The Changing Landscape of Email Investment

  |  July 26, 2012   |  Comments

What a typical email marketing budget looked like five, seven, and 10 years ago, and where you should be making your email marketing investments. Part one in a two-part series.

I've been in the email business for over 10 years, and while not much has changed in our space, the last few years have seen a pretty dramatic shift in what was previously a simple and straightforward budget line item. A lot of the changes are due to an emergence of peripheral email developments (like smartphone consumption and social media adoption) and specialized email-focused companies as well as the more macro issue of email marketers getting more sophisticated and realizing a good email program absolutely requires more than just a delivery platform.

Let's look back at a typical email marketing budget from five, seven, or 10 years ago.

Delivery/software. This often was 100 percent of the budget of many marketers. Selecting an email service provider (ESP) was often seen as the one and only decision and requirement for success.

Deliverability/rendering. Companies like Return Path and Pivotal Veracity filled a void that email marketers continue to find needed - how do they ensure and measure emails get into their subscribers' inboxes?

Acquisition. A plethora of companies would gladly sell, rent, and help find new subscribers, often regardless of whether they provided permission or even knew who your company was. In an effort to grow small programs, this area of the budget often was the most focused on, yet most off the target. In many infamous charts from research providers, this line item often fell in the email advertising bucket, which misguided many observers.

One thing to note is that email budgets are often small, disproportionally small given email's significant return on investment (ROI). A 2009 study my agency did along with ExactTarget found that over 40 percent of clients stated they had $100,000 or less of their annual budget dedicated to email marketing.

emailbudget
Compensation and Resources Study via BrightWave Marketing, EmailStatCenter.com, and ExactTarget

As we evaluate the change in spend projected through 2016 we should note two things:

  1. Email is certainly not fading away, which many prognosticators have said ad nauseam. It continues to be the healthy heart of digital marketing.
  2. The "other" non-delivery areas of email are poised to gain significantly more of the email marketing spend than delivery. While all of the major ESPs have diversified and have largely strong businesses, this represents somewhat of a land grab for the key areas of email marketing services. Agencies (specialized and broad), tech startups, consulting firms, and the ESPs all have begun to make a play (or are noticeably absent from the space) for these other dollars. (Full disclosure: I started my company almost 10 years ago and have built the business on thriving in this particular part of the industry.)

forresterresearchusemailmarketingspend
Forrester Research, Inc. chart

In Part 2, I'll take a real look at what is changing on the email investment front and where the smart money is going.

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ABOUT THE AUTHOR

Simms Jenkins

Simms Jenkins is CEO of BrightWave Marketing, North America's leading email marketing-focused digital agency. The award-winning firm specializes in elevating email marketing and digital messaging programs that drive revenue, cut costs, and build relationships. Jenkins has led BrightWave Marketing in establishing a world-class client list including Affiliated Computer Service (A Xerox Company), Chick-fil-A, Cox Business, Phillips66, Porsche, and Southern Company. The agency was recently ranked among the fastest growing private companies by Inc. Magazine.

Jenkins was awarded the prestigious AMY 2010 Marketer of the Year from the American Marketing Association for being the top agency marketer and the Email Marketer of the Year at the Tech Marketing Awards held by the Technology Association of Georgia. Jenkins is regarded as one of the leading experts in the email marketing industry and is regularly cited by the media as such and called upon by the financial community to provide market insight and consulting.

Jenkins is the author of two definitive and highly regarded books on email marketing; The New Inbox (published in April 2013 by ClickZ/Incisive Media) and The Truth About Email Marketing (published by Pearson's Financial Times Press in 2008). Jenkins is currently the Email Marketing Best Practices Columnist for ClickZ, the largest resource of interactive marketing news and commentary in the world, online or off. His industry articles have been called one of the top 21 information sources for email marketers.

He has been featured in Fortune Magazine, The Wall Street Journal, Adweek, Bloomberg TV, Wired Magazine, and scores of other leading publications and media outlets. Jenkins is a regular speaker at major digital industry and general business conferences.

Additionally, Jenkins is the creator of EmailStatCenter.com and SocialStatCenter.com, the leading authorities on email and social media metrics. Prior to founding BrightWave Marketing, Jenkins headed the CRM group at Cox Interactive Media.

Jenkins serves on the eMarketing Association's Board of Advisors among other civic and professional boards. He is also a mentor at Flashpoint, a Georgia Tech-based startup accelerator program. Jenkins is a graduate of Denison University in Granville, Ohio and resides in Atlanta's Buckhead neighborhood with his wife and three children.

Follow and connect with Simms on Twitter, LinkedIn, Facebook, The BrightWave Blog, and his book websites at NewInboxBook.com and SimmsJenkins.com.

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