How many of us have bought a handful of cheap DVDs abroad, only to find that the subtitles don't work or they cut out at the crucial moment? Some brands take similar risks with their email marketing. Attracted by high volume and seemingly attractively priced email data, they risk losing their customers with this bargain-basement approach.
The message that brands need to fine-tune their email marketing doesn't appear to be getting through as well as it should. According to Gartner Research, more than 80 per cent of companies continue to send non-personalised, bulk email. It estimates that response rates are declining, with an industry average of less than four per cent.
When it comes to identifying the most appropriate list, the issues of quality, quantity and price of email data are all interlinked. It means that the old advice of caveat emptor, or buyer beware, holds true in particular for email list buying.
There has clearly been a growth in the number of list sources over the past two years; indeed, the availability of data helped email overtake direct mail in volume last year. "There was a time when there were very few email address sources," says Richard Gibson, commercial director of RSA Direct and chair of the DMA's Email Marketing Council Benchmarking Hub. "Now there is no shortage, particularly in the consumer market."
Providers are finding that clients are obsessed with volume and fail to assess the quality of data in the right way. "Many companies are taking a short-term view, demanding data for next to nothing without recognising that there is a significant cost in building and maintaining a quality email database," says Lynn Stevens, managing director of Lloyd James List Broking Services. Stevens says lists can be had for as little as £10 per thousand names, with "you get what you pay for" now a common refrain among brokers.
With such easy availability, there can be confusion around the origin of data, which makes it more difficult to predict which lists are likely to work. "Users are more likely to inadvertently buy the same name twice or more from sources that have overlapped, so ultimately you end up with fewer names after your de-dupe," says Lisa Neville, operations director at agency EDM Media.
Delivery problems
Unresponsive lists tend to contain old, irrelevant or illegally obtained data, all the more reason to pay attention to the data collection methodology. Skip Fidura, email partner at OgilvyOne Worldwide and vice-chair of the DMA's Email Marketing Council, suggests asking for a guarantee, in writing, of delivery rates.
Suppliers advise checking the overall age of the data, and how recently it was updated. In the B2B space, data ages more quickly in certain sectors than in others. In the world of IT contracting, for instance, marketers can expect to see a higher gone-away rate than on a list derived from a source like Farmers Weekly. "But brands don't often think like that," says Liz Woodbridge, senior account manager at Mardev. "To some clients, cheap is good - until they realise there's a 40 per cent gone-away rate."
This is an issue that email data's more sophisticated suppliers - be they brokers or owners - are tackling by offering deals on a cost-per-click, or a cost-per-lead, basis. Woodbridge says that the quality of leads, perhaps unsurprisingly, will be lower in cost-per-click than in cost-per-lead deals. The click could, for example, merely be a student gathering information for his homework. She adds that cost-per-lead schemes can be a "perfect solution" when done well.
Know your limits
However, there are limitations to such models. List owners will be reluctant to take on the risk of tiring their databases too quickly, which can be a result of cost-per-lead schemes where the consumer may be contacted more than once in the hope of an eventual response. Woodbridge says that Mardev will not take on too many of these arrangements, due to the danger of unsubscribe rates rising.
A multi-channel approach is often the smarter way to go - for example, following up a second email with a phone call. As it gets harder to generate sales from a one-off broadcast, moving away from treating email as a separate entity can be a wise move.
This is what Louise Jeffrey, account manager at broker HLB, has found when working with charity clients such as the NSPCC. However, she does warn that such arrangements are prone to high attrition rates. "They won't have the lifetime value of direct mail," she says.
With third-party email list buying fraught with such complexities, it's small wonder that a growing number of brands are developing their own email lists. "List rental has a place in the mix, but brands need to leverage consumer touchpoints at every opportunity in order to capture email addresses," says OgilvyOne's Fidura.
He gives the example of US Airways, which used cocktail napkins in-flight as well as large posters in baggage-claim areas to invite a captive audience of travellers to text in their email address and flight number in order to join its frequent flyer programme. "You can use above-the-line campaigns to drive email address capture and generate excellent results," he says.
One option for clients wishing to go down the DIY route is demand generation applications, supplied by companies such as marketing automation and lead management supplier Eloqua. Clients including Schroders and EMI Music Publishing use Eloqua's platform to monitor individual prospects' level of engagement as they move through the consideration process, from the first click to an enquiry, say, 10 minutes later for more information. Eloqua scores and profiles each lead, which means that only qualified prospects are handed to the sales department.
Simone Barratt, managing director of broadcaster e-Dialog EMEA, is another advocate of homegrown lists. "Clients see greater success ultimately if they focus their budgets on growing their own email lists. Yet most websites do not maximise acquisition of data," she explains.
A matter of trust
How much detail can be obtained will depend on brand perceptions. Trusted household names such as British Airways or Boots can go beyond the capture of email addresses and the obligatory opt-in, and ask for more details about consumers. But lesser-known brands will find it harder to find consumers who are willing to engage on this level. Experts in this area advise inviting recipients to receive information by e-bulletin, or offering to enter them into competitions.
But the responsiveness of an email address ultimately boils down to the offer, which means that potential benefits to the consumer need to be clear. Many brands have built in detailed preference centres, so that customers can communicate what they are - or aren't - interested in.
The best email marketing follows two golden rules: make sure each email address has been opted in, regardless of whether it is third-party-sourced or client-captured, and ensure every email has an 'unsubscribe' option in the footer (see legal guide, page 26). With consumers getting increasingly irritated by spam, Mark Patron, chief executive of web analytics consultancy RedEye, observes that "cold data is now a very cold place to be". The troubles of email data pioneer IPT are well known, with the AIM-listed company announcing last month that it was "in active discussions" to sell its UK businesses, which were trading "significantly below" budget.
IPT was not available for comment, but Patron, who believes that email is more effective for retention purposes, says he is not surprised to see trouble brewing. "IPT is the first to hit problems because it was so highly geared in this space," he explains. "Data owners like DLG and tmn, on the other hand, have a more diversified portfolio of products. But I do not think that anyone is doing well when it comes to cold email data."
That said, Richard Webster, commercial director at DLG, claims that the company is seeing healthy demand for email lists. He attributes this in particular to the economic downturn's effect on businesses, which are moving from postal channels to this cheaper alternative.
But even if email can represent a cheap option, it should not be approached as such.
With careful planning and execution, and by shunning the low-quality deals, brands can avoid unnecessary damage to their reputations and, just as significantly, deliver that all-important return on investment.
SHOPPING FOR EMAIL DATA - A LAWYER'S GUIDE
Email marketing is governed by both the Data Protection Act 1998 and the Privacy and Electronic Communications (EC Directive) Regulations 2003. Before an individual's email address may be used, list brokers should ensure that person has consented to the passing of their email address to others, with an easy way to opt out. The Information Commissioner polices this area and can issue fines.
Lawyer Susan Singleton of London firm Singletons advises clients to ask list companies for a contractual guarantee that they have obtained all the consents needed. "If they have not, there would be a right to pursue them for breach of contract and damages," she explains.
It is wise to purchase from reputable sources, as the legal buck stops with the buyer. Companies run into trouble by not checking they have the right types of consent and relying too much on the list company.
The Consumer Protection from Unfair Trading Regulations 2008 make it an offence to persistently send unwanted marketing emails. The question will be what constitutes 'persistent'. "Often, a judge will look up the definition of words in the Oxford English Dictionary," Singleton says. "I would say persistent means five times, particularly if the individual has asked not to be contacted."
Singleton's top tips:
- Work only with reputable list companies.
- Only use permissioned data. Do not pass the email address to anyone else without the individual's consent.
- Under the Data Protection Act, it is the list owner's duty to make sure lists are up to date.
- If anyone asks to be removed from your list, do so without delay.
- Keep your customers happy: it's psychology, not law.
For more detail see:
The Direct Marketing Association: www.dma.org.uk
The Information Commissioner's Office: www.ico.gov.uk
The Office of Fair Trading: www.oft.gov.uk
The Department for Business, Enterprise & Regulatory Reform: www.berr.gov.uk
CASE STUDY - mydeco.com
Objective: To grow the Mydeco.com database through opt-in email campaigns
Target audience: New customers and prospects
Budget: Undisclosed
Home furniture and interior design website mydeco.com was launched in February by lastminute.com co-founder Brent Doberman. Having built up an in-house database for its weekly style- and product-focused newsletter, the brand was keen to drive new users to the website.
A brand-positioning study enabled mydeco to identify its core target audience - primarily women who own their home and have a predilection for home shopping. Internet marketing agency tmnmedia recommended lists such as those owned by online fashion retailer Asos.com and property site Primelocation.com to reach the desired audience.
After testing small volumes, it was decided that Asos was the best fit for mydeco, and its list was rented on a cost-per-thousand basis. Jo Casley, marketing manager at mydeco.com, says the list generated high click and open rates as well as conversions into subscribers.
"We were particularly pleased that we haven't seen open or click-through rates for our newsletter declining, although these people are not as familiar with our brand as those who were grown organically on our site," says Casley.
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