Channel Booster

Posted on by Chief Marketer Staff

The results are in and once again, return on investment from e-mail is astronomical compared with other direct marketing channels. But a drastic shift in the way DMers think about e-mail may be needed to fully capitalize on its efficiency.

In 2007 marketers spent $500 million on e-mail to drive some $23 billion in sales, according to the Direct Marketing Association’s Power of Direct Marketing economic impact study released in October.

In 2007, the DMA says, e-mail returned a whopping $48.56 for every dollar spent on it.

At the same time, marketers spent $20.8 billion on catalogs to realize $150 billion in sales.

For a little ROI perspective, in 2007 catalogs returned $7.22 for every dollar spent. And if the point still isn’t clear, direct mail got back $15.57 per dollar, DRTV $6.87 and DR radio $8.64. Meanwhile, non-e-mail Internet marketing delivered a comparatively robust $20.67, the study determined.

But no DM channel’s ROI is nearly as impressive as e-mail’s, because for one thing, the cost to send messages is as close to zero as outbound marketing gets.

So the answer is to spend more one-mail, yes?

No. Not necessarily.

Looking at e-mail purely from an ROI standpoint is taking too narrow a view of direct marketing’s most productive medium, says Matt Seeley, president of Experian Digital, parent company of e-mail service provider CheetahMail.

And, he adds, until most marketers change the way they think about e-mail they won’t be able to take full advantage of it. “I believe e-mail is affecting the other channels in a positive way that may be difficult to measure today. But tomorrow it will get easier to measure.” Seeley calls e-mail “an enabler” for other sales channels, and feels any strategy built around it must allow for the way it works with the rest.

For example, he says, retailers that haven’t done so already need to start collecting e-mail addresses at the point of sale: “The people who take that seriously have seen amazing results.”

Indeed, as reported here recently (“Rolling Strikes,” October), Brunswick Bowling and Billiards has used an offer of an hour of free bowling to develop a database of almost half a million e-mail addresses. Key to the effort, though, was Brunswick’s local managers’ realization that collecting this information at their bowling centers could help them meet sales goals.

“Yes, e-mail is a channel, and as a result has a direct ROI calculation, but it’s an influencer of other channels. We’ve got to make sure that’s accounted for in the organizational structure,” Seeley says. “But that’s not an easy thing to do because these [siloed] organizational structures have evolved over many years, if not decades. Breaking down those walls takes energy and time.”

CheetahMail claims more than 380 big-brand clients in the United States and 200 in the United Kingdom.

Seeley believes e-mail shouldn’t be viewed in terms of direct sales. “I look at e-mail as a very cost-effective way to talk to a customer. It’s not necessarily a channel to close sales. If you take that approach, you’ll start thinking about e-mail differently. Maybe it’s just there to remind [the customer] that a catalog is coming in a day, or a new store is opening. Maybe it’s there to talk [specifically] about a sale. And maybe it’s a branding experience.”

Brad Wolansky, vice president of e-commerce for outdoor gear and apparel merchant Orvis, adds: “E-mail isn’t a channel. It’s an arrow in the quiver.

“We use e-mail to talk to every customer in every channel. We use it to talk to customers who like to shop on the Web. We use it to talk to people who like to shop on the telephone and we use it to talk to retail-only customers. We also use it to talk to our dealers, and we target the messaging to those particular channels.”

Of course, all of this points to the strong possibility that e-mail’s ROI may be even higher than we think.

ROI Per Dollar of DM Advertising in 2007
Commercial e-mail $48.56
Internet marketing (non-e-mail) $20.67
DR newspaper $16.99
Direct mail (non-catalog) $15.57
Insert media $11.65
DR magazine $10.21
DR radio $8.64
Telemarketing $8.61
Direct mail (catalog) $7.22
Other $7.04
DRTV $6.87
Source: Direct Marketing Association

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Magilla Marketing, Ken Magill’s weekly e-mail newsletter, is archived at http://directmag.com/magill/.

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