The commercial email market will soar to an estimated $7.3 billion in 2005, cannibalizing direct mail revenues by 13 percent, according to research by Jupiter Communications.
Jupiter’s research indicates that US consumers will see an estimated forty-fold increase in email volume because email is a cost-effective and high-response rate vehicle by which to acquire and retain consumers, sell and promote products, drive loyalty, and reinforce branding efforts. In fact, many Internet commerce and content ventures have made email the must-have communications vehicle. Because of the swift time-to-market and the strong return on investment (ROI) of email, Jupiter estimates that commercial email spending will grow from $164 million in 1999 to $7.3 billion in 2005.
The expected increase in the volume of email will strain consumers’ attention span, according to Jupiter. The average number of commercial email messages that US online consumers receive per year will increase from 40 in 1999 to more than 1,600 in 2005; non-marketing and personal correspondence will more than double from approximately 1,750 in 1999 to almost 4,000 in 2005. As competition for consumers’ attention rises, companies face two challenges: maintaining a high response rate and maintaining a high-quality dialogue with consumers.
“Businesses are beginning to perceive email marketing as the silver bullet for acquisition and retention strategies; it’s fast, cost-effective, and provides immediate feedback,” said Michelle Slack, senior analyst with Jupiter. “As a result, the volume of opt-in commercial emails continues to rise at a furious pace. However, consumers will not have the resources or tolerance to maintain the high response rates that are driving businesses to email in the first place. Businesses must focus on delivering value from the first email contact, because opt-out is just a click away.”
Jupiter’s research found that businesses can increase the value of their email marketing to consumers by integration across media, channels, and data. The report also advised that companies maintain message consistency across all media. The tone and message of email should reflect the look and feel of print, banner, and broadcast campaigns. A Jupiter/NFO survey found that 49 percent of online consumers surveyed said that they were more likely to respond to an email marketing message if they had seen an ad or commercial for the company or product recently.
|Type of Sites That Send Marketing E-Mail
|Computers & electronics
|Fashion & style
|Collectibles & hobbies
|Toys, games, & entertainment
|Travel & entertainment
|Source: ActivMedia Research
One of the biggest challenges that businesses face in email marketing, according to Jupiter, is growing their internal email contact database effectively. Companies must realize that they have to leverage all available channels–Web, phone, and retail–to capture email addresses from consumers. Marketers must integrate email collection efforts into all points of contact with consumers aggressively, both online and offline.
In order to provide valuable communications to consumers and maintain a high response rate,businesses mustalso capitalize on the closed-loop environment that email provides by integrating all available data, according to Jupiter. In order to maximize marketing intelligence and improve content messaging to targeted audiences, businesses must leverage and feed back into email efforts as much consumer data as possible, including response rates, purchasing behavior, and demographic data.
A survey of 2,500 online shoppers by ActivMedia found that 43 percent said email was an “important” factor in their most recent purchase. Less than half (43 percent) said the site periodically emails them to stay in touch and make special offers.
Jupiter’s research also revealed that 65 percent of companies are spending between 1 and 5 percent of their marketing budgets on email marketing; an additional 22 percent are spending in excess of 5 percent. And with businesses shifting their communications strategies to take advantage of the efficiencies of email marketing, Jupiter predicts that email will cannibalize 13 percent of direct mail revenues by 2005.
According to Slack, almost 60 percent of email users have the ability to receive HMTL email, which gets twice the response rate as text email. The only exception being highly targeted, individualized HTML emails that see a similar response to text email.