Report: E-Mail Will Grow as Direct Mail Declines

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Many businesses are using e-mail marketing campaigns instead of traditional direct mailings to maximize their advertising budgets, a GartnerG2 report released yesterday said.

According to the report, "E-Mail Savings Threaten a $196.8 Billion Direct Mail Market," e-mail advertising revenue is projected to reach $1.26 billion in 2002, up from $948 million in 2001. By 2005, e-mail ad revenue is forecast at $1.5 billion. GartnerG2 is a research service of Gartner Inc., Stamford, CT.

"Direct mail has reached its peak and will account for less than 50 percent of mail received by U.S. households by 2005, down from 65 percent in 2001," said Denise Garcia, research director for GartnerG2 covering the media industry. "As e-mail use, familiarity and trust increases, consumers will become more comfortable with accepting advertisements through their computer."

E-mail marketing campaigns have proven more efficient, GartnerG2 said, and their success can be measured more easily. On average, it takes four to six weeks to complete a direct mail campaign, compared with seven to 10 business days for an e-mail campaign. Responses to direct mail average three to six weeks, while responses to e-mail take an average of three days.

In addition, e-mail campaigns are cheaper to execute. E-mail costs currently range from $5 to $7 per thousand while direct mail costs range from $500 to $700 per thousand, according to the report.

GartnerG2 analysts said permission-based or opt-in marketing strategies are critical to higher e-mail response rates. Response rates are about 1 percent for direct mail and for e-mail that is not permission-based. The average click-through rate for permission-based e-mails is 6 percent to 8 percent.

"Advertisers must begin to incorporate these types of personalized e-mail strategies in conjunction with their traditional direct mail efforts in order to maximize the reach, penetration and effectiveness of their campaigns moving forward," Garcia said.

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