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When Making Money Costs You Money

  |  April 25, 2012   |  Comments

When you base your ad sales solely on the size of your list, you not only paint yourself into a corner, you are destined for deliverability issues.

Last time I briefly talked about ad revenue-based business models.

While I am definitely not a big proponent of third-party advertising in email, a large number of marketers make their revenue, or at least a portion of it, through third-party advertising within their emails. When the ads are not intrusive or overwhelming, and your customers are made aware they will receive them when signing up, many have success with this method. However, when you base your ad sales solely on the size of your list, you not only paint yourself into a corner, you are destined for deliverability issues.

"But that's the way we've always done it…"

While I'm not knocking anyone for squeezing some extra revenue out of a few ads, I am warning you against being enticed by uniformed ad buyers who base buying decisions solely on list size. If you follow this path, list size will continue to grow while overall engagement goes down, ultimately leading you to the bulk folder - selling ads that will never be seen. While your list may be deliverable and ad dollars could roll in for a while, eventually the older inactive segments will start showing signs of spam traps. Once that happens, the list you have will be worth nothing if you can't get it delivered.

Apart from the deliverability concerns, if you base your pricing off the list size alone, you are selling yourself short. If ads are core to your business, then you should be selling them on list quality, not quantity. If you can show with hard data that your list is highly engaged, has excellent deliverability rates, click rates, etc., then you should be selling those ads for more money. This isn't print or skywriting. You know exactly how many people are reading each email and how often each ad is viewed or clicked. With this shift, your list size can shrink to a healthy engaged audience, while not losing any revenue. You'll want to think about and adjust your model, before the ad buyers eventually wise up and start negotiating pricing based on it.

If ad revenue is your only email revenue, then you might be fine with the old model for a bit longer. If you have target list size numbers to hit (regardless of quality) and short-term ad revenue is more important to you than your customers, then poor deliverability is not your issue. It's a side effect of your practices…although that is almost always the source of a deliverability issue. But if you do rely on email customers purchasing for revenue, then you are leaving money on the table. The inactive audience you use to sell ads to is prohibiting you from getting your message to your customer.

Some of you may be reading this and just don't buy it. OK…but don't say I didn't warn you when you finally hit that major blocklist and are forced to reconfirm your database to get off it. This can lead to losing a massive portion of your list and a crippling revenue loss, all because you painted yourself into that corner. Ultimately, you need to make your own decision on what is more important: ad revenue based purely on list volume or improved deliverability.

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Jay Brangiforte

Jay Brangiforte is a senior deliverability operations manager at e-Dialog. He has been with e-Dialog for five years, and is a graduate of the University of Massachusetts, Amherst and a member of MAAWG. Jay works with e-Dialog clients to help them implement best practices for privacy and deliverability.

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