April 1, 2005, 12:00 AM

E-Mail Marketing Survey

In the second of a series, Internet Retailer’s E-mail Marketing Survey tracks what works and doesn’t in e-mail marketing

On the surface, e-mail marketing has a lot of strikes against it. There`s the controversy over spam and the new regulations against it. There`s the widely held belief that legitimate e-mail promotions are lost in a blizzard of illegitimate e-blasting and are therefore less effective than they once were. And a new Internet Retailer survey of e-retailers shows that the overwhelming majority online merchants--71% to be exact--attribute less than 10% of their retail web sales to the e-mail marketing they do.

Nonetheless, that same survey shows that 68% of e-retailers are doing more e-mail marketing this year than the year before and the majority of those surveyed believe e-mail marketing is as or more effective than other forms of web site marketing. The explanation for this dichotomy appears to be found in the fact that e-mail is seen as an extremely effective way of communicating with online shoppers, even if that communication does not result in a sale that can be attributed to an online sale. Furthermore, the low cost of e-mail marketing makes it an extremely "effective" sales generator measured in terms of return on investment, if not in absolute sales.

The survey is the second in a new series of web-based surveys on e-retailing that Internet Retailer is conducting in partnership with Web Surveyor, which provides the web-based survey solution used to conduct the surveys and tally the answers of all respondents. Participation in the e-mail marketing survey was offered in the first week of March to all 32,000 opt-in subscribers of IRNewsLink, Internet Retailer`s daily e-mail newsletter. Fully 355 subscribers, or slightly more than 1% of IRN`s subscriber base, spent the three minutes necessary to answer the survey`s 15 questions and submit them. All individual responses to Internet Retailer`s e-retail surveys are strictly confidential and are not distributed; only the summary results are published.

Those responding to the survey on e-mail marketing proportionately represent a broad cross section of the web-based retailing industry--and least on the basis of size--and as such the survey fairly reflects the prevailing attitudes on e-mail marketing held by all online merchants. Slightly more than 13% of respondents operate retail sites with more than $25 million in annual sales, 25% have annual online sales between $4 and $25 million, 17% between $1 and $3 million and the remaining 45% have web sales of under $1 million.

Despite the fact that their promotional e-mails must rise above an ever growing amount of spam to get noticed and despite their belief that e-mail marketing generates a small percentage of their online sales, the majority of those surveyed are stepping up their e-mail marketing this year for two related reasons: their retail web businesses and Internet customer bases are growing and e-mail offers perhaps the best means for communicating with online shoppers. Fully 38% of respondents who are expanding their e-mail marketing say they are doing so in response to the growth of their online retail businesses, and nearly the same percentage attribute their e-mail marketing expansion as an effort to establish a closer relationship with online shoppers.

The commitment to expanding e-mail marketing varies depending on the size of e-retail businesses that respondents oversee. Clearly, larger e-retailers are ramping up their e-mail programs faster than the smaller online merchants. For example, 82% of online merchants with annual web sales in excess of $25 million report they are expanding their e-mail marketing programs this year. That figure drops to about 60% for e-retailers with web sales under $3 million. And the number one reason provided by the bigger e-retailers for expanding e-mail marketing programs is the rapid growth of their retail web operations. By comparison, 46% of merchants with online sales under $1 million say their expansion of e-mail marketing is an effort to stay in closer touch with customers--making that easily the primary reason small e-retailers cite for their expansion of e-mail marketing.

Just as significant as the two main reasons given by e-retailers for the growth of their e-mail marketing programs are the reasons that are rarely cited for e-mail expansion. Only 2% of respondents who are e-mailing more this year give as their reason the desire to get noticed above the spam, and another 2% say they are e-mailing more because they are attempting to overcome declining response rates. And only 9% who are e-mailing more this year say they are doing so because e-mail is more effective than other methods of marketing their retail web sites.

The growth of spam and the legal risks of spamming are affecting those 13% of survey respondents who report that they have cut back their e-mail marketing this year. Among that group, about a third explain their e-mail cutbacks as a response to declining e-mail response rates that they attribute directly to the growth of spamming. And another 24% of those cutting back e-mail marketing this year report doing so out of fears of the legal risks associated with spamming.

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