Facebook's Custom Audiences technology will finally allow email to cross the chasm and join the ranks of advertising technologies and tactics recommended by advertising agencies.
While sending out an email has long been a great way to drive sales and traffic, the push nature of email has been a double-edged sword. Email marketing and advertising have relied on a dependable but limited model since its inception: the first-party-branded newsletter. The success of this one device - essentially a vanity magazine published hundreds of times a year - has fostered a profitable if isolated industry that has unintentionally ghettoized email marketing and kept it from being appreciated for what it really is: a fantastic advertising technology.
The reliance and limitations of the first-party brand newsletter holds email advertising back from the recognition it deserves. That's changing, and it's changing fast. But email marketers didn't figure out how to break out and cross the chasm, so who did?
Facebook. When Facebook released its Custom Audiences functionality earlier this year, it cracked the code for email marketing. What exactly did it do?
Facebook's implementation of Custom Audiences leverages the email address - or more precisely the MD5 hash of the email address - to finally allow retailers (and anyone who collects email addresses) to reach their subscribers outside their first-party-branded newsletters. This means that if you have a list of opt-in email addresses, you can "hash" them, load them into Facebook, and then run ads that are targeted only to your subscribers. That's pretty cool.
Custom Audiences technology will finally allow email to cross the chasm and join the ranks of advertising technologies and tactics recommended by advertising agencies. It's amazing it took so long. And Facebook isn't the only one doing this.
Why is this such a big deal? Email open rates, for one. The self-published opt-in email newsletter is very effective even though it is opened by - on average - maybe 10 to 12 percent of the audience it is sent to. More than 80 percent of the intended audience of a traditional retail email newsletter does not open it. Many people might open only one newsletter they get from a retailer every year. But as the etailers know, just making a purchase from the single newsletter is enough to justify sending 200 others to that same address that are never opened. The retail email newsletter expects a lot of wasted media.
What Custom Audiences does is totally different. Custom Audiences is open-centric. The technology leverages the hash of the email address used to log in to a site - in this case Facebook - to bid for and display an ad only to someone who is actually reading something, in this case a page on Facebook. This method is extremely precise and also allows email marketers to continue to use one of their favorite methods: segmenting.
Custom Audience campaigns can be run against segments so that, for example, you can target an ad to show only to people who are in your Golden Circle of best customers. Or it can be used for retention of customers whose contracts are about to come up. There are more practical applications that can be listed here.
Custom Audiences is not limited to Facebook. Email ad exchanges have been created in the past several years that allow retailers to do the same thing as in Facebook, but across a wider range of publishers. Even Twitter is getting into the game.
You've been collecting email addresses for years. Your open rates for your own newsletter have been lower than you'd like. Now your decision to collect addresses has been justified. The email address now sits at the intersection of ad tech and CRM. The email address is the simple device that crosses the chasm between offline and online. Pat yourself on the back.
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As president of LiveIntent, Dave Hendricks has overall responsibility for revenue, finance, legal, and operations. Prior to joining LiveIntent before its 2009 Series A, Dave was EVP of operations at PulsePoint (then known as Datran Media), where he worked with LiveIntent founder and CEO Matt Keiser and ran Datran's ESP StormPost. Before all that, Dave held senior roles at data management companies InfoUSA and Experian. A member of the founding executive team at ExperianCheetahMail, Dave began his email adventure at Pioneering ESP MessageMedia after running global partnerships for Oracle Corp. Dave was named one of Silicon Alley Insiders Top 100 technologists in 2011 and is active in several IAB Committees including Mobile and Email. Follow him on Twitter @davehendricks.
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