E-Mail Append: Opt-In or -Out?

If you do email marketing, chances are you’ve been approached by a vendor offering email append services. For those unfamiliar with email address appending, The Direct Marketing Association’s (DMA’s) definition:

E-mail address appending is the process of adding a consumer’s email address to that consumer’s record. The email address is obtained by matching those records from the marketer’s database against a third-party database to produce a corresponding email address.

A few years ago, I wrote a column on email appending. It was a hot topic at the time, and it remains one. I just helped a client evaluate proposals from some email append vendors and was surprised how little had changed from a few years ago.

How appends are marketed has always been one of my pet peeves. The focus is on quantity, not quality. Vendors will quote “match rates,” the number of new email addresses you’ll get. But they don’t talk about how those email addresses will perform, in other words, their quality.

Get explicit opt-in from your appended email addresses. Opt-in assures the people you’re sending to want to hear from you and hence boosts list quality. This is a dramatic departure from the opt-out process most append vendors adhere to, in which they assume anyone who doesn’t respond wants to hear from you.

Most vendors have different pricing structures for opt-in and -out. Opt-out addresses can cost $0.06 to $0.20 per email address, while opt-ins often run $2.50 to $4.00 per address. The work involved for the append vendor is the same for opt-in and opt-out; the difference is how many email addresses you walk away with and what level of permission you receive from them. An opt-in process provides fewer names with a higher permission level; an opt-out process returns more names with a lower permission level.

It’s interesting to see the rates vendors quote. On an opt-out process, most state up to 25 percent of the gross email addresses they match will opt out. For an opt-in process, the standard quote is 2 percent or less will opt in. If these hold true and the initial gross match returns 1 million email addresses, an opt-out process will net at least 750,000 addresses; an opt-in process would net only 20,000.

At $0.20 per name, the appended opt-out list of 750,000 will cost you $150,000; the 20,000 appended opt-in names, at $4.00 per name, would cost $80,000. This is where the quantity argument kicks into high gear. Sure, you pay more than twice as much for opt-out names, but you get more than 30 times as many names.

But wait. Consider how they may perform. If the append vendor is right and only about 2 percent of the gross list will be interested enough to respond to your opt-in, with the rest not responding at all, what makes you think future sends to this list will be any different? Shouldn’t we expect that 2 percent to be responsive in the future — and the other 98 percent to be non-responsive? You can talk about different offers, different creative, and so forth, but the list is a critical factor in any email campaign’s success. Even if they’re your current customers, they won’t necessarily respond to your email.

And there’s a cost to each send. If you pay a $5 CPM (define) to your email service provider, mailing the list of 20,000 opt-in email addresses will cost $100; the opt-out list will cost $3,750. A big difference, especially if we assume 98 percent of the large list will be non-responsive. You’d need to get a much larger revenue stream out of the larger list to break even, which is unlikely since the same core of 20,000 are your best bets for response in both cases.

I’ve seen appended email addresses not respond at all for too many clients. We identify a list segment that’s performing poorly or not responding at all, and research shows they’re appended names. It doesn’t matter whether they’re your customers, there’s still a good chance they won’t respond if they don’t opt in.

Using this reasoning, the 20,000 opt-in email addresses are a far better value than the 750,000 opt-out email addresses. But even if you choose the opt-in list, I’m not sure appending makes sense.

That $80,000 isn’t an insignificant amount of money. There are other ways to get email addresses. How much would a direct mail postcard to your house list cost? Or a note inviting people to opt in added to a bill, print newsletter, or other direct mail piece you’re already sending? Appending isn’t the only game in town. It’s important to look at other ways to get the email addresses… and the opt-ins. Rarely is appending the most cost-effective way to go.

Why is appending still so popular? It’s viewed as a quick fix, a way to instantly start an email marketing program. But as with many quick fixes, something’s lost in the process. In this case, it’s the response. And an email marketing program without significant return on investment is just an additional expense for your organization.

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

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