Why is email marketing investment set for robust growth - and how can you ensure you spend wisely?
It would appear that reports of email marketing’s death have been greatly exaggerated. Despite ‘the death of email’ having been a popular topic in recent years, evidence suggests that this 40-year-old communication tool (yes it really is that old
) is not ready for the scrap heap quite yet. In fact, quite the contrary – with reports from the likes of the Direct Marketing Association (DMA) and Forrester indicating that despite the emergence of newer and sexier channels such as social media, spending on email marketing continues to show robust growth.
The Forrester Research Email Marketing Forecast, 2012 To 2017 (US)
, for instance, predicts that investment will continue to increase over the next five years. While in a study of its own, the DMA found that over half of senior business-to-business and business-to-consumer brand marketers said they are confident expenditure on email marketing will rise. So what’s happening?
“There are a few reasons for this growth,” says Kath Pay, co-founder of Plan to Engage,
communications hub chair of the DMA Email Marketing Council
, industry speaker and all-round expert in the topic. “One is the ongoing impact of the economy, so the online budget continues to be moved from offline to online because of the cost-effectiveness of it. And then more specifically for email, I think people are realising the value of email. For the past eight years the Econsultancy Email Census surveyed companies and found that email marketing has either been in the first or second position in delivering the best ROI of all the digital channels. And that is bearing fruit in gaining further budget for it.”
The DMA Email Marketing Council's 2013 National Client Email report underlines this, linking marketers' optimistic outlook for email's prospects to the channel's improving commercial performance. According to the respondents polled, email provided an average ROI of £21.48 for every £1 spend in 2012.
The strong performance of the channel is linked to improving techniques, with over half of brands reporting an increase in open, click and conversion rates last year, marking a 5% increase from 2011. Reflecting this, the DMA’s 2012 Email Tracking Study reported that more consumers are signing up to receive emails, with the number of consumers who have signed up to receive mails from 10 or more brands having increased in the past year by 10% to more than two in five (43%).
Furthermore, in contrast to the popular view that customers are irritated by the amount of email messages they receive from brands, consumer approval of the content of marketing emails have increased, with one in three (29%) saying that they find more than half of the emails they receive of relevance and interest to them. In comparison, the DMA’s 2010 study showed just one in 10 (9%) consumers reported finding 50% or more of the emails they receive of interest to them.
However, there are bigger influences driving email’s performance, and Forrester has identified a number of trends feeding email marketing’s global growth - for instance, an increase in content consumption, and an increase in the number of active email users, with the analyst forecasting that the number of active email users in the US alone will grow to 227 million by 2017.
But in particular, there are three ‘mega trends’ that have emerged that – provided brands respond appropriately – will have an unprecedented impact on email marketing.
Growth of email marketing automation
“The hospitality industry, the financial services industry, the retail sector, consumer products and the media industry all require marketers to use very sophisticated acquisition and retention marketing campaigns,” says Forrester analyst Jitender Miglani
. “They have to acquire the users and once they are acquired they have to set up email campaigns to keep maintaining the relationship with them, along the lines of retention emails. So if you want to launch a sophisticated acquisition and retention email marketing campaign, you have to have good trigger-based programmes to keep engaging the users. And that has given rise to the entire field of email marketing automation.”
From a B2C perspective, core marketing automation is generally regarded as triggered sequences such as welcome emails and shopping cart abandonment emails, and behavioural emails. “It’s really just a matter of leveraging the touchpoint within that consumer’s lifecycle, and then just leveraging them with an automated email,” says Pay. “These are the times when that person has been in contact with us and is wanting to be contacted by us, so as long as you have tested and optimised these processes then you can be looking at getting great results.”
Meanwhile, in the B2B world, marketing automation is being utilised for lead generation, and even further than that, for lead scoring. Pay explains: “When a person has downloaded a first white paper, they are put into a lead nurturing process where they’ll download a paper, then they might click through and be offered a couple more and click through and then they are accumulating these points, and when they get to a certain amount of points the sale person knows it is worth them giving that person a call because he/she is ready. From a cost-effectiveness perspective, it makes sense because it’s saving the sales team calling until the opportunity is right, plus it is better for the recipient as well - they are going through this lead nurturing stage and finding out more about the products and the company until they are ready. So all of this is actually automated in a system - it is making life a lot easier.”
What isn’t necessarily so easy, however, is picking a provider – with the marketing automation sector having become a crowded marketplace. Pay has the following advice: “If you are going to be doing marketing automation using lead scoring, not all email service providers (ESPs) offer it. Most of the better ESPs will offer the actual lead nurturing ability, that’s not a problem, but if you actually specifically want lead scoring then there’s only a few suppliers that will offer that, so make sure that they are the ones you’re focusing on.”
She continues: “For all others that don’t need the lead scoring but they just want the marketing automation tools, the best thing to do is, instead of being sold to by the ESP, write down your actual requirements - what really matters to you? All the ESPs have got wonderful bells and whistles that they would love to dazzle you with, and it is very easy to be dazzled. But you are not necessarily going to use a lot of these bells and whistles, even though you will be paying for them. So hone down what it is you are going to be doing, understand what your strategy is, what your plans are, what your tactics are, what features are you going to be using, then get them to actually demonstrate those to you. Within the ESPs, they have all got these wonderful tools but some of them are a little bit easier and usable than others. So really get down to there.”
Mobile's mega influence
There has been a rapid evolution of email clients – from text-based, to desktop to web-based and most recently to mobile clients. And this latest evolution is proving to be the most significant yet, with Forrester estimating that by 2017 as many as 78% of all US active email users (178 million) will access their messages through mobile email clients.
“We have had advancements in mobile operating systems like Android and iOS and the emergence of entire app ecosystems, so mobile is really the mega-trend of the decade,” says Miglani. “When you look at how smartphone subscribers spend their mobile internet time, we find that email has the highest share – people check email a lot on their mobile devices! And as advertisers, you want to tap into the user’s time, so if they are spending a lot of time on email, you want to be part of that.
“Given that, email marketers have to focus on making their messages easily seen on the mobile device for consumers. They have to make them easily readable, easily actionable and they have to make sure that the email size is right. So there are a lot of things that marketers have to do in order to target their user base effectively on the mobile.”
The explosion in mobile means that email marketers are now with their subscribers, clients and consumers 24/7, and that the emails are going to be read in different contexts and situations, whether waiting in a queue or walking down the street. The good news is that the timing of messages, which has always been a huge concern for email marketers, is becoming less of an issue, as consumers are able to access messages all times of the day. However, the other side of the coin is that marketers now need to understand their audience better than ever before, understand the context they may be reading the mails in, and give serious thought to modifying messages to take this into accordance.
“It has been demonstrated in reports and case studies that consumers on mobile are more responsive – some suggest you can get double the response rate from your mobile audience than from your desktop audience,” she says. “So if you do a good job with the optimisation of your email for your mobile and your landing page then you are likely to get an increase in uplift and conversions as well.”
But unsurprisingly, businesses will need to invest time and money to reap these benefits.
“As far as the actual logistics of creating these optimised emails, there is going to be a small investment, as far as redesigning these mails and getting them optimised,” Pay continues. “There are a couple of options. One is just to simplify the email altogether – email is only the vehicle, its purpose is to get the customer to the landing page where they are going to be converting (whether that is download a white paper or make a purchase), so it makes sense to have a nice simple mail. The other option, which is the ultimate solution at the moment, is to use a responsively designed email so that no matter what device they open the mail on they will be getting the properly designed one. So there is a lot of forethought and preparation needed to go into that, as well as investment.
“The other issue is that either your website needs to be fully optimised again using responsive design, or you follow suit on a landing page by landing page basis to ensure that the pages you’re driving traffic to is also optimised, because there is a real disconnect if you have a nice optimised email and then take customers through to a non-optimised landing page. So there is additional work and additional budget required but at the end of the day it is not huge and certainly not when you consider the benefits that you are going to be gaining from it.”
Integration with social media
The final mega-trend that is influencing email marketing is social media. Email marketers have for some time now been exploring how the integration of email and social media can deliver marketing success, and while it remains early days for most organisations, early results indicate that they could be a winning combination.
Miglani explains: “There are three kinds of media: we have paid media, which is charged, such as Sponsored Tweets and Facebook ads; owned media, which is all the landing pages and the white papers you own and the blogs you write; and earned media, which is the retweets and likes and comments you get. We believe that email helps you increase the statistics of your owned and earned media. You can provide the options for following you on Twitter or liking your Facebook page in your emails. And social also helps you increase your email database – having people like your Facebook page, you can ask them to sign up to your email newsletters.”
While email marketers have been largely frustrated in their efforts to see ‘forward to a friend’ ignite, social sharing is showing greater potential, with studies demonstrating the impact it could have. Recent analysis by GetResponse, for instance, suggests that newsletters that included social sharing buttons had an average click-through-rate 115% higher. So it is perhaps surprising that the number of businesses that include social sharing buttons in their emails is still relatively low.
“Social sharing isn’t taking off as much as we had originally predicted – ‘forward to a friend on steroids’ type of thing – but it’s becoming more of a part of everyone’s daily lives and we’re more trusting of it so there is some pick up,” says Pay.
For the most part, there is only partial integration of the two channels at present, rather than fully leveraging eachother to cross-pollinate into the other channel. Partly this is a result of a relative lack of maturity in the field, and partly this is due to the siloed approach that most organisations still operate with.
“Often email will have a team and social will have a team, so there is no unified view of the customer,” explains Miglani. “Everybody is managing their channels in silos and we don’t understand this emerging media right now, so getting a unified customer view and integrating email and social is a challenge.”
The downside of this is that there is repetition, says Pay. “You don’t want to be replicating the same content on the channels because if you have got the same audience then you want to be delivering unique content in each channel,” she says. “But this comes down to the fact that there are still silos – the social media silo and email marketing silo – and they don’t always talk to eachother. So ideally you need to get a strategy in place where you establish what value the email is delivering and what its objective is, and what value social is delivering and what its objective is – and these are two different things, yet they are using eachother to cross-pollinate. And the advantage of that is that you can be using your email to be promoting a competition you have got within your social media channel, and also social media should ideally have an email sign up.”
But Pay emphasises that early results demonstrate that the future of the two channels is to be “completely and utterly” integrated.
“Social has been around long enough for us to understand that it has a distinct purpose, and that isn’t necessarily for companies to be driving ROI, whereas email does that – so that’s why they tend to blend quite well together,” she continues. “It’s just a case of organisations identifying their objectives for each channel and making sure the strategies are different and that the content is different and ensuring there is little overlap.
“Some of the companies that are utilising them together are probably overlapping a little bit too much, and that is taking away the value of belonging to both of the channels – the user will think why should they belong to both. The challenge therefore is to break down those silos, have discussions internally, get that strategy working and then of course on a practical basis, remember that we are the email team and we have got a competition for social that we need to be promoting and cross-pollinating.”