Email Marketers Suffer a Drop in Revenue

Emails are reaching their intended recipients with increasing regularity, according to a new survey of permission-based marketers, but a smaller percentage of customers is opening them and clicking through. Worse, the average revenue generated by an email has plummeted 33 percent over past year. The study, "DoubleClick Q2 2004 Email Trend Report," is the latest quarterly comparison of the billions of emails sent by users of DoubleClick's DARTmail technology. According to Eric Kirby, vice president of strategic services, all the emails tracked in the study were part of permission-based marketing campaigns. Open rates--reflecting the share of emails that has been read by recipients--dropped by more than 7 percent compared to the year-ago quarter, as did the share of emails that were actively clicked on once they were opened. Overall, just 7.7 percent of emails were clicked on, the lowest level since the second quarter of 2002. The bottom-line results were even more dramatic, most notably, the 33 percent drop in revenue per email delivered in the second quarter 2004. Only 20 cents were generated per email delivered, compared to 30 cents a year ago. Average order size also declined, from $98 to $93. DoubleClick's Kirby says the most recent figures belie a two-year trend showing "a lot of stability in the performance of email marketing as a channel." The apparent decline in open rates, he suggests, "aren't really low by any historical measure," adding that the figures are above where they were in 2002. He says the revenue figures of a year ago represented an all-time high, and that comparison may not be appropriate. He also points to the continuing upward trend of email deliverability, a measure of how successful marketers have been at getting their messages to the intended targets. A full 89.5 percent of emails reached their mark, an increase over last year's 88.5 percent. Still, Kirby acknowledges that it's been a difficult year for email marketers, particularly with the enactment of the federal CAN-SPAM legislation. He says that one factor in particular is responsible for any degradation in email marketing: outdated addresses. The results of any email campaign, according to Kirby, rely on the quality of the marketer's address list, and often that quality is in direct correlation to how new the addresses are. "Companies need to start paying attention to the fact that newer email addresses in the file tend to be more effective than older addresses," he says. "If you don't have a continual stream of new addresses, that list tends to get stale. And if it gets stale you can expect those performance metrics to decline." Marketers have made significant improvement in their data quality efforts in terms of accurately capturing addresses on the front end. Much of the remaining deliverability problem, according to Kirby, can be attributed to address churn as customers upgrade to high-speed Internet connections and set up new email accounts. As the marketplace has matured somewhat, that area of churn has been less volatile than it was several years ago--and consumers have grown used to receiving marketing pitches in their inboxes. "People are now more accustomed to the channel," Kirby says. "Marketers have to get increasingly smart around how they design and target their email communications. Today, most companies using email do so in a campaign mind-set...deploy[ing] that campaign out to their whole list." Companies should accept using email in a more "triggered" fashion--linked to customer actions. "When emails arrive at a more contextually appropriate time for the consumer, [marketers will] get a higher response rate." Related articles: CRM in Action: Targeted Emails Win Forex a 100 Percent Response Rate The Coming Rebirth of Email Marketing