Is the Price Right For E-Mail?

As 2001 closes and we look ahead to the next marketing season, it is both exciting and a bit sad that the hot direct marketing vehicle will be e-mail and not postal direct marketing.

With the U.S. Postal Service facing billions of dollars in losses, anthrax scares and cannibalization from e-mail, 20th-century direct marketing is taking a further back seat to its newer relative, e-mail marketing.

Why is e-mail so appealing? It is cost-effective, it is personal and it can be targeted.

But there are appealing aspects to postal mailing lists that have not developed yet in the e-mail marketplace. I am not even talking about targetability or selectivity; I am talking about the relatively mundane subject of pricing.

Unlike its postal cousin, prices for e-mail lists are all over the place. A marketer's reputation is tied immediately to the list that is rented. That is the key difference between the postal world and e-mail. The recipient of a direct mailing piece probably does not know the sources of the list. With e-mail, the source of the list is not only stated, but by virtue of its use, creates a quasi-endorsement/marketing relationship with the mailer.

There are other organized parts of the list rental process from the brick-and-mortar list rental days that have not translated to e-mail.

Mailing lists, which here will refer to the postal names, have always been listed in the SRDS Directory. This has been an organized, categorized and up-to-date volume that allowed a whole generation of list professionals and mailers a source from which they could derive creative information. (In fairness, SRDS has evolved into a great electronic service as well).

Unfortunately, there is nothing standard with e-mail lists and their pricing, or, for that matter, e-mail lists and the data they are built from. Pricing has become a fluctuating barometer of how the e-mail list as a commodity is doing. For many marketers, the cost of the e-mail list may supersede all other variables that normally go into the selection of a mailing list. This is troubling because long-term failures of e-mail campaigns resulting from the wrong choice of a list may turn marketers away from what should be the killer app.

This is not to say that there should be no negotiation between a list broker and list manager for the best price. The price of an e-mail list is probably the key indicator on how the names were actually developed.

It is a rather lengthy and tedious task to build an opt-in or even negative-option list of any size that has buyers or subscribers willing to lend their names for commercial efforts.

As many good direct marketers know, the most responsive names come from the same medium that you market in; therefore, the warranty card that is sent in with an e-mail address on it will not be as responsive or useful as a paid subscriber to a magazine who is registered on a Web site and opted in to receive third-party mailings.

This is comparable to the old compiled list versus response list. It is more costly to gather the paid subscriber name or Web site buyer name, and, therefore, the list probably costs more.

The e-mail marketplace is more like a Middle Eastern bazaar than the organized trading and commerce of the 20th-century list business. It must be frustrating for major mailers that are used to receiving name arrangements and other price lowering incentives. The one holdover discount from the postal days will probably be what my colleague/competitor David Schwartz (CEO of 21stAZ) named the volume discount, because the more you buy the less you will pay.

As I look to the new year, I wish everyone in our industry and the country the very best. As marketers, we should remember that price is only one variable for a positive return on investment.

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