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Use Third-Party Lists With Caution

  |  October 27, 2000   |  Comments

Richard is a man with a mission. And that mission is to spare other small-business owners some of the hard lessons he's learned over the past five years. Email marketing is a great tool for the small-business owner -- he's not knocking it. But just how effective are third-party lists for an email advertising campaign?

I feel like part of my responsibility in writing this column each week is to be the industry cynic for all small-business owners out there, to use my experience to help you avoid the mistakes I've made over the past five years.

This week I'm cynical about small businesses buying opt-in email list advertising from outfits like PostMasterDirect, YesMail, BulletMail, and the like. These lists are compiled by getting people like you and me to sign up to receive email solicitations on specific subjects. Sometimes you and I sign up by going directly to these providers' sites. Other times, we sign up through affiliate partner sites. (Take note of this. It will be important later.)

So think of the whole shebang like the electronic version of direct mail.

But email marketing comes with its own problems, and no one ever seems to talk about them.

  1. My email inbox doesn't have a physical limit, but I have a mental limit.

    We can read only so many messages per day. And since email is the primary way many of us communicate for business purposes, that email will take precedence. And we already get too much business email to go through in an 8-hour day (or, for many of us, a 12-hour day). So where do you think that leaves most direct email advertising? That's right, in the virtual trash.

  2. The first marketer of the day to send his or her message to a third-party list gets a better response than what the last marketer of the day gets.

    When you send a mailing to a list put together by one of these list-provider companies, you have no idea how many other advertising messages arrived before or after yours. Was yours the first mailing today or the 100th? Don't let someone try to tell you there is no difference in response between the first mailing of the day to an email address and the last.

  3. There is a wide margin between the number of people who opt in for a list and the number of people who actually open email messages they receive as a result.

    They may have a list of 10,000 "double opt-in" people, and that is surely what you're charged for, but the actual number of those people who open an email message is far less. With text email, it is impossible to see when someone actually opened the mailing. But privately, I have seen open rates of some HTML email mailings (where you can know when someone opened the message) and have been shocked at how low they were. So if 75 percent of the people you mail to don't ever open the email, it's the same as never sending them the email in the first place. But it increases your costs 300 percent because you are still paying for the impressions.

  4. Relationship of recipient to sender is the single most important factor in getting the recipient to open the message.

    Regardless of how targeted the list, how well written the copy, or how pretty the Flash animation, all emails are equal when they arrive in someone's inbox. That's because all you ever see of an email message before you open it is the subject line and who it's from. Those are the two pieces of data on which you decide whether or not to open and read further. Third-party list providers don't usually send your emails out under their name; they send it out under yours. But the people who gave their email addresses have a relationship with the third-party list provider; that is who they signed up with, not you. They don't know who you are, and your response rate is depressed as a result.

  5. Double-digit response rates in email campaigns are from in-house lists, not third-party lists.

    I don't know of any third-party list provider who brags of double-digit response rates anymore. Direct email advertising is no longer the novelty it once was. When you hear of double-digit response rates in email campaigns, that is from people who send to their in-house email list. That is where the action is.

Next week I'm going to talk about affordably managing your own in-house list: how to build it and what to mail to it.

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Richard Hoy

After five years of telling others about how to spend their marketing budget online, Richard Hoy recently left the employ of this influential publication to see if what he's been blabbing with his big fat mouth all these years really works. He is President and Co-founder of Booklocker.com Inc., an alternative to traditional publishing that helps authors realize profits of up to 70 percent of sales by combining electronic publishing with Internet marketing.

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