Marketing to Third-Party E-mail Lists, Part 1

More of my clients are dabbling in third-party e-mail marketing as a way to grow their in-house lists and broaden their reach, for two very good reasons:

• The average cost of renting third-party lists is decreasing.
• The average CTR (define) on e-mail to third-party lists is increasing.

Today, I’ll talk about both of these industry trends and provide some tips for reading data cards and choosing lists. Next time, I’ll delve into the best way to begin a third-party e-mail marketing program, including how to ramp up quickly with list and creative tests.

While business-to-business (B2B) lists remain the most expensive ones you can rent, online or off-, they are less expensive than they were a year ago. A B2B list today averages at a $287 CPM (define), a decrease of $2, or 0.69 percent, from last year’s $289 CPM, according to Worldata’s Winter 2008 Price Index, which credits an increase of B2B lists on the market with creating more choices for renters and downward pressure on prices.

Business-to-consumer (B2C) lists continue to be more affordable than their B2B counterparts, with Worldata quoting an average CPM of $135. This is $3 less than last year, which translates into a 2.17 percent decrease, the largest year-over-year price drop in the report.

Average CTRs for third-party e-mail lists in 2007 were 4.3 percent for B2B lists and 2.5 percent for B2C lists, compared to 4.1 percent and 2.3 percent, respectively, in 2006. This is according to a MarketingSherpa benchmark survey. No data were reported for conversions, so you’ll want to use some assumptions about those to project your potential ROI (define).

The list can make or break your marketing efforts. Even the best offer, creative, and deliverability won’t result in a successful return if the people on the list aren’t interested in your product or service.

The third-party e-mail list market has historically been plagued with a dark side: organizations that offer lists of questionable quality for rock-bottom prices. The best way to steer clear of these bad players is to work with a legitimate list brokerage firm. Many of the traditional brokers offering offline direct mail lists (read: U.S. Postal Service addresses) now also offer e-mail lists. My favorite online database of third-party lists is managed by Edith Roman, whose ePost Direct group specializes in e-mail lists. Once you register with the site (it’s free), you get full access to search their data cards, which provide information about lists available for rent.

Any marketer who has experience with offline direct mail knows how to read a data card. But I’m finding that many of my e-mail marketing clients aren’t as familiar. Here’s a sample data card:

click to enlarge

The top left of the data card is where you’ll find the name of the list as well as information on quantities. In the sample above, the list has just over 164,000 e-mail address records on it. Also up in the top left: cost. You can see that the cost of renting these e-mail addresses is $275/M, or $275 per thousand names.

Underneath this section, you’ll see transmission fees, since the owner or broker will be sending your e-mail creative to the list on your behalf. This is standard in the world of legitimate third-party list rentals; it’s a way to protect the list integrity. In this case, you’ll pay an additional $95 CPM for text e-mail sent, and $115 CPM for HTML e-mail. This is in addition to the $275 CPM fee to rent the list.

The paragraphs following the quantities and fees talk about how the list was developed and who you’d be reaching should you decide to rent it. In this case, the card provides industries as well as job titles and publication names. The key questions here are: Does this description match the audience you’re targeting? Are these people who would be interested in what you’re offering?

The “Media” section in the right column also ties into this: it gives you a brief description of how the list was built. In this case, the list is “100% controlled circulation,” meaning that members have to fill out a form with information about their job title and responsibilities, and if they qualify, they receive a magazine subscription (for free) and are added to the list.

Another term you may see on a rate card is “compiled,” which means the names were pulled from directories or other sources. In general, compiled lists tend to perform less well than lists built via controlled circulation or other methods where the person on the list has a relationship with the list owner.

The remainder of the left column is devoted to “Additional Selections,” or “selects.” The first few selects listed here are additional items or services you may want. Open-rate reporting and personalization are provided at no cost here. The same is true for A/B split testing, where you randomly split the list in half and send one version of creative to one half of the list and a different version to the other half.

If you want to do a test with three or more cells, splitting the list in three or more random parts, there’s an additional charge of $100 per cell. There is also a cost if you want to suppress names from the file, which would allow you to remove, before the send, the names of your current customers or people already on your house list. Suppression is a good idea; it keeps you from paying money to reach people you already have a relationship with.

The remainder of this section includes parameters you can use to further define which names on the file you want to rent. This database offers a wealth of selects in the area of industry, job title, type of products (“Product Specified”) the contact has expressed interest in and employee size. The quantity of each select is listed as well, so you know how many names are available in each area.

The cost of each select is listed in the right column under “Selections”; for the most part, you will pay an additional $15 per thousand for each select you choose (and you can choose more than one).

The “Minimum Order” in the right column is just want the title suggestions: the minimum number of names you can rent.

Let’s build a list order based on the information in this data card:

Item	Description	Maximum Possible Quantity	CPM ($)
List	E-mail	164,402	275
Transmission	HTML	N/A	115
Select	Job title: personnel	27,630	15
Select	Employee size: 500-999	6,046	15
Select	Employee size: 1,000+	11,796	15
Total*		17,842	435

As you can see, the base cost of the list ($275 CPM) is only the beginning. When you add in transmission and select fees, it grows quickly to $435 CPM.

In this example, our total* — the potential maximum list quantity — is driven by our employee size selects, where we’ve said we want all firms with 500 or more employees (6,046 + 11,796 = 17,842). Our actual final list quantity may be less than this, when only those whose job titles are in the personnel area, our other select, are included. So let’s assume the final list quantity is an even 10,000. At a CPM of $435, that would result in a total list cost of $4,350.

Next time, I’ll delve into the best way to get started with third-party e-mail marketing. In the meantime, feel free to do some initial research on third-party lists that might be a fit for your organization and let me know how it goes.

Until next time,

Jeanne

Want more e-mail marketing information? ClickZ E-Mail Reference is an archive of all our e-mail columns, organized by topic.