact study (published every year ) “e-mail returned a whopping $43.62 for every dollar spent on it in 2009”. (Read more here)
Sales per dollar of direct marketing ad spends:

  • Telephone Marketing: $ 8.55
  • Internet Marketing:  $ 19.94
  • Email Marketing: $ 45.06

You don’t need rocket science to tell you that almost everyone (in the Internet space that is) uses email today and everyone will continue to use email tomorrow.  So why has email marketing in India not given results that social media so seductively promises, are just round the corner?
The reasons are many but they don’t have as much to do with the growth of the eCommerce industry as they have to do with the lack of discipline and rigour in the Email Marketing process itself. Retailers know their busiest stores but not which email campaign generated most visits and why.  Organizations track new products / trends and plan production for the next season but don’t really measure which online sections of the site get the most visitors. The demographic market for the product and services is well defined but the email lists used don’t map to them.  (The usability and content of the website is another issue altogether.)
Without a targeted list, without customized messages, without setting targets and intention of improving the metrics   quarter on quarter, Email Marketing soon degrades into spammy, low involvement, wasteful junk email.
Email Marketing has the potential to generate a loyal list of consumers. It’s a faithful channel to send across your brand message, generate interest, drive traffic to your site and get instant feedback that comes right in your inbox.  You can pin point which customer responded to which message and did precisely what on your site.  You can send different offers to your consumers and pin point which offer did well and why.  You can even see which link / content/ offer got most clicks.  Other Direct marketing channels don’t have this big a penetration nor have the measurement metrics in place.
Email in the consumers’ inbox is like a salesman sitting in that consumer’s living room.  To continue with the analogy of a shoe store, it’s like a catalogue of shoes coming to the consumer’s home.  Social Media, at least for now (and without any measurement metrics), is like a loud procession passing on the streets below, that the consumer watches from his window.