The Problem With E-Mail for Acquisition

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I get e-mails all the time about making e-mail direct marketing more effective. They usually have tips from some experts, focusing on mistakes to avoid. What bothers me about these e-mails generally is they tout e-mail as a viable channel for direct marketers yet the articles almost always talk about either retention or house file e-mail and almost never about customer acquisition.

The most infamous for this is DoubleClick with its "insight." DoubleClick dedicates conferences to getting people to think that direct e-mail works amazingly, but it is always about customers that DMers already have and never about customers they are trying to get. E-mail, to date, has worked poorly on acquisition. It seems like there has been a conspiracy of silence by agents, e-mail brokers and technology companies about this fact.

Does anyone have a success story for acquisition from e-mail? There have been successes in business-to-business, but those do not translate well in the consumer category. There are other successes, but not the type that longtime direct marketers are as yet willing to try themselves.

New direct marketers, who have yet to make a name for themselves, and brand-insensitive DMers have undertaken some of the strategies that are effective. These include cheap bulk e-mail to old records, and cost per acquisition e-mail programs to anyone and everyone willing to take them (you can guess how good that data is).

Another e-mail strategy is using online brokers who don't represent the media that you are going to buy, and cannot vouch for where/when/how you will run. These tactics work nicely, except most direct marketers are either brand sensitive or are unwilling to let go of their marketing efforts because they want to learn firsthand what works so they can truly develop online as a channel for their acquisition efforts.

So what do normal DM companies do for acquisition when they aren't ready or willing to go this other route? They have been unable to do a lot with any sustainable success because of poor campaign results in the not-so-distant past and the ever-increasing amount of spam in recipients' inboxes. E-mail list managers, who do have good data on average, are unwilling to lower their cost per thousand rates (you have to pay for quality, they argue) and won't entertain alternative pricing structures. This doesn't bode well for acquisition efforts through the e-mail channel.

Yes, you get quality from high CPM lists, but that doesn't translate into sales and better ROI. It translates into worse cost per sale metrics because you will get only slightly better results from a very targeted (expensive) list than you will from a very broad (cheap) list. The inbox doesn't know that one of the lists is targeted and the other is not. The inbox looks at both equally, and so does the spam filter. What's worse is that the recipient generally is unable to pick out the one targeted solicitation from the 50+ competing non-targeted solicitations.

The direct marketing mantra is "test, test, test," but there isn't enough budget or testing that can get water out of a rock. That's the unfortunate truth about acquisition efforts using e-mail for most marketers who haven't given their offers to the brokers and agents. The results do not stand up high enough to warrant further tests, especially at the costs required by list managers.

The answer for DMers for e-mail as an acquisition tool must come from list brokers. Test budgets will dry up, and these companies will be unable to continue selling their products on a CPM basis when the results do not back up the pricing.

If e-mail list brokers want to develop e-mail as a product that can repeatedly sell, they need to rethink how they price their lists. They should consider open rate CPMs or cost per click pricing. Either of these modest changes would get marketers on the fence to test, and they are the only two measures that list owners should directly be judged on.

The conversion side of the marketing dance rests on the marketer, which is why e-mail list brokers shouldn't move to a CPA pricing model. They shouldn't be held accountable for the sales processes, which many marketers still haven't figured out online. But they should be held accountable for how receptive their lists are, just like in offline direct marketing.

Until then, direct marketers looking to the online channel as a new sales channel should move their e-mail budget to list-building efforts (for multi-step marketing programs) or search engine marketing. Either of these will help create online as an immediate sales channel with a sustainable future that DMers can count on. n


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