Your Inbox is Full

Marketers really like e-mail.

About 840 billion messages will hit inboxes by 2013, compared to 418 billion this year. The boom can be attributed to e-mail’s low cost and high return.

Spending on e-mail is expected to reach $4 billion by 2012, compared to $3.1 billion in 2008, according to Forrester Research.

Small businesses, slow to catch on, are expected to greatly increase mailings, grow their lists and experiment with segmentation and testing.

Over the last three years, the battle for online dollars in the retail sector has some high-end retailers moving from sending two or three messages a week to e-mailing subscribers daily.

“One retailer noticed click-through rates went down, but overall revenue returns went up, so it worked for them,” says Julie Katz, an analyst at Forrester. It’s good news for those companies whose customers have opted in to receive marketing messages. Those people are likely to spend 138% more than non opt-in customers, says Jeanniey Mullen, the founder of the Direct Marketing Association’s E-mail Experience Council.

These customers also purchase products 25% faster when notified through e-mail about specials, discounts, new products and services.

Response rates vary significantly based on the type of e-mail.

Service e-mails, or those used to welcome new customers, say thank you or confirm an order, offer the best response at 70% to 80%. Newsletters, most often used as retention vehicles, follow with a 30% to 60% response, according to the E-mail Experience Council.

Consumer products marketers are expected to increase their use of newsletters to learn what customers want. Kraft Foods incorporates surveys into its communications to learn how its customers feel about content, frequency, formats and other things, Forrester found.

But will consumers tire of being bombarded by all these e-mails?

Signs of fatigue are clear. Some 77% of U.S. online adults responding to a Forrester survey were annoyed with e-mail volume, and they are beginning to lessen their usage in favor of other channels. Eighty-three percent said they use e-mail weekly or more often in 2008, compared to 90% in 2007. Visits to social networking sites are up (16% in 2008, versus 13% in 2007), as is the use of weekly text messaging (35% in 2008, compared to 29% in 2007), according to Forrester.

In-house e-mail lists work best, providing a 15% to 20% response. Rented files drop the response rate to 8% to 10%. The lists can cost anywhere from $30 to $200 per 1,000 addresses, depending on the quality of the names.

The costs to send e-mail are dropping as marketers push service providers for volume discounts and the return-on-investment remains strong. Companies average a $48 return for every $1 spent, Mullen says.

E-mail budgets are increasing, but not at a significant pace — about 25% to 30% year over year for the last five years.

“It’s a deceptive number because e-mail is very inexpensive, but volume-wise it can be 70% of the messaging that is sent out to consumers,” Mullen says.

The most frequent types of messages sent are service related, followed by promotions, up-sell and cross-sell, newsletters or retention-based communications, educational and viral.

“Everybody who’s doing e-mail will include the opportunity to send viral messages, but there is a low usage of the messaging,” Mullen says. “Companies are putting them in, but customers are not leveraging them at high rates because it’s easier to click the forward button and choose people from your address book than to fill out a send-to-a-friend form.”

This year, for the first time, marketers began in earnest using social networks like Twitter, LinkedIn and Facebook to organize groups around specific products or services that they can then send messages to through a different application than their e-mail engine. This method is expected to significantly increase next year.

“That influencer is connected to over 100 of his or her friends and they will share that message,” she says. “You get immediate exposure from a trusted source.”

SNAPSHOT

E-mail volumes to reach 840 billion messages by 2013

Return on investment remains strong

77% of respondents to a survey annoyed by e-mail