Internet Advertising Analysis Part 13; Email
Targeting Behavior E-mail has the potential to be the ultimate direct marketing tool. The reasons cited above (cost, real-time distribution, and interactivity) tell part of the story, but they do not cover the key advantage: targeting. Direct mail has traditionally been the most targeted of all media. Direct mail is used by all sorts of advertisers to reach specific customers whose past behavior makes them appealing targets for the advertiser’s offering. Direct e-mail works on basically the same theory, but with some added benefits. Direct e-mail allows advertisers to add users’ past Web behavior to the database. For example, if a consumer had recently been to the Compaq Web site and read about the newest laptop, direct e-mail would allow Compaq to offer a special coupon or more information to that consumer.
This is the most proactive form of marketing that is currently available to Web advertisers. While static banners need to be noticed and clicked through, a targeted e-mail reaches a more receptive audience and is much more difficult to ignore. Direct e-mail allows advertisers to deliver different ads and offers to different consumers. Zip codes and local stores can be taken into account. The combination of demographic, geographic, and psychographic data makes direct email a potent tool for customer acquisition and retention. E-mail proactively reaches users, rather than trying to catch their attention as they navigate the Web.
Targeting on Browsers: Browser Sniffers In the past, e-mail consisted of text only. Now browsers have been integrated into the e-mail system to allow for links and graphics. Users can click on the link in the message and be transported directly to the related Web site. Additionally, many browsers now have rich-media functionality that can send full graphic pictures through e-mail. Direct e-mail marketers are poised to benefit from this technology using “browser sniffers,” which indicate what type of browser a user has and then sends the richest form of media that can be viewed on that browser.
Figure 18 E-Mail Targeting – High and Right is Best
Plain Text Approximately 10% of today’s e-mail users rely on browsers that can support text only, including Lotus Notes and Unix Mail. These users will receive text-only direct mailings. In order to gain more information, the user must click on the advertiser’s URL address and will be transported to the site. The response rate to these text-only ads is 3–4%. This is about 3 times as effective as traditional direct mail. Clickable Text About 60% of today’s browsers allow for “clickable text.” Eudora 3.0 and Microsoft Exchange support this type of advertisement. With clickable text, the link takes the user to a site devoted to the offer itself, instead of the advertiser’s entire Web site. This allows many links to different portions of the advertiser’s site. Response rates on these ads are 6–8%, or double those of plain text. HTML E-Mail HTML e-mail allows users to see graphic images in the message and accounts for about 30% of today’s e-mail market. Microsoft’s Hotmail and Netscape’s versions 3.0 and above service HTML e-mail.
With HTML e-mail, users can click on the image or another link to be transported to a site with more information or the actual sale page on the advertiser’s Web site. HTML e-mails typically generate response rates of about 12–15%, three times the level of plain text and two times the level of clickable text. Interactivity is currently being added to e-mail as well (users will be able to ask questions about an offer or play a game), which should further increase the response rates. Of course, as targeting and interactivity become more commonplace, it is possible that response rates will stabilize and drift lower from current levels as the novelty wears off. This has been the case with most new media (see the history of direct mail and, perhaps, Internet banners).
Table 13 E-Mail Response Rates
Tracking Just like ad serving, a consumer’s response to e-mail can be tracked. The offers that most interested a consumer and the degree of follow-through can be tracked. Of course, once a consumer clicks through the e-mail to the advertiser’s site, the consumer’s behavior there can be tracked. Typically, advertisers receive information on what types of consumers are responding to different offers and what offers are generating responses. Why Don’t Advertisers Do This Themselves? Several obstacles must be overcome before companies can successfully use e-mail as a marketing tool.
• Large technology investments: Companies must work around potential problems such as “bounced” messages and Spam-blocking software and deal with issues like network bandwidth utilization, content selection, and management of massive databases. These require larger investments in technology (not to mention an expert staff to manage it) than many advertisers are willing to make themselves.
• Spam: Unsolicited commercial e-mail (UCE), also known as “Spam,” is a major concern among users and Internet service providers (ISPs). A high degree of expertise and attention is essential on the part of a company sending e-mail to a large number of prospects. “Opt-in” databases alleviate some of this concern, but they are not foolproof. This will be discussed further in the “Opt-In vs. Opt-Out” discussion below.
• Online Is Different from Offline: Techniques for adding subscribers/recipients and improving response rates are substantially different from those used in physical direct mail. Because the experience and technology for implementing an effective e-mail direct marketing program are so different, good direct offline mailers may not easily transform themselves into successful online direct marketers. Opt-In vs. Opt-Out How a direct e-mailer generates the database of consumers is of critical importance.
In general, two methods are used. Opt-Out The first is termed “opt-out,” because a consumer is automatically added to the database and must contact the e-mailer to opt out of the program. This is generally used by advertisers trying to grab as many customers as possible, without much regard for long-term relationships. The problem is that consumers receive unsolicited e-mail that clogs up their inboxes and raises privacy issues. Opt-In The second way to generate a database requires the consumer to specifically sign up for inclusion. Termed “opt-in,” consumers that visit a direct e-mailer’s Web site may list the areas about which they would like to receive information. With opt-in, consumer acquisition may not be quite as rapid as with opt-out, but a better long-term relationship is formed with the consumer.
Consumers are much more receptive to advertising when they opted in to a program. As consumers become more and more inundated with e-mail, the use of filters will become more prevalent, and these filters will likely block opt-out e-mail for the simple reason that many consumers aren’t interested. Opt-in email will be much better received. E-mail exchange programs also exist. In this case, a cobranded e-mail exchange registration page allows consumers to opt in for more than one e-mailer’s list. Additionally, some direct e-mail ads have a link to a co-branded site at which the consumer can sign up for further e-mail groups in selected areas. This is very similar to the media seller’s network of sites. Affiliated sites gain size, scale, and reach by participating. Further, they receive compensation for referring consumers to other members of the exchange program, making them more attractive in advertisers’ eyes.
Table 14 Direct eMarketing Appears to Beat the Rest
Cost Typically, direct e-mail campaign fees are broken into two types. Set-up fees start at about $1,500 per campaign, and delivery fees are usually $0.02–0.05 per e-mail, but volume discounts often result in lower fees. Customer acquisition costs via direct e-mail are much lower than via direct mail. We estimate that the difference is approximately 20–30% in favor of direct e-mail. Customer Acquisition/Retention It is our belief that direct e-mail’s greatest benefit lies in building customer relationships, rather than simply acquiring customers. This is opposed to the prevailing Internet wisdom, which encourages dot-coms to grab share of their respective markets no matter what the cost. We believe that customer relations and quality will suffer if companies adopt the “land grab” strategy. E-mail is much more intrusive than banner advertising or even interstitial advertisements. For that reason, it must be approached with more care. Customers receiving unsolicited e-mail are much more likely to react negatively than even those receiving unsolicited direct mail. Thus, we feel that opt-in e-mailers with a slowly building sales pitch are best-positioned in this industry. Rather than focusing on one-time sales, these companies will build relationships with customers over the longer-term.
After all, getting the third or fourth sale is much more valuable than getting only the first. Competition Because of the low barriers to entry, the direct e-mail marketing space has many competitors. We believe that several characteristics will separate the winners from the losers.
• Scalability: Those e-mailers with scalable operations, possessing the ability to reach large numbers of consumers without incurring large extra costs, will stand out.
• Rich Data: Data on consumers is key for the success of e-mailers. Collection, management, and interpretation of data are important for ad targeters and direct e-mailers. Those with the most rich data on the greatest numbers of people will be best-positioned.
•Relationship Management: In our minds, direct e-mail is not a customer acquisition tool. Rather, it is a customer relationship management tool. The successful e-mailers will view it this way and act accordingly.
• On- and Offline Convergence: Eventually, due to its low costs and incredible targeting ability, direct e-mail will become a complete direct marketing solution. Both on- and offline advertisers will use it to enhance their businesses. The e-mailers that position themselves for this coming convergence will be best prepared to beat out their competitors.
Coupons & Promotions: The Internet Marketing Sweet Spot?
Couponers and promoters on the Internet sit in a very nice sweet spot. For several reasons, their marketing and ability to provide advertisers with high rates of return are virtually unparalleled.
• Users and their behavior do not need to be tracked across the Internet, as users go to the couponer’s home page to conduct transactions. There, couponers compile information on their various interests, often at the behest of the consumer.
• Couponers and promoters typically require registration information, so they immediately obtain very valuable information on consumers. • Couponing is by definition an opt-in process. Thus, marketers can be assured that they are reaching a receptive audience.
• The demographics of Internet users, and those who sign up for online couponing in particular, are very attractive. This has caused many offline businesses to offer online coupons, even if they don’t ever expect to offer ecommerce. Targeting Through the use of coupons and rewards programs, marketers are able to closely monitor what consumers are purchasing, due to the simple fact that consumers must redeem their coupons or report what they are purchasing in order to generate points. The same is true on the Internet, but to a much greater extent. Consumers clicking on certain coupons are obviously interested in those types of products, so specific marketing can be targeted at them even if they don’t make a purchase. In addition to the clickstream monitoring, couponers typically gather a great deal of information on consumers through the registration process, which allows advertisers to target specific individuals depending on self-described likes and dislikes.
Rewards Programs
It is our belief that rewards programs on the Internet will be big, like the “frequent-flier” programs currently offered offline. By purchasing goods on the Internet, consumers accumulate points that can be applied to the purchase of further products. Many companies are currently linking online and offline rewards programs, thereby allowing consumers to accumulate points through both online and offline purchases.
The key to any such reward program is the marketer’s ability to migrate consumers up the value chain. By gently encouraging consumers to make larger purchases thereby earning more points marketers are able realize the greatest benefits.
Drivers of Success for Internet Couponers & Promoters
While there is no set template that Internet couponers must follow to ensure success, we believe there are certain issues that will distinguish the winners.
• The Offer: Marketers must optimize their targeting, using all of the information available to drive up conversion ratios.
• The Coupon: For offline marketers, the coupon itself must be easily printable, but not easily duplicable. For online marketers, the coupon must offer a seamless ability to purchase the product online.
• Privacy: Online couponers generate a great deal of information on consumers that must be handled carefully and prudently. Clear privacy statements should be posted, and couponers must stick by them. Failure to do so may result in a mass exodus of consumers.
• Customer Relations: We feel that too many Internet companies are sacrificing good customer relationships in a scramble for customer acquisitions.
Those couponers that establish good relationships through quality service and prudent use of consumer data will profit in the long term. Those who simply try to impress Wall Street with the number of customers acquired will fall behind. The Future In the future, we believe that those couponers who integrate redemption across the offline and online worlds will benefit the most from the development of online coupons. Looking further ahead, we believe that the actual paper coupon will disappear and be replaced by automatic transfers via credit card. Some couponers are already doing this, in one instance allowing a consumer to “clip” an online coupon for a restaurant and have the savings transferred directly to his or her credit card to be redeemed in the future. Cybergold goes even further to allow its cyber dollars to be transferred directly to customers’ credit cards for use in purchasing anything.
Continue with:
Part 14; Advertising or Direct Marketing? , Part 15; What Does the Internet Advertising Market Consist of? , Part 16; Rich Media still has some drawbacks ,
Part 17 Inventory and Concentration , Part 18; Market Share and Concentration Data , Part 19; Global Impact, Part 20; Residential and Business Use ,
Part 21; Pageviews , Part 22; Advertising vs. Direct Marketing , Part 23; Investment Conclusion
Corey Katir Brings you Lady Gaga News ; Corey Katir Brings you Eminem News ; Corey Katir Brings you Justin Bieber News
Corey Katir Brings you Michael Jackson News ; Corey Katir Brings you Lil Wayne News ; Corey Katir Brings you Miley Cyrus News
Corey Katir Brings you Katy Perry News ; Corey Katir Brings you Shakira News ; Corey Katir Brings you Rihanna News
Corey Katir Brings you Drake News ; Corey Katir Brings you Christina Aguilera News
