Increase in E-Mail Marketing Could Mean Opportunity for Providers

With eMarketer estimating the spending on email marketing at $4.6 billion by 2003, Jupiter Research sees an opportunity for mail providers such as ISPs and portals who divide email into Post Office-type classes to separate the good stuff from the junk.

eMarketer’s “eMail Marketing Report” predicts that the combined expenditures of email marketing products, services, and email advertising will reach $4.6 billion by 2003, a 360 percent increase over 2000.

By 2003, the number of permission emails received per week will rise to 31 (from 12.8 in 2000), including those from companies/Web sites with whom they have relationships, opt-in lists, sponsored newsletters, and discussion groups.

“Currently, the average email users receives more than twice as many email messages as he pr she sends out,” said eMarketer Statsmaster Geoffrey Ramsey. “This is a result of the rapid adoption of permission-based email marketing and the wide transmission of opt-in lists.”

eMarketer also found that 61 percent of medium to large-sized companies in the US are currently implementing email marketing into their business strategies to market toward prospects and/or customers. Among direct marketers, 62 percent currently have email marketing capabilities, and an additional 23 percent said they are considering implementing email marketing by year-end 2000.

Other findings of eMarketer’s report include:

  • By year-end 2000, there were 96.6 million email users age 14 and older. This represents 43.8 percent of the total population of adults and teens.
  • US companies were projected to spend $496 million on email advertising by year-end 2000, a 177 percent increase from 1999.
  • Revenues from retention email are predicted to grow to $2.4 million by 2003, a 300 percent increase from year-end 2000.
  • Permission-based commercial email message volume was forecast to increase 60 percent by year-end 2000 to 64 billion, accounting for 12 percent of total volume.
  • Spam accounts for 10 percent of total email volume in the US.

All these large email marketing numbers can add up to opportunity, and new revenue streams for large portals, ISPs, and Web mail providers, according to a report by Jupiter Research. As email marketing proliferates, Jupiter projects that ISPs and email service providers will have approximately 5.6 billion email messages cross their networks for each 1 million subscribers by 2005. Additionally, Jupiter predicts that advertisers will send 268 billion email messages in 2005 — 22 times the number of promotional marketing emails sent in 2000.

“Internet email service providers control a crucial chokepoint between marketers and the millions of consumers they want to reach. As they restrict access to a user’s primary inbox and monetize the delivery of promotional email, advertisers looking to reach consumers online must prepare to pay a premium,” said Christopher Todd, analyst at Jupiter Research. “Although short-sighted marketers will view this as extortion, savvy marketers will recognize it as an opportunity to distance their messages from existing inbox clutter. Large portals, ISPs and other organizations that have a sizable email subscriber base will see it as a significant opportunity to generate additional revenue.”

Jupiter’s report predicts that the current free delivery of promotional email will evolve into a tier-based scenario that forces marketers to refine and focus their email strategies: Top Tie, profiled delivery into the primary inbox based on individual usage behavior; Second Tier, enhanced delivery into the primary inbox with enhanced fonts and icons to break through clutter; third tier, standard delivery direct to the primary inbox for marketers that compensate for access and for all personal or one-to-one email messages; and Bottom Tier, bulk delivery into a promotional “bulk” email inbox.

“On the consumer side, this may be end of spam as we know it,” Todd said. “Consumer email users will adopt and accept new delivery tiers as they realize increased efficacy within their primary inbox.”

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