Where did marketers go after their 2001 traditional advertising budgets were decimated? To their customers’ inboxes, according to a Direct Marketing Association (DMA) report that queried nearly 700 companies involved in direct and interactive marketing. In 2001, many marketers were on the lookout for cost-effective methods to retain customers and boost sales and those that chose email were met with success.
“E-mail marketing, facilitated by new technologies and driven by the challenging economy, is now reaching a stage of maturation and playing a greater role in direct marketing,” said H. Robert Wientzen, president and CEO, The DMA. “Increasingly, email marketing campaigns are being used as an important retention tool, in many cases offsetting more costly traditional channels.”
The report indicates that two-thirds (66 percent) of respondents reported overall increased sales in 2001 as a result of email marketing promotions, with the average increase being 52.4 percent. Medium-sized companies reported the best results (59.8 percent), compared to small (42.6 percent) and large-sized companies (47.1 percent).
Respondents that invested only 13 percent of their total 2001 marketing budget indicated that email promotions not only improved customer retention, but also generated 15 percent of total net interactive sales. More than six-in-ten (63 percent) respondents found email marketing to be the most effective promotional method to retain customers. However, only 37 percent indicated that email is an effective customer acquisition tool.
Smaller companies reported that they allocated the highest percentage of their marketing budget to email marketing (21.4 percent) compared to medium-sized (7.0 percent) and large-sized companies (13.4 percent). Smaller companies also reported that the largest percentage of their 2001 net interactive sales were derived from email based promotions (21.4 percent on average), compared to medium-sized companies (7 percent) and larger companies (13.4 percent).
The study found that 80 percent of email based promotions were text and 66 percent were HTML, with results showing that the use of text and HTML increased in conjunction with a company’s size. Nearly two-thirds of respondents indicated they have the ability to manage their email technology in-house.
Direct click-throughs were cited as being used by more medium-sized companies (70 percent) and large-sized companies (68 percent), while unique links were used most often by medium-sized companies to measure effectiveness. Two-thirds (66 percent) of respondents indicated they rely on direct click-throughs, unique links (54 percent), and embedded HTML code (40 percent) to track the effectiveness of email marketing campaigns.
Not only does email marketing have a pronounced effect on sales but online advertising overall seems to make a positive impact, too. A study by Information Resources, Inc. (IRI) and DoubleClick Inc. shows that online advertising can positively influence consumer perceptions of brands and increase offline sales by an average of 6.6 percent for major consumer packaged goods (CPG).
The study mapped the impact of Internet advertising throughout the consumer purchase decision process, finding growth in brand awareness, message recall and sales that was incremental to the base levels achieved through TV, radio and print advertising. The sales lift resulting from online advertising ranged from flat for two brands up to a remarkable 22.5 percent* for a brand with a new line extension.
“Not only does this research dispel the notion that people ignore banner ads, but it shows that online advertising can impact the most important measure – sales,” said Brian Murphy, senior vice president, IRI. “This research should shift the debate from ‘does it work’ to ‘how can we maximize the impact and ROI of Internet advertising within the marketing communications mix?'”
The joint study was conducted on eight brands from five leading manufacturers. Participating brands represent beauty care, personal care, laundry products, beverages, frozen foods, confectionery products and culinary product categories. Half of the brands achieved statistically significant increases in unaided brand awareness, ranging from 1.8 percent to 23.9 percent depending upon the ad impact, ad frequency and base awareness level. Six of the eight brands achieved significant growth in aided message recall. “Building from these sales and branding metrics, we were able to construct an ROI model to help marketers put the results in perspective and craft a stronger online strategy,” added Murphy.
* Sales increases based on consumers who were exposed to the online ads, i.e., 100 percent reach and median frequency of five exposures.
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