Special Delivery
NMA Article by Ben King - quoting me!
When AOL and Yahoo! recently revealed plans to charge companies to deliver emails to their users, they drew a mixed reaction from the marketing community. Might this be just a short-term way to deal with the issue of spam, or could it mark the way forward for the industry?
AOL and Yahoo! are both to use technology from Goodmail Systems. Under a voluntary arrangement, advertisers will pay $2 to $3 (£1.15 to £1.70) for every 1,000 messages they send. In return, the Internet giants will guarantee that the messages will be waved through their email filtering systems and reach consumers’ inboxes.
“It will be the brands that pay the email charges, not the agencies, and the added costs will mean that brands invest more heavily on the creative side to increase response and maximise return on investment,” predicts Louis Halpern, CEO of agency Halpern Cowan.
Others, such as Dan Bannister, commercial director of Allegran Advertising, are more cautious. however. “From an email marketer’s perspective, anything that reduces spam has to be welcomed and is a step in the right direction,” he says. “However, the costs for the AOL/Yahoo! certified emails will filter through to brands and eventually consumers, so I’m not sure whether this is the best way to do it.”
A major marketing tool
Charging for email delivery is the latest phase in the long-running attempt by the industry to strike a balance between protecting legitimate marketing messages and cutting down on spam.
Email can still be an extremely powerful marketing tool, otherwise no one would bother to send spam. Careful design, tracking responses and user profiling can produce sophisticated and effective campaigns, but only if marketers respect the user, not wasting time with irrelevant offers.
The volumes of marketing emails are vast and growing rapidly. Tesco sends between 16m and 20m emails a month, according to independent estimates, and online ad agency DoubleClick sends over 1.35bn a month around the world.
However, these enormous numbers mask a considerable variety. Email is fundamentally just a communication medium and can carry many different kinds of message.
“Email falls into three categories for us,” says Barry Holloway, marketing director of uSwitch, an online comparison and switching service for utilities, telecoms and financial products. “First, as a customer service tool, customers email us with questions to which we reply. The second element is a communications tool for our existing customers - people who register for the newsletter on our site.”
The third element is acquiring new customers - potentially a very valuable role, but a difficult one to get right because it’s easy to cross the line where customers begin to see it as spam.
Email is most widely used for the second of the purposes Holloway describes: as a way for businesses to talk to their existing customers. Internet news services use free email alerts to let their readers know what new articles they’ve published that day, and persuade them to return to the Web site. Likewise, retailers, travel companies and others send their existing customers news of new services and special offers.
However, media companies are still among the most successful and advanced users of email marketing, and practices from the media industry still form the basis of many successful campaigns in other product sectors.
“The best clients take a publishing approach to email,” says John Nugent, MD for EMEA of DoubleClick Email Solutions. “They use direct mail analytics to see who opens and who doesn’t. Publishers are much better at understanding what people are interested in.”
The key concept is simple but very hard to deliver. Companies have to target their customers with interesting information they want to read.
Happily, senders of email newsletters don’t just have to guess what the recipients are interested in. They can track what their subscribers do and don’t read, and then tailor their messages.
One of the simplest ways to do this is to include links to the company Web site and see who clicks through on which link. Also, when an email is sent in the full-colour HTML format, the email program has to contact the sender’s server to download the pictures. This traffic is counted, giving an indication of who opens each email.
Such tracking tools are becoming increasingly sophisticated and companies can easily test how well each element of their email works. Considering a new format for the subject line? Then send out two emails, one with the old format, one with the new, and see which gets the best response.
“There’s always going to be at least one element we’re testing,” says Holloway. “Subject line, layout, sending strategy - we’re always testing at least one. We’re constantly surprised by the value of doing simple tests.”
Designing an email is only the start. You then have to make sure it gets into the person’s inbox. As home users and businesses fight against the torrent of spam, they send their mail through increasingly sophisticated filters to make sure only genuine email gets through. Legitimate marketing emails can easily be filtered out by mistake, along with the ads for Viagra and genital enlargement surgery.
Designing emails that customers actually want to read plays a big part in getting through the filters. Many spam filters are powered by feedback from users, so if they flag your mails as spam, then the filters will catch it.
But even this isn’t always enough. To keep their mails out of the spam traps, companies spend a considerable effort working with ISPs and anti-spam companies. For example, email agency CheetahMail has 40 members of staff working full-time to lobby ISPs and ensure they recognise their clients’ mail as legitimate. CheetahMail also has an extensive testbed which checks whether ISPs or anti-spam companies are blocking its clients’ messages.
Keeping emails relevant
Even with a brilliant combination of creative invention and scientific testing, a single email won’t fascinate all your customers. The next stage is segmentation - using customer data to ensure they only get relevant emails. A bank will know which of its customers have recently taken out mortgages, so it shouldn’t send them more mortgage offers. Home insurance, on the other hand, might be more appropriate.
“We’re moving from a list-based approach to a profile approach, and the next step is behaviour-based,” says DoubleClick’s Nugent.
Some companies already divide their lists into over 100 different categories, and there’s no reason why this shouldn’t increase. Nugent predicts that email engines will soon be closely linked into customer relationship management (CRM) databases and Internet analytics engines, to target emails based on the complete set of customer information that companies hold, from demographic data and past purchasing behaviour to past Web surfing and email reading behaviour.
So if someone reads all your emails and clicks on every link, you know they might appreciate receiving them more frequently. If they’ve only visited links relating to car insurance, that’s a good sign that a targeted offer for cheaper car insurance would be favourably received.
Such techniques work with existing customers, but using email to recruit new ones is a potential minefield that many marketers stay away from. However, there are firms that keep opt-in lists of people willing to receive offers from companies they don’t already do business with.
TheMutual.net, for example, has a database of around 1m email addresses and has run campaigns for Nestle, T-Mobile and British Gas. It gathers a wide range of information on its users, from address and income to credit card ownership, car ownership and intention to purchase another car. So rather than mailing random names, a car manufacturer can target only those who specifically intend to buy a car.
“The targeting is the most important part of making sure that you get a strong response,” says Mark Smith, CEO of TheMutual.
The question for the industry now is whether such established targeting techniques can meet the challenge posed by spam, which is also getting more sophisticated. If not, more email providers might follow the lead of AOL and Yahoo! and begin offering guaranteed delivery in exchange for a fee from advertisers.
“I think it’s a nice idea with obvious good intentions,” says Sam Brownfield, managing partner at digital agency Liquorice. “But anything that introduces a cost, no matter how small, to something that was previously free will run into problems.
“More importantly, anything that introduces an element of doubt - why didn’t I get that email? Is it because it didn’t have a stamp on it? - will fail,” he warns. “The idea feels like it needs much more thought and to be inclusive of the wider Internet community.”
Quick Take
:: Despite ongoing frustrations with spam, email marketing is finally delivering for legitimate businesses
:: Volumes are increasing rapidly, but the smart marketers are keeping their click-through rates high by observing the basics: interesting, relevant content, delivered to opted-in customers
:: Email produces an instant response, allowing marketers to refine their campaigns with surgical precision
:: At the cutting edge, detailed profiling and targeting based on demographics and past behaviours turn email marketing into an extremely powerful tool to drive business
Citroen tracks online behaviour
Citroen has been sending its customers emails for years, but felt it could do more than just build brand awareness. More than 80% of car buyers research their purchases online, so by tracking their site visits, Citroen could learn about them and send emails to help cajole them through their car purchase.
For the launch of the C2 supermini at the start of 2005, Citroen trialled what it called a triggered email campaign, in collaboration with interactive marketing agency Syzygy.
Rather than sending out blanket emails to every address on its database, it directed participants to a C2 microsite and judged where they were in the purchase cycle by studying their behaviour. They were then sent targeted emails to encourage them to take the next step. Citroen identified four categories of ‘hot leads’: people who had opted in to receive email, had made a return visit to the site, or who requested a brochure or a test drive.
Certain events would trigger an email - for example, if someone had requested a brochure but not responded for two days, they would receive a carefully designed mail encouraging them to sign up for a test drive. “The triggered email trial campaign was in recognition of advances in behavioural analysis, segmentation and delivery, and it showed how we could take email to the next level,” says Giovanni Gribaudo, Web and online marketing manager at Citroen UK.
Citroen compared the results with a control group to see if the mails were having an effect. It judged that the campaign successfully encouraged people to complete the calls to action and view the Citroen Web site. All participants who bought cars were encouraged to buy more expensive models, and a number of cars were sold as a direct result of the triggered email. The trial more than paid for itself, and the experience will be used in future campaigns.
“The campaign’s results justified our faith in behavioural-driven email as a marketing tool capable of more than just customer acquisition or retention,” says Gribaudo.
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