E-Mail ROI High, Response Rates Low - eMarketer

E-Mail ROI High, Response Rates Low - eMarketer:

E-Mail ROI High, Response Rates Low

OCTOBER 30, 2007

Next to search, e-mail spend is tiny. But that's OK.

Spending on direct marketing commercial e-mail in the United States will hit $600 million in 2008, according to the Direct Marketing Association. That number represents an increase of nearly one-quarter over 2007.

The numbers are dwarfed by spending on non-e-mail Internet direct marketing—such as search and display—which is expected to hit $23 billion. But judging by the DMA's data, the spending figures belie e-mail's low cost and high ROI.

eMarketer spoke with Anna Chernis, senior research manager at the DMA, about e-mail response rates.

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"E-mail produces the highest response rate for lead generation—especially for house campaigns—of direct mail methods we have studied," Ms. Chernis said.

"E-mail is in general the lowest-cost way to run a campaign," she said. "Sometimes the response rate isn’t so great, but the cost is so low that it is part of most campaigns."

The DMA also found that commercial e-mail's ROI will hit $45.65 for every dollar spent in 2008.

Ms. Chernis noted that the group's separate study of direct marketing media response rates did not indicate much about ROI because the cost to send additional e-mails is tiny compared with sending more pieces of direct mail.

She added that just because a given media type is effective does not mean it should be used forever. Direct mail is so prevalent in financial services that marketers are looking at other media as a supplement.

Still, response rates remain one of the primary methods by which US marketers assess ROI, according to a Penton Media Custom Research study commissioned by PROMO Magazine.

That said, even with online marketing, some metrics remain out of reach. Ms. Chernis said that market researchers have yet to determine lift, such as for brand awareness, from multimedia versus single-media campaigns.