Ben Bernanke delivered another gloomy assessment of the American economy to congress yesterday during which he pointed out that the seemingly antithetical dual risks we currently face—slow growth and rising prices (due in large part to energy costs and the credit crunch/housing collapse)—are likely to plague us for some time to come. A “perfect storm” of macroeconomic forces is currently ravaging us, and it seems as if we may not even have seen the worst of it.

Could this be good news for email marketers?

While I believe it’s probably not great news for anybody—especially for those of us who may own a house, have investments in the market, drive gasoline-powered cars, consume goods and services, or eat food—I do believe the current economic downturn we’re facing represents an opportunity for email to shine.

Marketing budgets across the board are shrinking, but in my recent experience, email is being allocated an increasingly larger percentage of that budget. As a highly measurable channel, we are immediately at an advantage. The fact that the average return on investment for a dollar spent on email marketing was an estimated $48.29 in 2007 according to the DMA doesn’t hurt either. When budgets shrink, it makes good sense to invest a greater percentage in email, and I am already seeing it happen.

So with an increasingly large share of budget, many of us are now charged with selling goods and services to segments that are increasingly price sensitive due to the $4.89 per gallon they are paying at the pump (I just paid that much). Many segments are looking for deals right now, and while we obviously still need to send the right ones to their inboxes, it seems as if consumers are now taking more time to review the offers they receive, which may be good news for good senders. I’ve seen evidence of this in the KPIs and test results of many of my clients’ programs, primarily in the form of higher than expected open rates for certain segments.

HERE ARE FOUR EMAIL MARKETING TIPS FOR THE DOWNTURN:

1. Now is a good time to test that reactivation program you’ve been thinking about.
Those inactive customers could be brought back into the fold with a juicy offer, and in these rough times, each win-back is more valuable than ever.

2. If you don’t already, leverage automated campaigns to the hilt.
Internal marketing resources at many companies hit hardest by the downturn are getting scarcer, but don’t let this inhibit the growth of your program. Focus on high-value, highly relevant, triggered and serialized campaigns that run without needing daily attention.

3. Think about creative ways to monetize your data.
Do you send targeted third-party offers to your list? Do you include banner ads in your newsletter? If you don’t, now would be a good time to test it.

4. Make a strong business case for more budget.
Few in your organization boast the ROI numbers you do. Build a cogent business case and get the additional budget you need to take your program to the next level—your business needs you now more than ever!

So while inflation drives prices higher and the credit markets seize, drop the Wall Street Journal, erase your E*Trade bookmark, and focus on messaging that appeals to your increasingly price-sensitive consumer. With any luck you’ll be able to uncover some rational exuberance in your email program.

—Nicholas Einstein of Datran Media

The answer…
38% --> Direct mail and catalogs
19% --> Blogs/RSS
17% --> SMS (text messages)
10% --> Social networks
10% --> Internet ads
4% --> Search
2% --> Television and radio

Are you surprised by the results? Share your comments below.

Also, visit the eec homepage to answer the latest Two-Click Survey question:
What is the primary metric by which you measure the success of your subject line A/B tests?

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Campaigning online has shifted the political fund-raising paradigm significantly, and forever altered the strategies candidates employ to feed their machines. When we read news stories about this phenomenon, however, we rarely learn exactly what online channel is driving the donations—search, email, social networks, etc. The headlines usually credit “the internet.”

Peter Greenberger who runs the Elections & Issue Advocacy group at Google was kind enough to make some time for me recently, and indicated that each of the campaigns is dedicating over 50% of their online marketing budgets to search—with some dedicating well over 50%. What I find most interesting, however, is that the candidates are primarily leveraging paid search to build their email lists.

Barack Obama is, hands down, the most successful online fundraiser. He often raises over a million dollars a day online, and has certainly forced the other candidates to get more sophisticated about how they approach the web. His online strategies definitely seem to be working. So how exactly is he soliciting donations?

Type “obama” into Google and click on the top link, a paid search listing. Where do to you land? The link takes a clicker to a page that features a simple opt-in box asking for name, email, and address, with an adjacent video window featuring a message from the candidate. There is no “donate now” button, or form with various contribution levels, just a simple opt-in box to register to receive updates from the campaign. Mr. Obama realizes that your email address is the most valuable donation you can make, and that with it he can more effectively induce you into making larger, more frequent donations, or solicit your assistance in making phone calls and otherwise promote the campaign. Obama may be spending the majority of his money on search, but it seems from this example, that he may very well be raising most of his money through email.

—Nicholas Einstein of Datran Media

I spent the second week of February in Palm Desert at the eTail conference and participated in a panel discussion focused on advanced segmentation strategies. Unlike in previous years, the team at eTail set up channel-specific tracks that preceded the usual conference—email and search each had their own rooms, and sizeable crowds looking to learn more from experts in the space.

The search room was especially well attended, with nearly double the number of conference goers as the email room. Now I have done some SEM work in my day, and have the utmost respect for search professionals and the business value they provide. But, as the recent Datran 2008 Marketing & Media Survey illustrates, email often delivers stronger ROI than search. In fact, 55.3% of the survey respondents expected email to outperform all other channels on the basis of return on investment in 2008. Additionally, when asked “which advertising media buys perform strongly for your company,” 80% identified email as a strong performer, compared to 70% for paid search. For this reason, 82.4% of respondents said they will increase their use of email marketing in 2008.

Again, don’t get me wrong here—I am a big search advocate (especially when it’s well integrated with email and other channels), but why were so many more people at eTail interested in search than email?

The reason, I believe, is that most organizations are still missing the boat on resource allocation and shortchanging email. Though email is often more effective at delivering near-term ROI, search still gets a bigger share of budget. Many of the advanced segmentation strategies we discussed at eTail require relatively significant investments of time and resources, and while they deliver excellent returns, it seems as if many of the people I spoke with were facing major resource constraints that prevented them from taking their programs to the next level.

It is our responsibility as email professionals (and evangelists) to ensure that our organizations realize the tremendous value a sophisticated email program can deliver. We need to craft email marketing performance dashboards that are designed for executive consumption—they must be clear, succinct and engaging. We need to keep our managers up to date on developments in the space and the opportunities they present to our businesses. Share the results of the Datran 2008 survey with your senior management. Leverage stats from EmailStatCenter.com in your quest for more budget. And do not take “no” for an answer.

All that is easily said. But I am still feeling a little like Rodney Dangerfield. Will the facts alone earn email the respect (and budget) it so richly deserves? What do you think? What can we in the email world do to get the resources required to drive more sophisticated and profitable programs? I’d love to hear your thoughts.

—Nicholas Einstein of Datran Media

During a recent eec Clients-Only Roundtable meeting we got the discussion going with a very simple question: “What keeps you up at night?” We hope the vendor and agency side is listening because what we said—and heard—speaks volumes for unmet needs. Here are our top three issues:

Value Proposition of Email
With marketing dollars being stretched across more investments than ever, virtually all of us have a crying need to re-justify spend on email programs and infrastructure. For some companies, email is still ramping and its value is still not fully established against more traditional media. For others, the need is to reframe email as a great ROI investment against the newer and sexier Web 2.0 capabilities that are diverting attention and budgets from email. And finally some companies need to update or expand aging systems or databases just to keep the lights on.

Since this is the same No. 1 pain point we talked about a year ago, it’s disconcerting that we are still struggling to find a good answer to this key question: Why invest in email marketing over other tools in the marketing mix?

Every one of our agency and ESP partners have a vested interest in helping us get this value proposition right. It’s clear that they all work hard to create evidence to support an investment in their point solution. But that’s simply not enough anymore. The question mark is higher up “in the stack,” as we technology marketers like to say.

Upgrades to Aging or Outgrown Systems
A couple of us are looking to expand beyond our first generation ESP partnerships to support growing use, while other companies need upgrades to their aging or inadequate systems. This forces email marketers to put on their IT hats: writing RFPs, assessing vendors, justifying internal IT projects and all the rest. It’s messy, time consuming and distracting work and in some cases we don’t have the skills we need to get it done. Vendors and suppliers who can make this easier get an inside track to the business. But look back at Item 1 above—if you can’t demonstrate that your solution supports a clear value proposition for email marketing, you might still lose out.

Email Governance
Even smaller companies are complex organizations with unclear boundaries regarding who “owns” various audiences, and especially the data about them: “the house list.” Drawing up business rules for appropriate use of the audiences in our house lists is becoming increasingly complicated and urgent. Fear and greed are driving the big challenge here: Don’t chase off valuable and hard-to-acquire prospects on the one hand (opt outs), but make sure they don’t simply loiter in our database either. This is as much art as science: balancing business needs with the desire to nurture and woo customer and prospects. Here we’ve seen some good work from our outside partners helping to develop and refine contact strategies, but we still need in-house leadership to create protocols and policies that stick. Otherwise we risk falling into frequent debates which can stop campaigns in their tracks.

How would we measure success? A new top three list a year from now!

—eec Clients-Only Roundtable chair Brian Ellefritz of Cisco Systems

Waking up Tuesday morning to CNBC’s Becky Quick telling me the Dow Jones Futures were down almost 600 points after a surprise three-quarter point Fed rate cut really put a damper on my day. As I watched the real-time chart tick lower, my stomach started to knot leaving me in a dizzying stupor. It’s times like these that bring me back to my days as a small cap equities analyst where I would question CFOs about where they planned to cut and by how much. The first answer out of their mouths was almost always “non-revenue generating jobs,” such as customer and administrative support. The second most common answer is “advertising and marketing.” The second answer always baffled me especially from companies that aren’t leveraged. In a time of a recession, companies with access to capital have an unusual opportunity to take market share as they are able to sustain or increase their marketing budgets. Whenever a CFO with a decent to strong cash position told me that he or she was going to slash their marketing budget going into an economic downturn, I eventually sold the company’s stock and bought a competitor’s that kept theirs intact. This strategy worked well—especially in the services sectors.

Although most people do suffer from a recession, winners do emerge and I’m confident that email marketing could get a gold medal. During the 2001-2002 recession, email marketing was just on the cusp of becoming widely adopted but had yet to make the necessary penetration to become a formidable part of the promotional mix. Most notably, the cost per email hovered around $0.05, way below the cost of a direct mail piece yet still prohibitive for most companies to implement two or three times a week on a large scale. Fast forward to 2008, email marketing is now one of the least expensive marketing channels, and according to the DMA, a very high performer. Today, most email marketers are paying under a penny per email, but email marketing only claims a small part of the average marketing budget. Even though email marketing has become widespread, email marketers, on a larger scale, are still not leveraging the medium’s true potential such as advanced personalization, delivery monitoring and management, and integration with third-party systems.

This gap, coupled with a potential economic downturn, presents a unique opportunity for email marketers to lobby their CEOs and CFOs for a larger slice of their marketing budget. Email marketers have already proven that email marketing works well. Now is their opportunity to reclaim it as the most relevant push channel available and the biggest bang for the buck.

—Elie Ashery of Gold Lasso

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How do you value and report your email channel ROI to C-level executives? Some companies have been very successful in reporting how email channel initiatives generate incremental revenues—such as the average ecommerce business with 10%-30% of annual sales revenues from its email marketing program (i.e., for a large retailer that is $25-35 million per year). However, most organizations have still not accounted for the many cost-savings email breeds nor do they include, for example, hold out groups to demonstrate the impact on Lifetime Customer Value when email is removed.

How can we come together across media channels to report a more complete picture to C-level executives (CPA, Revenue, AOV, Satisfaction, LTV)? Thoughts? Ideas? Comments? —Barry Stamos, senior director of strategy, Responsys

The Voices of Email had this advice:

Chip House: This, I believe, is all about human nature. We all gravitate to the things we know—to our comfort zone. So when the DMA reports the latest in a string of statistics that shows higher ROI for email, it doesn’t really surprise me. It also doesn’t surprise me that C-level execs (often even CMOs) seem to forget email when it comes to doling out marketing spend. Their comfort zone drives their marketing spend allocation, and unfortunately their own CFO’s aren’t calling them on the disconnect. Ultimately, shame on both of them.

Direct marketing, and online marketing specifically, is inherently very measurable. Take keywords; you can easily track impressions, clicks, conversions etc.—and choose from multiple tools with which to do so. Banner ads—same thing. In fact, with banners, your media buyer/or network takes care of most of the targeting hassle. Perhaps offline media, as well as other online media, get more respect from the CMO simply because they are easier to grasp and don’t require the strategy, planning, list-building, deliverability expertise, etc. that a successful email campaign requires. So, not only do we gravitate to our comfort zone—we do what’s quick and easy. Email marketing often isn’t quick or easy, and to many it carries a stigma.

So how do we value and report the high ROI of our email channel in a way that resonates with a C-level exec? First, you’ll need to show him the stats. Show him all the stats. The DMA number above is just the starter. Another showing the disconnect for online vs. offline spending, from the folks at Forrester, shows that though people spend 29% of their time online, it gets just 8% of the marketing dollars. Disconnect? Umm, yeah!

Second, prove it to your CMO yourself. Monitor your own spend on a handful of offline and online media and see it for yourself. If you’re not tracking ROI individually yet, you’re not doing yourself any favors.

Stephanie Miller: Good for you, Barry—this is exactly right. We as marketers have hidden behind the “email is cheap” myth for too long. We've dug ourselves into a budgeting hole. We promoted email as cheap, so it got a small budget. When we were charged with making the channel earn higher return, we just sent more email—not better, more targeted, more relevant email, just more email—because there was no significant budget hit. Now, when revenue expectations for the channel are growing, we find that we have to apply our marketing skills again—inventing and optimizing compelling subscriber experiences in order to generate growing revenue. This requires a budget for creative, testing and analytics in addition to the commoditized fees for delivery and list hygiene. It requires that we consider the email channel for more than just broadcast promotions, but as part of a multichannel experience that includes web and offline experiences and direct sales and education touchpoints. That means we need to measure it and budget for it just like other direct channels. All this should be welcome for both marketers and subscribers.

Have some good advice that we missed? Please add a comment and take part in the conversation.

Have a question for the Voices of Email? Email Chad your question at chad@emailexperience.org and we’ll REPLY TO ALL by posting the answers so everyone can benefit.

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