Many of the inquiries I receive for consulting help are from organizations looking to use third-party lists rather than their own house lists. Successfully marketing to third-party lists is more challenging than marketing to your house list for a number of reasons. Here are a few tips to help.
First, why is it more challenging? It's primarily because you have the extra variable of an unknown list. The quality of the list is the primary factor in the success or failure of a campaign.
A general rule of thumb is to expect a third-party list to perform, at best, half as well as your own house list. In my personal experience, I've only had one client who was able to make third-party lists work better than their own house list; and in this case, it was because their house list wasn't very good to begin with.
Marketing to a third-party list is also more expensive than marketing to your own house list, so you also have additional cost, which you need to cover with sales to break even.
Many small organizations get taken in by companies offering cheap third-party lists. First tip: don't fall into this trap! In email list rental, you get what you pay for and very cheap lists rarely perform well, if at all. Here is the latest data on average list rental prices:
The good news is that list rental prices have been decreasing quarter-over-quarter, so third-party campaigns are less expensive than they used to be. But you should still proceed with caution.
When you're vetting lists you obviously want to look to match, as closely as you can within reason, your target audience description. But that's just the beginning.
You also want to look at how the names were gathered and what branding will appear in the "from line" and in the email itself.
Permission-based lists tend to perform better than aggregated or compiled lists. The best permission-based lists include lists of association members and publication subscriber lists; the key here is that the reader has a relationship with the list owner.
Be cautious of "permission-based" lists where that relationship is weak or non-existent. This would include lists where subscribers were offered a large incentive ("Enter to Win a Brand New Jaguar") to sign up, but where they have no real ongoing relationship with the list owner.
Aggregated or compiled lists are built by pulling names from directories, websites, and various other sources; in this case, the company offering the list has no relationship with the recipients. Typically performance on these lists is much less than with permission-based lists; that said, they can be successful in some instances.
Many organizations renting permission-based lists offer "sponsored" email sends. This means that the "from line" of the email will state that it comes from the organization the recipient has a relationship with (not from you). They often also co-brand the body of the email, with their logo and name as well as yours. Typically you'll see higher open rates as a result; you also have a better chance of getting recipients to at least skim the content.
After this, it's all about whether or not your message resonates with the reader. But at least with a sponsored email you have a higher likelihood of getting your message looked at.
Organizations offering aggregated lists don't typically include their branding in the subject line or in the body of the email. They are required, under law, to include their own unsubscribe mechanism, but this is typically in fine print at the bottom of the email. Since it's at the very bottom and since the organization doesn't have a relationship with the reader, this isn't going to help you get her attention.
If you're just beginning your third-party email marketing adventure, you don't need to choose just one list; you need at least three. As I mentioned above, performance of third-party lists is unpredictable. You want to wade in slowly by choosing at least three lists and testing small quantities of each. This gives you a higher likelihood of finding at least one list that will perform well enough to roll out on.
Even if you have the budget to rent one million names, start small. Choose three to five lists and rent 20,000 names from each. Mail those and see which list(s) perform to break even or better. Then you can use your remaining budget to do a larger quantity send to this (or these) list(s).
I find that a test mailing to 20,000 has a high likelihood of delivering a statistically significant result. Can you test with fewer names? Yes. But your results may not be statistically significant.
One more note: many permission-based lists offer a list select option that they call "hotlines." When you ask for a hotline, you're asking the list owner to include the most recent names added to their list that also match your other criteria. Hotline names tend to perform better than the overall lists, since new subscribers are much more likely to open and click on email.
Hotlines are great for testing, since they have a high likelihood of response. While you'll need to adjust your projections down a bit for a full send, testing with a hotline is another way to help ensure that you'll come out of your test with at least one list worth rolling out on.
So if you're thinking of wading into third-party email marketing, try these tips and let me know how it goes!
Until next time,
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Jeanne Jennings is a 20 year veteran of the online/email marketing industry, having started her career with CompuServe in the late 1980s. As Vice President of Global Strategic Services for Alchemy Worx, Jennings helps organizations become more effective and more profitable online. Previously Jennings ran her own email marketing consultancy with a focus on strategy; clients included AARP, Hasbro, Scholastic, Verizon and Weight Watchers International. Want to learn more? Check out her blog.
December 12, 2013
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