Thought Leaders Commune on Email Marketing – Part 1

Email marketing has come of age. And we all know what happens with age. Zest, effectiveness and energy diminish. Younger and more effective players emerge. And, before you know it, you’re pensioned off!

Which begs the question: Is email marketing, as we know it, doomed?

In its current state, perhaps. But with advancing age comes wisdom. The effectiveness of email is still hamstrung by spam, as we are limited by our inability to get our messages delivered because of spam filters. But email’s current problems are merely challenges. And where there are challenges, there are opportunities.

MarketingProfs convened a Thought Leaders Summit of global experts to discuss the issues facing email marketers today. On hand were Chris Baggot, founding partner of ExactTarget; Rok Hrastnik, owner of MarketingStudies.net and author of Unleashing the Marketing and Publishing Power of RSS; Eric Kirby, senior vice-president and general manager for email solutions at DoubleClick; Chris Price, managing director of Permission; Neil Squillante, president of Landing Page Interactive; Jim Sterne, consultant, speaker and founding director of the Web Analytics Association; and Shar VanBoskirk, consulting analyst with Forester Research.

(Here’s a complete list of the participants and their bios, as well as links to the audio recording and transcripts.)

On one thing we all agreed: Because of its innate and powerful ability to communicate one-to-one with customers, the essential value of email marketing is unlikely to change. But its cost-effectiveness has been its Achilles heel; so many marketers are now using email that consumers are overwhelmed.

Left to its own devices, email marketing is unlikely to survive. However, if email marketers take responsibility for developing great strategy and execution, we are likely to bring on its evolution.

In fact, the evolution of email marketing is already evident in the issues facing the industry today, as spam and inbox clutter — both big topics of conversation — have made it harder to build and gain results from email marketing.

Three years of recorded benchmark data show click rates have been remarkably stable, demonstrating that companies that are smart and have good practices continue to evolve techniques, programs and targeting. In other words, best practices allow some companies to surge ahead of some of those challenges.

RSS,friend or foe?

Will RSS replace email as a marketing channel over time, or will both technologies work cooperatively together?

On this, all of our panelists agreed. RSS is unlikely to stage a takeover any time soon. Due to the relative maturity of email marketing compared with RSS, one would be hard-pressed to find in RSS the same level of marketing functionality, targeting, personalization and metrics capabilities that “come standard” with most email marketing packages. That said, RSS technology is progressing rapidly.

Of course, email technology is not standing still, either. Much is being done to eliminate the spam problem. Mainstream media continues to report that the amount of spam being sent is increasing. But what they are failing to report is that the amount actually getting through to individual mailboxes is decreasing. What the recipient is experiencing matters, and a lot of recipients are experiencing less spam than they used to.

In the end, it is all about user choice. Just as we have seen with email, some consumers simply won’t want to embrace RSS. But as Yahoo rolls out RSS and MSN makes it readily available, the consumer will have more exposure to RSS, and marketers will be looking for an additional tool to distribute the marketing messages that they couldn’t maneuver past spam filters.

For end users, RSS technology as an email replacement lacks ease of use. Simply said: It’s just not that straightforward for the uninitiated to subscribe to and follow RSS feeds. It’s hard enough explaining to an RSS newbie what an RSS feed is; just try walking that person through the installation and use of an RSS newsreader software or Web-based aggregator.

Then there’s the issue of recipient identity. Currently, most RSS feeds are just one feed for everyone to use, which means you lack the identity of email. But with an email list of, say, 10,000 people, each email goes to just one person, and you can feel pretty confident that you have 10,000 people on your list.

Email and RSS are often appropriate for different content types, our panelists said. For instance, email is the top channel for delivery, whereas RSS is more useful for high-frequency content updates. It’s not only about getting your content delivered to end users, but about improving your online visibility, search engine rankings, driving new traffic through RSS search engine directories, syndicating your content on other Web media and so on.

With RSS, there are ways you can create a unique, trackable URL per subscriber that do not have to be through HTTP authentication. But there are also certain solutions in the market now that generally feed per user and even allow for data capture; that is, the user can now register and receive a unique URL.

One of the problems, however, is that if a user incorporates that into Bloglines and shares it with the world, you may have a situation where that one unique URL is actually being subscribed to by a bunch of people. That’s one situation where HTTP authentication can help, because that usually limits that particular feed to just one person.

RSS is going to be a user-driven decision. People are going to choose whether they want to receive communications as email. There will be a lot of pressure on publishers to produce highly valuable content that will remain in the inbox, whereas less valuable content will be pushed aside for people to pick up via RSS.

Can we fix it? Yes… Well, maybe

Email is a conversational medium. It allows the marketer to send a communication to which customers can actually respond. However, marketers have often treated it as direct mail without the postage and paper.

People’s expectations are changing. Legitimate email marketers are now waking up to the realization that their email campaigns are getting less attention than 12 or 18 months ago.

Email marketing is not just an ad-hoc promotion-focused approach, but one that intends to answer your needs and makes you want to open the message and perhaps buy. The goal is for sellers to recognize that they must deliver value to the end users.

Consumers are looking for “easy” — an easy way to identify the people or entities from which they want to receive emails. Nothing is more frustrating than missing a wanted piece of information because your spam filter ate it. The approach of identification, authentication and recognition would go a long way toward fixing what ails the email marketing industry.

Let’s go back 12 years or so to the Peppers and Rogers “One-to-One Future” theory: That theory was never executable because there wasn’t a medium that would let us take data and behavior and drive it into relevant, timely one-to-one communications and interactions. Email has given us the tool to do that. But email has been misused and slighted, because the metric for successful email has focused on things like open rates instead of the human-to-human interaction. Consumers attitudes are now “talk to me when you have something to say.” And, “Say something relevant, appreciate me and give me an opportunity to respond.” The panelists say that marketers are seeing a lot of that in current email trends in 2005.

Roadblocks, obstacles and speed bumps

What are the biggest obstacles facing email marketers today? Believe it or not, spam (and issues associated with spam) are actually becoming less of a concern for most companies today. Those that are leading in the field now have very good ways of managing and dealing with the issue and are turning their attention to working out how to keep their customers engaged by deriving deeper insight and intelligence into their customers’ needs so that they can tailor their messages appropriately. It’s about being able to access, organize and act on the detailed data that enables that kind of communication.

Email as a marketing communications vehicle hasn’t received executive-level attention because it’s been viewed as a low-cost (albeit effective) channel that really hasn’t merged into the overall contact strategy of most organizations today.

Along with that, companies are trying to manage a corporate governance-model email strategy. This is true especially in large enterprises with multiple brands and multiple divisions. There, securing a consistent permission strategy and contact strategy across those various divisions will ensure that your customers are being treated appropriately from their point of view, and not just from the point of view of one single division or brand.

Most companies find it difficult to come up with really compelling content on a regular basis. The best email from a marketing perspective comprises a blend of promotional material with real editorial content. And that’s difficult for a lot of companies to achieve if they are not media companies — or don’t have journalists or copywriters on staff.

Many opt-in third-party newsletter lists lack context. For some reason, the email marketing sector determined that people who joined these lists would receive ads only, which worked great at first, but the problem now is no context. If you are a member of such a list, all you are receiving is ads. You are not receiving any real editorial content, and that is a problem. And, believe it or not, there is a dearth of newsletters in some industries.

Perhaps the largest obstacle facing email marketers are the marketers themselves. Some are not performing enough due diligence on issues like “How should I really be leveraging this medium? What are the messages that are appropriate to communicate via email? Who are the customers who are appropriate for me to be communicating through email with?”

Instead, some marketers are enamored with the notion that they can send out a ton of messages inexpensively, especially coming from a direct-mail perspective, and that email is an overwhelming opportunity. Because of this, we now face the obstacles that have been created, like the spam issue and the over-emailing issue, which lead consumers to want to opt out or just stop replying.

But given that clickthrough rates have stayed fairly constant year after year, email is still valued. It’s still effective. It’s just that marketers have to make sure that they are doing everything they can to maintain a “permission” relationship with their customers — and that means they need to use email to meet their customers’ needs rather than promote merely their own business goals. Putting the customers’ needs at the forefront of their strategy is paramount. If they don’t do that, they are creating an obstacle for themselves and for the industry at large.

It’s also about relevance. How can email marketers increase the relevance of their campaigns to garner attention? How can they nurture individual relationships over a long period of time? With that mindset, email becomes a much stronger tool.

One final take on spam: It’s almost a cost of entry nowadays. Everybody understands it. And everybody knows how he or she should be dealing with it.

Email tracking and reporting — is it reliable?

When it comes to email tracking and reporting, nothing is black and white (or transparent, for that matter). There are many technical and operational reasons why you are not going to get exact data on statistics like open rates. For one, we may enjoy greater success if we all used the same yardstick!

Perhaps it’s better to ask: “Am I getting better open rates than yesterday?” The difference between the two is a more trustworthy number. If your open rates are going down, it is up to you as a marketer to figure out how to improve them.

Open rates typically fall into more of a branding-type measure. If you can double the number of people who hit “reply,” even if your overall open rate goes down, what is the better metric?

Some of the problem is with industry measures as well as the kind of email that people are sending. Gigantic retailers dominate by overall volume of email, but typically they are not very good emailers. It’s therefore skewing to look at a total pie that is predominantly influenced by people doing weekly blasts of coupons or special offers that aren’t very relevant. As one of the panelists said: “OK, now tell me what happens when I add more data. Tell me what happens when I decrease my frequency for a certain segment of individuals and things like that.”

In other words, measure what you are really trying to accomplish — not measure open rates or clickthroughs as the total goal of success. Again, that’s an impression model left over from television, which, in our business, reeks of the dark ages.

The yardstick is actually shrinking, and here’s why: Over the past year, more and more email software clients have been adopting a feature that in many cases, by default, will block images from displaying in a message. Given how we actually track opens in emai — using uniquely named, one-pixel images known as “Web bugs” — the act of opening will not be visible to the email marketer if the request to load the “Web bug” isn’t made.

Previously, a display within the preview pane in Outlook would have counted as an open, as long as the recipient was online at the time. Today it won’t — assuming the recipient hasn’t changed that default setting in their new version of Outlook. ISPs and email software providers are adopting this feature because they figure that spam of a graphic nature won’t display unless the user takes an action to display those messages. But, in doing so, they simultaneously sabotage the marketer’s ability to measure campaign effectiveness.

DoubleClick actually sees this downward trend in opens in data tracking quarter to quarter. Looking back over the past year of long-term trending data among a similar set of companies, they see slight declines occurring in email open rates. However, analysis indicates that it is being driven by the image-blocking phenomenon. The reason DoubleClick can say that is because other metrics that, over time, directly correlate with open rates, such as click-through rates, have actually maintained their performance levels.

In the case of open rates, that number actually is changing and has to do with how that number is calculated, which could be seen as a good thing because it’s a measure of somebody’s engagement in opening up your message. If somebody has to take the extra steps to display images, you know that that person is truly opening and it wasn’t just an accident.

One other metric you probably want to be thinking about in terms of whether it is believable or accurate has to do with purchases and purchase rates. The reason for that is because the only purchases that we can directly, in most cases, attribute back to email are ones that occur online that we can then associate back to a click from that email.

Most companies aren’t sophisticated enough to actually look at the multi-channel impact of their email messages — as when, for example, an email campaign recipient goes in to a store and buys or opens up a catalog and buys over the phone. That isn’t being captured today in most cases in email metrics, which actually causes people to under-report or under-credit the impact of email in their overall marketing efforts.

If you are buying an ad in an email newsletter, you may want to see whether the company publishes that email newsletter in HTML. You may want to inquire about whether you can run a text ad in that newsletter, as opposed to a banner, because if you run a text ad, it will still show up even with the images not being turned on, whereas if you run a banner it won’t show up unless the end user actually clicks to turn on the images.

It’s surprising how few marketers are looking at trends. Even though the technology and the data are there, marketers aren’t utilizing them. Email tracking is really about trend-watching rather than exactly pinpointing the actual and absolute numbers. The trends are enough to give us an impression of what works, what doesn’t and what, in fact, creates a sale. In the end, that is the most important thing.

Common traps and pitfalls

The biggest trap for email marketers is falling into that mass marketing blast. You can do everything right — get the right permissions, confirm opt-in, be CAN-SPAM compliant — and then you blow it by sending me offers or things that are more interesting to you, the sender, than me, the recipient.

It’s an easy trap to fall into, because it brings a pretty good return on investment compared with other media, but it is not real data-driven communication.

Another trap is trying to say too much. Some people just try to cram too much in an email, not realizing that they have only a limited amount of time to get their message across.

Another one is not understanding the complexity of the medium. Some people are blindly going on as if they are immune to deliverability and CAN-SPAM issues, whereas the smart email marketers are engaging professionals and experts around them, or choosing suppliers with skills and coming to grips with that complexity.

Selecting an email marketing vendor

They’re a dime a dozen, so how can you pick ’em?

For the most part, email vendors all have the same basic capabilities in terms of delivery, reporting, testing and helping to ensure delivery (through SpamAssassin scoring, etc.) and thus should be up to the task technically. From a marketer’s perspective, the things to look for are which tools are the best fit for you, how easy it is to use their system and what kind of support you get. Do you need a lot of hand-holding to make it happen? If so, can you get it when you need it? Are there people available during your business hours and after hours?

But, first, do some due diligence around what you are looking for, why you want to work with an outsource provider and what it is that you are looking for based on what you have internally.

Be prepared to direct the partner in a relationship. This may not mean that you have to tell the provider everything you want to do because that is probably why you are looking for a provider — to help you. But it does mean that you need to take responsibility for your part in the relationship and be aware of why you are selecting them. Can they be trusted? Do some cross-checking so that you know that the provider you are working with is in fact delivering on what they said they would.

Study their background. Are they stable? How long have they been in the industry? What is their expertise? How many employees do they have dedicated to each of the areas that are important to you? What is their client renewal rate?

And then you’ll want to get at some of the intangibles that are beyond what they’ll normally tell you. Can you actually talk to some of their clients? Can they uncover some of these hidden gems or secret best practices that may not be the mainstream things that anybody can come up with?

Are they philosophically aligned with what your real goals are? A lot of email vendors are volume-driven. That’s how most are compensated. Remember that volume is not in the best interest of you, the client.

More importantly, ask the right questions: How do you drive lifetime value? How do you drive data-driven communications? Is volume the correct measure of success? In the mass-marketing world, it is; and for a lot of email vendors, it is. Asking such questions will certainly reveal the vendor’s philosophy on lifetime value.

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Part 2 of this article tackles the really thorny issue of getting past those spam filters. We reveal hidden “gotcha’s” in CAN-SPAM and other anti-spam legislation that marketers are missing, ways around multi-list suppression, differentiating an ordinary email marketing campaign from an extraordinary one, top most-effective email marketing techniques and major issues that will be affecting the email marketing industry in 2006.