I’ve been in the email business for over 10 years, and while not much has changed in our space, the last few years have seen a pretty dramatic shift in what was previously a simple and straightforward budget line item. A lot of the changes are due to an emergence of peripheral email developments (like smartphone consumption and social media adoption) and specialized email-focused companies as well as the more macro issue of email marketers getting more sophisticated and realizing a good email program absolutely requires more than just a delivery platform.
Let’s look back at a typical email marketing budget from five, seven, or 10 years ago.
Delivery/software. This often was 100 percent of the budget of many marketers. Selecting an email service provider (ESP) was often seen as the one and only decision and requirement for success.
Deliverability/rendering. Companies like Return Path and Pivotal Veracity filled a void that email marketers continue to find needed – how do they ensure and measure emails get into their subscribers’ inboxes?
Acquisition. A plethora of companies would gladly sell, rent, and help find new subscribers, often regardless of whether they provided permission or even knew who your company was. In an effort to grow small programs, this area of the budget often was the most focused on, yet most off the target. In many infamous charts from research providers, this line item often fell in the email advertising bucket, which misguided many observers.
One thing to note is that email budgets are often small, disproportionally small given email’s significant return on investment (ROI). A 2009 study my agency did along with ExactTarget found that over 40 percent of clients stated they had $100,000 or less of their annual budget dedicated to email marketing.
Compensation and Resources Study via BrightWave Marketing, EmailStatCenter.com, and ExactTarget
As we evaluate the change in spend projected through 2016 we should note two things:
- Email is certainly not fading away, which many prognosticators have said ad nauseam. It continues to be the healthy heart of digital marketing.
- The “other” non-delivery areas of email are poised to gain significantly more of the email marketing spend than delivery. While all of the major ESPs have diversified and have largely strong businesses, this represents somewhat of a land grab for the key areas of email marketing services. Agencies (specialized and broad), tech startups, consulting firms, and the ESPs all have begun to make a play (or are noticeably absent from the space) for these other dollars. (Full disclosure: I started my company almost 10 years ago and have built the business on thriving in this particular part of the industry.)
Forrester Research, Inc. chart
In Part 2, I’ll take a real look at what is changing on the email investment front and where the smart money is going.
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