 |
Branding Laws · Internet Marketing · eMarketing · Internet Advertising · Online Branding |
|
Branding Laws · Internet Marketing · eMarketing · Internet Advertising · Online Branding |
|
Email Marketing: The Most Effective Advertising Technique
April 16, 2004
Prepared by
Skyler Christensen
Market Research Division of Prodigy Financial
Email Marketing:
The Most Effective Advertising Technique
April 16, 2004
Prepared by
Skyler Christensen
Market Research Division of Prodigy Financial
Prepared for
Jon Hansen, CEO of Prodigy Financial
ii
Table of Contents
LIST OF ILLUSTRATIONS…...............................................................................................iii
EXECUTIVE SUMMARY…………………………………………………………………..…iii
INTRODUCTION……………………………………………………………………………….1
Purpose and Scope……………………………………………………………………….1
Background………………………………………………………………………………1
Problem…………………………………………………………………………………...1
DISCUSSION…………………………………………………………………………………….2
The Most Effective Techniques………………………………………………………….2
Email Marketing Action Plan………...…………………………………………………3
10 Serious Email Mistakes to Avoid….………………………………...…………..3
How to Build an Email List………….……………………………………………..4
How to Develop Creative Briefs …….……………………………………………..5
Content Creation…………………………………………………………………..5
CONCLUSION………………………………………………………………………………….7
iii
List of Illustrations
Figure 1: Direct Marketing Effectiveness……………………………………………………….2
Figure 2: Email Risk Scale………………………………………………………………………3
Executive Summary
As a result of the market research conducted for this report, I recommend the following:
· Start an email campaign by hiring an email marketing company and renting double-opt in
lists.
· Build an in-house email list
· Publish an in-house newsletter to both in-house lists and rented double-opt in lists
· Compare the results from the in-house marketing to the hired marketing company
· Contribute more resources to the email marketing system that works best
The research that supports these recommendations is summarized in the following paragraphs.
The most important finding was that email is by far the least costly and most effective type of advertising.
This fact was found in a report by Iconocast on internet trends and demographics.
Other important research indicated mistakes in email marketing that even large companies make. Examples
of this include ignoring spam filters used by Yahoo, MSN, and Outlook. Also, companies have a tendency
to buy cheap lists which have low conversion rates.
Recommendations were gathered from experts in email marketing on the following topics:
· Collecting Emails
· Preparing Creative Briefs
· Writing good content for newsletters
By implementing the techniques and recommendations contained in this report, Prodigy Financial will
increase the quality of its advertising campaigns and ultimately its profits.
1
Introduction
Purpose and Scope
The purpose of this report is to provide Prodigy Financial with the results of my research on email
marketing, the most effective method of online advertising. It will also give recommendations on starting
and running an email campaign. The desired outcome is that Prodigy Financial will be able to increase its
sales while keeping its advertising budget within 20% of sales revenue.
Background
Online marketing is quickly becoming a major facet of any competitive company’s promotional campaigns.
According to a statistical report by Iconocast, online ad spending of U.S. companies will reach $16.5 billion
by 2007 which exceeds the $16 billion spent on Yellow Pages and the $13.2 billion spent on magazine
advertising (2001). These facts show that if a company wants to be competitive, it must use the internet for
advertising.
Prodigy Financial’s first efforts at online advertising were unsuccessful. The company purchased cheap
search engine traffic through Goclick.com which resulted in a loss of 70 percent of the initial investment.
Soon afterward Prodigy Financial put the more expensive pay-per-click search engines to use. Google
generated a 400% return on investment and Overture produced a 500% return on investment over a period
of only one month.
The high returns generated by the more expensive traffic demonstrate the importance of using the correct
mediums to advertise. Even though goClick’s cost per click was lower, the company lost money on it
because its distribution network doesn’t produce quality traffic. While there is no guaranteed method of
obtaining a decent return on investment (ROI) with advertising, odds can be improved significantly through
market research.
Problem
The problem that Prodigy Financial faces is a lack of market research on advertising. Currently the
company is using a costly and limited advertising medium: pay per click search engines. Due to budget
restrictions this method is not producing enough sales to reach the company’s goals. Therefore the President
wants to know which types of online advertising are the most effective and least costly. This report will
focus on recommending the best online advertising technique and how to implement it. The President will
then be able to use this information to expand Prodigy Financials sales and profits.
2
Discussion
The Most Effective Techniques
According to Iconocast the most effective direct marketing tactic is customer or visitor email (2001). The
second is online press releases, and third is referral partnerships. The Figure 1 below shows marketing
techniques rated according to efficiency, based on a scale of one to five where one is ineffective and five is
highly effective. Notice that customer/visitor email has the most effective rating which is why this report
will focus on email marketing (cited in Iconocast, 2001).
Figure 1: Direct Marketing Effectiveness
Rank Method Rating Use
1. Customer/visitor e-mail 4.02 54
%
2. Online PR 3.59 30
3. Referral Partnerships 3.49 20
4. Sponsorships 3.48 18
5. Affiliate Programs 3.44 27
6. Search Engine Position 3.34 66
7. Reciprocal ads/links 3.32 43
8. Streaming Video Ads 3.21 4
9. Banners/links 3.05 38
10. Unsolicited e-mail 2.67 11
Source: Jan 2000 Direct Marketing Association
It might be surprising that e-mail is the number one most effective channel of advertising but there are
several very simple reasons for its success. First, email is personal, it is sent to an individual and that
individual eventually has to either open it or delete it. Second, it basically doesn't cost anything to send
email to thousands of prospects. Third, it provides instantaneous feedback about the success of the
campaign; people usually respond within 24 hours.
3
Email Marketing Action Plan
Many companies use unethical means to build email lists. They promise that they are newly acquired emails
and that they have never been used for soliciting. Often the prices are cheap for the number of emails
offered. For example, FX Style rents a list of 238 million email addresses for $29.95. Purchasing a list like
this is very dangerous legally. A list this big was most likely crated with emails that were harvested from
web pages on the internet. This means that the company used a program to scan web pages for emails. The
list created by the program is a spam list because permission wasn’t obtained from the owners of the emails.
Sending emails to this type of a list is illegal and could result in a lawsuit. Brendenberg, a veteran in email
marketing developed a scale showing the highest to the lowest risk email lists (n.d.). Figure 2 shows this
list:
Figure 2: Email Risk Scale
Highest Risk
Rented Spam List
Homemade spam list
Targeted spam list
One-time unsolicited invitation
One-to-one cold canvass
Rented opt-in list
In-house opt-in list
Lowest Risk
There is a correlation between the level of risk in an email list and the conversions which result from
marketing to the list. The riskier lists produce very few sales while the safer lists produce the most sales.
Note in Figure 2 that the best email lists are in-house and rented opt-in lists. These are the two types of lists
that Prodigy Financial should use in its campaign.
10 Serious Email Mistakes to Avoid
The Vice President of Marketing at EmailLabs, Loren McDonald, compiled a list of the ten biggest
mistakes made in 2002 in email marketing:
1. Ignoring the Outlook Filter – Certain phrases such as “money back,” or “order now,” trigger the
Outlook Spam filter.
2. Avoiding the word “free” in all emails – The word “free” can be used as long as it is not in
combination with other words that email filters will consider spam.
3. Renting low quality lists.
4. Using non-catchy subject lines.
5. Failing to test emails with Outlook, Yahoo, and other popular email clients.
6. Failing to measure and fine-tune variables the campaign.
7. Fine-tuning a campaign and then not broadcasting it enough to provide a good return.
4
8. Sending irrelevant offers – The list should be segmented so that each offer is targeted to the
needs of the readers.
9. Broadcasting emails without adapting the html and message for specific web based email
accounts such as Yahoo and Hotmail.
10. Being to lazy to post past issues of the newsletter on your website and optimizing them for
search engines (n.d.).
By avoiding the mistakes listed above, Prodigy Financial will increase the odds of having success with a
newsletter. Particular attention should be given to spam filters because they are becoming more and more
common and the chances of having a legitimate email miss-identified as spam are increasing. Also, posting
past editions of the newsletter to your website is probably one of the fastest ways to get good rankings in the
search engine because search engines reverence good content.
How to Build an Email List
Now that the risks and mistakes of email marketing have been discussed, I will present the steps for
building an email list. Brendenberg, explains how to safely gather emails. Below is a list of his ideas on
collecting emails ethically:
1. Start collecting emails at your own website
2. Send a free newsletter with articles and tutorials periodically
3. Rent an opt-in list from a reputable company and use it to advertise your products
4. Place ads in e-zines and email discussion lists (n.d.)
Most emails are collected because a site requires the user to enter it in a form before allowing the user to do
a download, receive free information, or get access to a password protected site. The principle behind this is
people often need some kind of incentive before they will give their email. Offering a free PDA every
month to one of the new sign-ups on a newsletter could boost the emails collected. Dr. Ralph F. Wilson,
publisher of the e-zine Web Marketing Today, gives additional tips for adding emails to an in-house list:
· Place a subscription box on every page of your website.
· Provide a privacy policy that makes it clear the visitor’s email will not be sold or rented to
third parties.
· Submit your website to e-zine directories (2003)
Goodwin, who writes marketing articles, suggests using a pop-up on your site which tells visitors of the
subject of the newsletter and encourages them to sign-up (2004). Also, giving incentives to those people
already in the database to forward the newsletter to all their friends can have a chain-reaction effect that
quickly increases the number of subscribers. However, giving incentives can dilute the quality of the email
list because some people will subscribe just for the incentive and may give fake emails. The best methods
for collecting emails depends on the target market and purpose of the newsletter.
How to Develop Creative Briefs
5
Jeanne Jennings has developed around 200 newsletters for her clients (2004). Articles that she has published
demonstrate an excellent understanding of the marketing process. I recommend contacting her
(jj@jeannejennings.com) about conducting an email campaign in behalf of Prodigy Financial. In a recent
article, she described the elements to include in a creative brief. A creative brief is a list of all the positive
details about a product and company which will give a marketing team everything they need to know to
design an email campaign.
Jennings recommends seven steps for preparing a creative brief:
1. Determine the exact audience
2. Write a detailed list of the benefits of the product and its competitive advantages over
competitors. Also, list weaknesses that should not be mentioned in a campaign.
3. Gather customer feedback comments. Find forums discussing the product and learn what
people think of it.
4. List the links that should appear in the email.
5. Set aside the graphics and logos to be used.
6. Write the main purpose of the campaign.
7. Send all information gathered in steps 1-6 to the email marketing company (2004).
These steps should also be used for preparing the content for an in-house newsletter. Prodigy Financial
should build and market its own in-house email list while at the same time hiring another company to
conduct a campaign with a rented list. This would allow the company to compare the costs and benefits
associated with each type of campaign. This report will focus on managing an in-house marketing
campaign.
Content Creation
Loren McDonald, Vice President of Marketing at EmailLabs, recommends a set of guidelines for setting up
a successful newsletter. Her advice appears below exactly as she wrote it:
1. Define Success – Ask yourself “ What is the purpose of your newsletter?” An eNewsletter is a
substantial investment of company resources in terms of time and energy, and you need to define in
as tangible terms as possible the purpose of your eNewsletter.
2. Voice – Establish a voice or editorial personality – whether newsy, serious, gossipy or funny – that
is synergistic with the image you want to portray and connects with your audience.
3. From Line – Whether a person’s name, name of the newsletter or company name – determine what
will resonate best with your readers and stay with it.
4. Subject Line – “Vol. 1, Issue #4” or “Company X News” are not enticing subject lines. They are
certainly consistent and simple, but they don’t tell your readers anything that will motivate them to
open your email. Your subject line is your calling card - entice your readers with the most
interesting or intriguing information in your eNewsletter.
6
5. Style/Format – Establish a format and layout of your eNewsletter that is clean and simple, with
elements of the eNewsletter (table of contents; “Tips”, subscription information, etc. located in the
same spot each issue).
6. Content – Figure out what your readers want and give it to them. Seek continuous improvement by
obtaining reader feedback and monitoring click-through rates to determine what types of articles are
most popular.
7. Frequency – Determine how frequently your readers want to hear from you/receive your eNewsletter
– and what you can commit to. Don’t launch a weekly newsletter if you are not absolutely certain
that you can distribute a quality eNewsletter every Tuesday at 10:00 am.
8. Timing – Test and pick a day and time that works best ...and stick to it. Readers should almost be
able to set their watches by the receipt time of your eNewsletter.
9. Viral – Provide information readers can act on or that stimulates reaction – forwarding it to friends
and peers, stimulating purchases or requests for additional information. Make it easy for readers to
forward articles and information to peers and friends. Provide a “Forward to a Friend” link that
enables readers to forward the eNewsletter with a personalized note.
10. Search – Make it easy to find articles of interest and back issues. Provide a table of contents and
links to articles within the newsletter and to resources and past articles on your site.
11. Printing – Consider providing “printer-friendly formats” on your Web site.
12. Personalize – At minimum address the reader by name. The most successful newsletters have a
human being associated with them...and a personality. If possible, your eNewsletter should be
“written by a person” at your company...not the company.
13. Test – Test the eNewsletter on few email addresses to check for errors and other issues – before
sending to the entire distribution list (n.d.).
These guidelines should be used as a checklist before sending a single email. First impressions are not
easily forgotten so the first email must be professional. Both Goodwin and McDonald suggest using viral
marketing by using “Forward to a Friend” links. During my research I have also read many articles that
suggest the same. This is confirmation of the importance of motivating people to share the newsletter with
their friends and family – possibly reaching individuals that you’d never reach otherwise.
Conclusion
The advertising methods with the highest rating of efficiency should be used most. This means that email
marketing should be the central focus for Prodigy Financial. Next in line is public relations followed by
strategic partnerships. Perhaps in the future the President will want reports similar to this one on the topics
of online public relations and strategic partnerships. By allotting time and resources for each opportunity in
proportion to its efficiency, Prodigy Financial will be making strategic marketing decisions which will
distinguish it from its competitors.
7
The following marketing actions are recommended for immediate implementation:
· Start an email campaign by hiring an email marketing company and renting double-opt in lists.
· Build an in-house email list
· Publish an in-house newsletter to both in-house lists and rented double-opt in lists
· Compare the results from the in-house marketing to the hired marketing company
· Contribute more resources to the email marketing system that works best
8
References
Brendenberg, A. Low risk e-mail marketing. Retrieved April 6, 2004, from
http://www.emailresults.com/article.asp?ContentID=43
Crawford, P. A. (2000, November) Nothing ventured...a new twist to online pr. Public
Relations Tactics, 7(11) Retrieved April 12, 2004, from Business Source Premier on-line database
http://search.epnet.com/
Goodwin, K (2004). Six ways to grow a subscriber list. Retrieved March 22, 2004, from
http://www.smallbusinesscomputing.com/emarketing/article.php/3312231%20
Google. Google information for webmasters. Retrieved March 22, 2004, from
http://www.google.com/webmasters/
Iconocast (2001). Map. Retrieved March 22, 2004, from http://www.iconocast.com
Jennings, J. (2004). A strong creative brief optimizes e-mail marketing. Retrieved March 22, 2004,
from http://www.smallbusinesscomputing.com/emarketing/article.php/3295821%20
McDonald, L. 13 Quick tips for creating a successful e-newsletter. Retrieved April 16, 2004
from http://www.emaillabs.com/articles_13quicktips.html
McDonald, L. 10 Costly e-mail mistakes made in 2002. Retrieved April 16, 2004 from
http://www.emaillabs.com/article_10costlymistakes.html
PR Web. PR web frequently asked questions. Retrieved March 22, 2004, from
http://www.prweb.com/faq.php
Wilson, R. (2003) How to build your email list. Retrieved April 15, 2004 from
http://www.doctorebiz.com/07/030319a.htm