Email Marketing: If you cannot see this opportunity clearly, click here!

Vikas Tandon, Managing Director, Indigo Consulting
In the age of Web 2.0 and even Web 3.0, Email Marketing is perhaps as Web 1.0 as you can get. Email pre-dates the worldwide web in fact, and in many ways was the early-stage acceleration in the growth of the Internet.

But as they say, some things never go out of style, and Email is perhaps the “classic” Internet application. According to a recent JuxtConsult report Email remains the top usage of the Internet, with 91% of the 47mn-odd Internet users in India using email – almost 20 percentage points ahead of the next most popular activity – Job Search. Worldwide too, 70-80% of Internet users use email, making it among the top three online activities (search has gained significant ground). But here’s a real whopper of a stat: 87% of Consumers online time is spent reading their emails. (David Daniels, Vice President JupiterResearch - Dec. 2007).

And this is only on the PC. Considering that email is now easily available on most connected devices like Mobile Phones and Televisions, the addressability and accessibility of users has multiplied.

If you go by sheer numbers therefore, Email remains an extremely attractive channel for online marketing. Yet, Email Marketing accounted for barely 2% of US online spends in 2007 and is in fact expected to further fall as a proportion of total online spends to around 1.5% (emarketer.com). The main reason for this is ironically one of Email Marketing’s main advantages – it is cheap!

The cost of sending an email can be as low as a quarter of the equivalent cost of an impression of display advertising. But there are more reasons to love Email Marketing:

1. It is targeted: As in physical direct mail, an email is sent to a pre-identified recipient. And if done ethically and to in-house lists, you know a fair amount about the recipient to ensure relevance of the communication.

2. It is wanted: If done ethically, users have asked to receive that email, or at least to hear from you. So it is less intrusive than a banner or pop-up.

3. It has a longer life: Unlike a banner or a search result, an email resides in the recipient’s mailbox till such time as it is deleted, allowing users to store it for later, and view it multiple times, potentially increasing frequency.

4. It can be forwarded easily: Where would viral marketing be without email? With an email, your actual reach can be far more than intended reach.

5. It is scaleable: The cost of sending 50000 mails is a little more than that of sending 5000 mails.

6. It works!: As per the State of Retailing Online 2007 report (Sept. 2007) from Shop.org, Email is delivering sales at an average cost per order of less than $7, compared to $71.89 for banner ads, $26.75 for paid search and $17.47 for affiliate programs. Noted usability guru Jakob Nielsen, in a March 2007 column, listed an email newsletter as "probably the single-highest ROI action you can take to improve your Internet presence."

Email Marketing has also been established as an excellent reinforcement and support medium, vastly improving overall campaign performance.

The Indian Experience

While Email Marketing has been prevalent in India, it is still unstructured and often takes the form of basic bulk emailing. Intelligent and sophisticated email marketing starts with list building & mining. Yet, many large organizations have the email addresses of less than 10% of their customer base. Apart from sectors like Banking, and to an extent Online Travel Agencies, not many others are investing in building lists, analytics and intelligent campaigns.

For instance, one of our banking clients ran a campaign to increase usage of credit and debit cards during the festive season. However, instead of sending a standard, undifferentiated email to all its customers, the contactable customer base was analysed and segmented to form distinct buckets based on demographics, card usage and spend patterns. Accordingly, the email communication to each recipient was personalized and made relevant by offering gifts that were appropriate to their demographic and spend levels, as well as highlighting spend opportunities relevant to their patterns. So a male card holder who spent on travel, was shown travel offers with a chance to win a helicopter ride, while a female card holder who spent on shopping was provided a list of local shopping offers, with a chance to win jewelry. All of this can be automated using campaign management tools that allow creation of a template mail, into which the personalized elements are “assembled” before sending out to each segment.

Tips for Effective Email Marketing

Like every other medium in our increasingly fragmented media world, every channel has its own place. In general, while other channels like Display Advertising or Search Marketing are better suited at prospecting for new customers, Email Marketing works best as a Relationship Building and Management tool, once the basic handshake of introduction is completed. Email marketing works best when:

1. It is expected: The importance of permission in email marketing cannot be stressed enough. On average, a user receives nearly 20 spam messages a day, and the problem is only getting worse.

2. It is from a known sender: A user is far more likely to open a message when it is from a known sender, even if the mail is unsolicited.

3. It is Personalized AND Relevant: Not just to my identity, but to my needs. Addressing the recipient by name is only the beginning of personalization. For example, sending me an email selling travel insurance right after I have booked a holiday online is relevant, even if it does not carry my name. But if that same email also carries a quote for the insurance, with a semi-completed form, considering that the site already knows where I am going and for how long, that’s relevant AND personalized.

4. It is Timely: For example, a bank may send its customer, a personalized emailer selling a relevant insurance policy with a quote and one-click application process. But the same email sent in March during tax-saving season, may be a lot more effective than one sent in April or May.

5. It has been Tested: The low cost, immediacy and measurability of email marketing allow for easy testing of multiple variables – from subject lines to creatives and landing pages.

By far the biggest challenge facing Email Marketing is the ever-increasing volume of spam, which not only impacts deliverability, but also the consumption behaviour of recipients. On the one hand, as a result of corporate and ISP filters, and blacklists, permission-based marketers face daunting obstacles in their attempt to deliver solicited, confirmed-consent messages to the inboxes of customers and subscribers with whom they've established relationships. On the other hand, email users become increasingly intolerant of marketing messages in the mailbox, even legitimate ones, and reduce their attention spans.

Notwithstanding these challenges, Email usage is unlikely to reduce ensuring that it continues to remain an important channel in online marketing. In growth markets like India in fact, email growth will be directly proportional to the growth in Internet penetration, which is yet to reach potential. According to Jupiter Research, US spending on email advertising will grow to $2.1 billion by 2012 from $1.2 billion in 2007.

So while it is exciting to explore the new opportunities offered by social media, rich video and mobile, Email Marketing, like a good pair of jeans, has to be an integral part of the digital marketing wardrobe.