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DMA client benchmark report 2012 research findings
This document summarizes research findings from the DMA Email Benchmarking Hub on email marketing trends in 2011. Some key findings include: 1) Email marketing was seen as very important or important by 90.9% of respondents and its strategic value continued to grow, especially for B2B. 2) While email marketing budgets remained relatively low at less than 10% of total marketing spend for many, email was rated as the best marketing tactic for ROI. 3) Barriers to email success included lack of internal resources and challenges highlighting email's value to senior management. Segmentation and personalization also emerged as areas to improve. 4) Overall trends were positive with optimism about performance and satisfaction rising,
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DMA client benchmark report 2012 research findings
- 1. Research findings Fiona Robson,managing director, Rocketseed Anthony Wilkey, strategic client director, Emailvision #dmaemail
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- 3. DMA Benchmarking Hub •Fiona Robson – Managing Director – DMA Email Council – DMA Email Benchmarking Hub • Anthony Wilkey – Product Marketing Manager – DMA Email Benchmarking Hub
- 4. 2011: a greatyear for email
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- 6. Report Overview • Strategic importance of email • Email marketing budgets • Barriers to success • ROI – revenue and relationship • 2011 key metrics • Concerns • Contact strategies • Segmentation
- 7. Strategic value ofemail
- 8. Importance of email •90.9%: “Very Important” or “Important” • Significant increase YOY for B2B • Recognition for direct response but also longer-term impacts of email marketing • 62% of marketers satisfied with their email marketing programme
- 9. Email:% of marketingbudget
- 10. Email expenditure • <10%of total spend for almost half of respondents • 30% or more of marketing budget for 1/3 of respondents • 63% expect to increase expenditure • Increased spend linked with plans for advanced email marketing tactics • Expected increase in spend in 2011 did not happen • Is email so cost effective that businesses think investment is not needed?
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- 12. Barriers to success •Internal Resources are the biggest barrier • In 2010 Budget was top issue (37% vs 26%) • Lack of data is less of a concern (28% vs 22%) • In B2B responsibility for email marketing more likely with Senior Staff • 15% cite lack of involvement of senior staff as a barrier
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- 14. The value ofemail • Reported Revenues from email marketing are “disproportionately large” • For almost half – drives 30%+ of revenue • 2011 sees an increase in those who can measure revenue from email (61% vs 55%) – 79% B2C vs 44% B2B • Increased focus on revenue vs tracking • Increased awareness of longer-term, brand, relationship impacts
- 15. ROI of Emailin the Marketing Mix
- 16. ROI in theMarketing Mix • Email marketing is rated as best marketing tactic for ROI • Newsletters & limited time offers contribute the most to revenue • Findings concur with other recent surveys: – DMA US estimated Email Marketing’s ROI at $40.56 for each $1
- 17. Relationship in themarketing mix
- 18. Relationship in the MarketingMix • Email marketing is the clear winner, cited by 72% of respondents • This is exactly double those citing “social networking sites” • Opens up new value possibilities beyond direct response • Email as a vehicle for both distributing and creating content • Complementary channel to social media, requiring an integrated approach
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- 21. Performance • Positive trends • Optimistic outlook • Stay focussed • Importance of testing
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- 24. Satisfaction and Concerns •Broadly optimistic outlook • Significant drop in overall concern • Key challenges – effectively engaging senior management – highlighting the true value of email – data and resource management
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- 27. Contact Frequency • Move beyond deliverability • Mailing volumes remain low • Focus on contact strategy • Testing opportunity
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- 29. Segmentation • Definition ofsegmentation changing • Progress towards personalisation • Growth of multi-channel • Emergence of mobile marketing
- 30. Conclusions • Overall emailtrends and sentiment are positive and improving • New channels present an opportunity • Investment in email remains relatively low • Critical to highlight the value of email to secure additional resources and optimise programmes
Editor's Notes
- #5 End of social vs email debate Open, click and conversion rates trended up over the past 12 months and are widely predicted to increase further in the future. Only 1 in 6 marketers reported decreases in these metrics.
- #6 Social Integration : Indeed, compared to previous years, email marketers are far more positive about social media/networks as a complementary channel to email, particular its role in building relationships. Maximum mailing frequencies have dropped compared with 2010, and there is a suggestion that many marketers may not be emailing enough to truly maximise email response. 500 different handsets produced last year
- #7 Do we need a slide at the beginning of key findings or include these in the intro slide?
- #8 90.9% Very or Important. In 2010 88.7%. That was also an increase on 2009 figures. - greater shift in the “very important section” This increase in importance is particularly marked among B2B organisations, which likely has several causes. One is certainly growing recognition of email’s ability to influence loyalty and longer-term purchase decisions, rather than simply drive immediate and direct responses. Cuts, for example, to travel/ tradeshow budgets also mean prospects and customers are harder to reach “in person” and email is a cost-effective way to take up the contact slack. B2 B in 2010 39% B2B very important in 2011 – 50% most marketers (62%) describe themselves as satisfied or very satisfied with their email marketing programme.
- #10 Email marketing accounted for 10% or less of the marketing budget in almost half of businesses surveyed, but still claimed a slightly greater proportion of budgets than in 2010. 63% expect to increase expenditure on email marketing in the future 55% less than 10% in 2011 48% less than 10% 34% spent aver 30% of marketing budget vs 2012 where 31% spent over 30% of marketing budget in 2010 survey clients had expected spending to increase 51% actually – not seen by these results. The high ROI produced at a relatively low cost leads many organisations to perceive email as something that performs perfectly well without the need for significant resources. This can constrain investment in more advanced tactics, such as shopping cart abandonment emails. 2011 follows a similar pattern to previous years, with 48% spending 10% or less of their budget on email. Nevertheless, as Chart 2.1 shows, the year did see slight improvements in budget allocation compared with 2010, and over a third of respondents spent 30% or more of their marketing budget on email. Equally, the desire to invest more in email marketing is often associated with proposed investment in new tactics. But the actual implementation of new tactics is constrained not just by the true availability of funds, but also by a lack of appropriate resources.
- #12 Internal resources are the biggest barrier to success: most businesses have less than one staff hour a day allocated to email marketing. Skills are not necessarily a major constraint, with 70% of marketers at least familiar with the essentials of the marketing discipline. Last year budget was biggest issue. (37% bs 26% this year) Internal resource moved to number one issue (34% last year) Lack of data – not such an issue now LY was 28%, now 22% - more the challenge of how to use it and who will do it. Responsibility for email’ success or failure 2010 54% mgt level, 24% exec level – only 16% director and 5% board level Organisational inertia is partly to blame, but the continuing perception at higher levels that email requires little investment to work is not likely to lead to more emotional investment from senior executives. Responsibility for B2B email marketing more likely to be in the hands over senior staff Between 2007 and 2009, organisations moved towards better management of email activities, but the trend was reversed in 2010. Some 17% fewer organisations controlled email processes centrally compared with 2009, and about a sixth of all respondents had no set control process at all. As with segmentation, there is a danger that marketers see data/budget/resource/technology issues as insurmountable constraints to practicing advanced email marketing. The challenge is to move forward within these constraints.
- #14 The reported revenue contributions from email marketing are disproportionally large when compared to its budget allocation. For example, email drives 30% or more of revenues for around 44% of respondents, ? but accounts for an equivalent amount of budget in just 34% of cases. The first is the ability of marketers to actually measure email revenue. Around 61% say they can, which is slightly more than the 55% who could do so in 2010. There are, however, marked differences between B2B and B2C senders: the figure for the latter is 79%, while only 44% of B2B organisations claim the same ability. This disparity is easily explained by the typical nature of B2C and B2B emails. B2C messages are commonly direct response offers for a particular product, with a trackable, measurable conversion path: open - click to a unique landing page - purchase. B2B emails are often informational, with long-term, harder-to-measure revenue impacts achieved through increased loyalty and lead nurturing. The second issue is that standard measures of email revenue – tracking post-click conversions from unique landing pages - actually under-estimate the true impacts of email. A recent consumer survey6 by the DMA , for example, asked how people respond to receiving an interesting email from a trusted brand: 22% would visit the sender’s website without clicking on an email link and 45% would “bear the information in mind for later use”. The resultant sales, downloads, etc. would not normally be attributed to email. One study7 has shown, for example, how sales spikes can be observed among email subscribers shortly after a campaign send. Unsurprisingly that sales spike is observed in subscribers who neither open nor click on an email. Equally, proper awareness of “out-of-email” response (those responses that aren’t expressed through an open or click on the email itself ) opens up the possibility of using more campaigns specifically designed to encourage this response; where email acts, for example, as a branding vehicle, awareness builder or driver of offline activity. Value of brand impressions The high value, performance and potential of email marketing is also emphasised in budget plans for 2012, with 63% intending to increase expenditure on email and only 6% expecting a decrease Another factor behind investment increases is the continuing challenge of the dynamic online environment, where standing still can mean going backwards. Particular challenges include: • Competition for attention from outside the inbox (social networks, video, gaming etc.). • Competition for attention within the inbox, particularly as inbox providers provide more tools for sorting email by importance. • The arrival of mobile email, which changes when and where a growing proportion of an email list see their email.
- #16 Email marketing is rated as by far the best marketing tactic for both ROI and for developing enduring and profitable customer relationships. The share of revenue generated by email marketing exceeds its share of budget, even ignoring the considerable indirect and long-term responses to campaigns. Newsletters (generic and segmented by purchase habits) together with limited-time offers contribute the most to email revenue, but there remains considerable potential to use those message types that generate high revenue per email, particularly trigger email campaigns. Email marketing clearly has a strong and valued role for businesses, but how does it compare with other marketing tactics? Looking first at ROI , Chart 5.1 shows email marketing is a clear winner: 67% of respondents cite email as one of the tactics giving the best ROI in their company, almost double the next best option (online marketing in general). The figure is made more impressive by that general tendency to actually underestimate email revenues. Of course, these ROI results are biased by whether or not the company actually uses each tactic in question. It’s no surprise to find email top, given respondents were predominately email marketers. But the result does echo similar findings in numerous other studies and surveys. For example: • An Email Marketing Industry Census8 found email was second only to organic SEO in terms of ROI , with 72% describing email’s ROI as excellent or good. • The US DMA ’s “Power of Direct” study9 estimated email marketing’s ROI for 2011 at $40.56 for each $1 invested, easily beating all other marketing channels. • A Focus Marketer Benchmark survey10 saw email marketing cited most often as the best performer over the previous 12 months.
- #18 Perhaps more interesting is the evaluation of each tactic or channel’s potential in creating long-term and profitable customer relationships, which is less biased by whether or not the respondent’s company actually uses that tactic or channel. Again, email is the clear winner, cited by 72% of respondents. This is exactly double the number of the second-most promising option: social media. There are many positive aspects to this result. Despite the tendency to focus on immediate benefits and responses, marketers clearly do recognise that email can play a wider and important role in long-term profitability and customer relationship management. This recognition, coupled with a better appreciation of email’s indirect impacts, opens up the channel to a range of new possibilities beyond the constraints of the simple direct response offer, as discussed earlier. Email’s relationship role also ties into the enthusiasm for content marketing, where email is an excellent vehicle for both distributing and creating content, for example through: • Repurposing valuable content created for and through social networks, blogs, support sites etc. • Driving subscribers to discussions on social network sites, community forums and blogs • Inviting customers to submit reviews and ratings for products and services • Encouraging subscribers to participate in surveys and studies Email is almost unique in having value for both ROI and long-term, profitable relationships. This versatility contrasts with nearly all the alternatives, which tend to be better suited to one or the other. The results also point to a more mature approach to social media and social networks. Twitter, other social networking sites and online fan communities all scored relatively well as relationship builders. This suggests email marketers no longer reject “social” as a “threat” to email, but see it as a complementary marketing option of genuine merit. Promising, early-stage integration approaches include: • Using social networks to grow email databases, e.g. oo Announcements of forthcoming emails or newsletter issues oo Distribution of links to archived emails oo Linking to sign-up pages oo Embedding sign-up forms and copy in social network sites • Using email to drive social network activity, e.g. oo Email content as topics for discussion oo “Share with your network” links oo “Follow”, “Like” etc. links or campaigns oo Promoting Facebook chats and competitions • Sharing content between social and email, e.g. oo Monitoring social conversations for email topics and customer interests oo Repurposing social and user-generated content
- #20 Performance Trends How have the following trended over the last 12 months? Generally positive trends around 70% said that response metrics (opens, clicks and conversions) were the same or better than the previous year Reasons may be down to; a more evolved understanding of the channel a more sustained programme of improvements across design, tactics and strategy a better informed industry stronger technology and strategy partners Worth noting that 20% of respondents recorded a decrease in year on year conversion rates
- #21 Performance Outlook How do you expect the following to trend over the next 12 months? Sense of optimism for the future Reflecting continuing strength of email marketing within the marketing mix
- #22 Performance Positive trends Similar trends seen in the US, often a foreteller of UK fortunes Better still in growth markets such as Brazil and Asia Optimistic outlook Reflects deeper understanding of email channel Reinforced by a growing understanding of cross channel strategies Growing opportunity to leverage data resources effectively Stay focussed - No time for complacency – just because it can be cheap and it can be easy doesn’t mean the wrong decisions can’t be costly or make things more difficult Importance of testing May usher in a new era of testing within the field of email marketing as organisations target optimisation - From names (brand, organisation, account manager, other individual, or a combination of person and brand/organisation) - Subject lines (length, style, word order, capitalisation, branding, personalisation) - Timing (time of day, day of week, day in month) - Frequency Call-to-action (CTA) links (number, positioning, wording, style, colour, size, shape, use of secondary CTA s as well as a main CTA, CTAs in pre-headers) I’ll talk about other testing opportunities a little later
- #23 Satisfaction How satisfied are you with your email marketing programme? Around 70% either satisfied or very satisfied Around 20% unsatisfied or very unsatisfied – similar to the proportion of respondents who also reported declining conversion rates Varied slightly for B2C and B2B (BSB slightly happier)
- #24 Primary Concerns Which of the following are you most concerned about (multiple answers possible)? Overall levels of concern markedly down on the previous report (in most cases by at least 1/3), suggesting that the industry has matured significantly in terms of staff, image and objectives Priorities are shifting from process towards end results – this is reflected by the top priority in this report being conversions (as opposed to deliverability and click-throughs in the previous report) Note Strange to see data as less of a concern, especially as ‘lack of data’ was highlighted as a constraint earlier in the report This would suggest that respondents may have sufficient data and adequate tools to continue as things are, but not necessarily enough to implement more data-driven tactics and strategies
- #25 Satisfaction and Concerns Broadly optimistic outlook No surprise, given the other data in the report Important to note that B2C marketers have recorded lower levels of satisfaction with email marketing than B2B, though this is likely due to higher expectations and greater pressure Significant drop in overall levels of concern - As mentioned, overall levels of concern markedly down on the previous report - Perhaps also down to a comparison with other channels (e.g. social, mobile) where respondents may still be learning how to use them effectively - May also be down to what respondents are measured on and/or can influence – greater concern about things that affect them directly Key challenges - Securing greater resources to make more use of data and implement more sophisticated and effective email marketing programmes
- #26 Contact Frequency - A complex and much debated issue – perhaps one for the panel discussion later - A commonly held – albeit simplified - view is that increasing frequency can lead to increased responses and conversions, however one needs to take into account the caveats of potential list fatigue, unsubscribes and potential delivery challenges associated with higher spam complaints - Several challenges (Priority Inbox, Hotmail Sweep) introduced in 2010/2011 that made deliverability a significant area of concern in last year’s report Traditionally, most marketers have erred on the side of caution, implementing programmes based on presumed value as opposed to frequency; seasonal increases focus on more ‘engaged’ recipients introducing multiples email subscription streams triggered initiatives such as abandoned baskets or birthday emails
- #27 Contact Frequency Is there a contact strategy for the maximum amount of times you contact an address (based on time and behaviour)? The reason for providing this context in the first place is that it would serve to go some way towards explaining why almost 50% of respondents don’t currently have a contact strategy They may feel that if they’re approaching their email programme with appropriate levels of caution, why feel the need to actively manage contact limits? Other findings in the report suggest that overall maximum mailing volumes have actually gone down since 2010 – both on the B2B and B2C side – which would further reinforce this view It is surprising to see that if anything, this figure is slightly worse than in 2010 - nevertheless, if marketers are looking to increase email frequency as a potentially quick and simple way to drive additional revenue, then this is something that they would be advised to address
- #28 Move beyond deliverability For the time being, marketers have found ways to addresses these challenges, and if suitable best practices are employed they needn’t be a primary concern (as reflected in the report) Mailing volumes remain low As a consequence of concerns around list fatigue, reduced engagement and reputation management, the number of commercial emails people are receiving is still lower than many might think it seems likely that many senders are operating under the maximum safe frequency threshold Focus on contact strategy This remains limited and has seen little change in the past 3 years Without one, marketers may struggle to evolve their email marketing programmes, especially in the context of an expanding, multi-channel universe Testing opportunity This presents an opportunity for marketers to test different frequencies for test groups - successful campaigns can be rolled out to other target groups. Importance of reviewing and refining strategy – must be mindful of data and deliverability issues
- #29 Segmentation On average how many different customer segments do you use to segment your mailings? Overall, segmentation has regressed somewhat, despite being a proven strategy for increasing performance metrics This is the case for B2C as well as B2B marketers Reduced commitment to segmentation may be down a number of factors: new definition of segmentation due to increased levels of personalisation less available time to focus on segmentation due to a more complex marketing mix insufficiently sophisticated segmentation tools lack of resource dedicated to testing
- #30 Segmentation Definition of segmentation changing Multiple possible reasons Progress towards personalisation Fully customised offers taking advantage of dynamic, personalised content Growth of multi-channel - This is likely to place renewed focus on elements like segmentation and contact frequency in wider campaign strategies to address the risk of contact fatigue Emergence of mobile marketing - Marketers will need to consider the mindset of customers when they’re accessing emails on a mobile device as different from when they’re on a laptop or PC and target their campaigns accordingly I expect this to be a key area for the next 12 months as; pressure on email to deliver increases mobile growth accelerates demand for more personalised, 1 to 1 communications becomes the norm as opposed to the exception marketers become more equipped to handle sophisticated and dynamic selection and analysis tools
- #31 Critical to highlight the value of email to secure additional resources In previous DMA research, 86% of respondents said they still couldn’t calculate the value of an email address – how has that changed today?