The Series B round for Witherspoon’s Draper James brand was led by San Francisco-based Forerunner Ventures.
Consumers are inundated with e-mail marketing
Smart marketers know how to get their messages opened.
There’s no doubt that today’s e-mailboxes are getting as full as home mailboxes with marketing offers. Last year, 300 billion e-mail messages moved across the Internet-50% more than all the mail delivered by the U.S. Postal Service-and 17% were marketing offers, says New York City-based researchers The Winterberry Group. That number will grow to 600 million in 2005.
The proportion of e-mail marketing messages will more than double to 40% in 2005, Winterberry predicts. That means marketing messages will grow from 51 billion last year to 240 billion in three years-a near quintupling of marketing messages while overall messages double.
It’s no wonder that consumers are getting jaded about e-mail marketing. And so, many marketers are getting the word that consumers respond better to marketing messages from someone they know and trust. As a result, the portion of opt-in e-mail messages is growing. Already 10% of e-mail messages are opt-in messages, Winterberry estimates. That will grow to 25% in 2005. “E-mail users continue to make a clear distinction between their disdain for e-mail from companies with which they have no relationships and the value they find in e-mail from companies with which they have entered into permission relationships,” says Winterberry’s report “E-Mail Marketing: Robust Growth in a Consolidating Industry” that came out in December. “Permission, thus, is not a passing fad but will continue to be a condition to which marketers must adhere in order to make e-mail an effective marketing tool.”
Indeed, say companies that help e-mail marketers crack the code in getting the right e-mail to the right prospect at the right time, that concern will only grow. Consumers, who receive on average 7.5 e-mail messages a day, are sensitive to the volume of e-mails because they pay for the privilege of receiving e-mails. “There’s personal ownership of that e-mail space,” says Karen Talavera, vice president of marketing for Chicago-based MarketsOnDemand, which offers a suite of marketing services to retail and other industries. “It doesn’t cost the sender a whole lot to send e-mail messages, but it does cost the recipient time and money to receive them.”
What is sensitivity today could grow to outright animosity as the cost of owning an e-mailbox goes up, she says. A number of services that today offer unlimited e-mail capacity are restricting use and charging for greater capacity. A basic fee will get the user only so much space and anyone who logs on to find a mailbox full of marketing messages while letters from friends and relatives are getting bounced back will surely not feel favorably toward the companies who clogged the box. “Legitimate marketers, if they want to get a response and not get in trouble with consumers, better ask for permission,” Talavera says.
Sending messages only to opt-in consumers is one way that vendors of e-mail marketing services address the issue of making sure customers open their e-mail messages. Another approach is that followed by New York-based 24/7 Real Media Inc., which also targets retail and other industries with marketing services. 24/7 Real Media is creating a brand name in marketing so when consumers see messages coming from 24/7 Real Media, they will trust the brand and view the message. It is similar to the aura that TV networks or well established large consumer publications have created around their brands and the credibility consumers afford them when they view marketing in those media. “Our goal is to build a strong brand with consumers; we believe that will reduce opt-outs,” says Will Tifft, senior vice president and general manager of the mail and network product marketing divisions of 24/7 Real Media. “People will have a high level of confidence when they see a message from us that it’s quality.”
Vendors also are encouraging clients to dovetail e-mail marketing programs with traditional direct mail. “The mindset with our company is that e-mail should be a regular part of the marketing mix,” Talavera says. “It’s part of any customer acquisition and retention program.” To create lists that allow retailers to market via e-mail and direct mail, MarketsOnDemand offers a new e-mail append service, in which it will find and attach e-mail addresses for all customers of a retailer. “Some retailers have databases of millions of customers who have done business with them for decades, but it’s often difficult to get a critical mass of e-mail addresses for those customers,” she says.
The best way merchants have of getting e-mail addresses on their own is to encourage their customers to visit their web sites and register. It is therefore crucial that retailers provide value to customers for registering at a site. “The more value customers perceive they are getting at a site, the more likely they are to register and the more information they will provide,” Talavera says.
But she notes site registration will get only a portion of customers. “They’ll never get 100% of their offline customers to come to the web site,” she says. MarketsOnDemand can match the retailer’s customer database with other databases to connect customers with e-mail addresses at an average cost of 50 cents per name. Underscoring the importance of MarketsOnDemand’s commitment to opt-in e-mail marketing, Talavera notes, “We’ll do it only for marketers who want to append e-mails to their own customer lists. We won’t append to just any old list.”
Evidence that appending e-mail addresses to customer lists results in marketing that customers pay attention to comes from the success that Overtons, a boating supplies retailer, experienced with MarketsOnDemand’s e-mail append service. Open rates for e-mail messages from Overtons to customers averaged 15% and were as high as 25%. Click-through rates averaged 5% and opt-out rates were under 2%.