Are Rented CPM Email Lists on the Way Out?

Third-party, opt-in email lists purchased on a CPM basis have questionable effectiveness. There, I said it. Actually, I didn’t say it. Six colleagues of mine who have extensive email marketing experience said it. Granted, this is not scientific research; it is just a focus group of six colleagues. And although I respect them all, none are recognized experts — no Seth Godins in the bunch. Nevertheless, they are all experienced email marketers that either serve a respected list of clients or work at reputable companies, and they all said essentially the same thing without any prompting. Groupthink didn’t play a role. These were separate conversations that started by my asking a simple question, “What’s going on in email marketing?” Now, before you start bombarding me with emails telling me how stupid I am, please read the rest of the column. Then you can start bombarding me with emails telling me I’m stupid.

Next week I’m speaking at the ClickZ Email Strategies Conference in San Francisco. So, I started calling some colleagues who are engrained in the world of email marketing to get their opinions on current topics within the industry. These individuals are experienced email marketers, all of them with traditional direct marketing experience. Some cut their teeth at direct retailers, others at companies selling financial newsletters. One was even in consumer marketing at CompuServe in the early 1990s — her boss used to tell her stop worrying about AOL, it is underfunded, mismanaged, and likely to go out of business within a year… but I digress.

My colleagues each told me a story about using email marketing as a customer acquisition vehicle, and they all sounded very similar. Each has lately seen declining response and conversion rates from third-party, opt-in email lists purchased on a CPM basis. Each recently executed customer acquisition campaigns using such lists and failed to reach the breakeven point, much less generate the expected return rate. Three said they’ll think twice before executing email customer-acquisition campaigns using CPM-based, third-party, opt-in email lists again. That’s the good news. Three said they have given up on these email lists altogether.

Each of my colleagues has always supported purchasing this type of list. The term “purchase” may be a misnomer. We’re not talking buying an Excel file of 10 million email addresses for $99. As is the standard practice among reputable third-party, opt-in email list providers, the “purchaser” never takes possession of the email addresses, and the emails are actually sent by the list provider.

My colleagues have in the past shied away from email lists sold on a cost-per-action (CPA) basis for two reasons. First, they believed the targeting capabilities associated with CPM lists provided them the opportunity to reach higher quality prospects. Second, they believed CPA lists were more likely to contain email addresses attained through questionable means and were fearful of having their client or company perceived as a purveyor of spam. Now they are rethinking their positions.

I found it hard to believe that the experience of my colleagues represents the experience of all marketers using third-party, opt-in email lists sold on a CPM basis. After all, the reputable list providers are established companies with professional management. If all marketers were having experiences similar to those of my colleagues, wouldn’t marketers stop buying email lists through the established list providers? Wouldn’t that put the reputable list brokers in a position of financial peril?

When I brought this up with my colleagues, two shared a single opinion. They believe the reputable list providers are diversifying their service offerings in an attempt to stem what my colleagues believe to be declining email list rentals. Specifically, they see established list brokers that made their names in acquisition email marketing offering email customer retention and email append services. Although the list providers position these new services as logical extensions of their existing businesses, my colleagues believe development of the new services means they’re reaching for new sources of revenue to replace that lost from declining email list rentals. Interesting theory, but neither colleague could offer any real proof to support the argument.

So, I want to give ClickZ readers a vehicle to share their thoughts on using CPM-based, third-party, opt-in email lists. Specifically, I want ClickZ readers who have experience with these lists to respond to the following questions through the feedback link below:

  1. Do your email acquisition campaigns using CPM-based, third-party, opt-in email lists achieve the breakeven point?

  2. Do your email acquisition campaigns using these lists achieve the expected return rate?
  3. If you answered yes to both the above questions, what type of service or product are you offering? Are you targeting businesses or consumers?
  4. Do you plan to use CPM-based, third-party, opt-in email lists for your customer acquisition programs in the future?
  5. Do you agree or disagree with my colleagues’ hypothesis?

I’m anxious to read your comments, even the ones that tell me I’m stupid.

Mark will speak at ClickZ Email Strategies in San Francisco, November 18-19.

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