Outlook 2006: More Technology, More Targeting

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The overall outlook for e-mail marketing this year is positive, as less spam will reach our inboxes. But the picture isn't totally rosy. It will be tougher to reach consumers at their primary inboxes as 60 percent of online consumers regularly use two or more e-mail accounts.


Also, marketers must remain concerned with delivery, as the cost of erroneously blocked e-mail will account for $107 million of total e-mail spending in 2006.


We'll see greater focus this year on list hygiene, scrubbing non-responders from e-mail lists. Marketers need to be mindful of those non-responders as more Internet service providers will use what they consider to be dead e-mail accounts as honey-pot spam traps. This problem also will place greater emphasis on reputation standards and the emerging services that are addressing the pairing of sender identity to the senders' reputation.


We will continue to see the gradual use of targeting to make e-mail more relevant, as relevance will dominate the strategic plans of marketers in 2006. Search will remain the primary acquisition tool online, but it can't touch e-mail in terms of the return on investment that e-mail delivers as a retention tool.


A JupiterResearch report called "The ROI of Relevance" that I did last year shows that when done right, $1 spent on e-mail can generate a $9 return, which is generally much better than what search can deliver. But marketers need to look at these tools separately. Search is complementary to e-mail. E-mail works well in tandem with other channels. But even as a complement, e-mail marketers will be fighting for budget dollars.


If marketers do a better job of simple A/B testing that contrasts targeted e-mail to broadcast e-mail, they could use this information to parallel the performance of targeted e-mail to other broadcast mediums such as print. E-mail marketing spending will grow 7.5 percent this year to $950 million, up from $885 million in 2005.


Open and click rates vary by type of marketer, such as business to business versus business to consumer. But overall, we saw open rates of 30 percent and click rates of 12 percent last year, which were consistent with historical industry trends, though the industry has comparatively less confidence in open rates as a reliable metric.


The issues with image blocking will reduce open rates this year, making it more important for marketers to monitor their open rate patterns over time so that they can measure the effect open rates are having on the mailing performance.


The volume of spam will decrease on a compounded annual growth rate basis of negative 9.4 percent through 2010, but it will remain a nuisance. ISPs ultimately will place greater emphasis on identity and reputation. But in the near term they will continue to use a cocktail approach of multiple tactics to eradicate spam.


Despite the rendering challenges, HTML will stay the main choice for marketers. Just 3 percent of e-mail subscribers in a recent JupiterResearch Consumer Survey said they receive only text e-mail. More marketers will turn to RSS feed marketing as an complement to e-mail, where no image rendering issues exist.


From a provider perspective, automation and the use of AJAX and other Web-based development languages will create a new level of differentiation in the vendor landscape. We'll see more automation that makes it easier to integrate e-mail with other applications, touch points and processes.


Among the challenges that vendors will try to address this year are those around managing and integrating content assets in the application.


Wells Fargo did sophisticated things last year such as targeting by behavior and using lifecycles as the arbiter to message frequency. Marketers need to begin targeting their subscribers by response behavior. If you have subscribers who haven't opened in the past 24 months, then it is probably time to suppress them.


Marketers should test new ideas more often. We consistently see in our executive surveys that marketers who test on a regular basis have higher response rates. Marketers also should look into injecting Web clickstream data into the segmentation schemes, which can be enormously effective in driving higher response rates.


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