Marketing to third party lists does not perform as well as to your own lists. Add to this more frequent delivery problems, and many email marketers are questioning whether they should be using external data at all.
This entry gives guidelines to using third party lists successfully.
I attended the "The Best Of Digital Marketing" conference recently. The event inspired me to consider my view of how email marketing will develop into the future. In particular it got me thinking about whether there is a future for email marketing list rentals as part of acquisition strategies.
It is no secret that acquisition campaigns do not perform as well as retention campaigns. The DMA's Email Marketing Benchmarking Study shows that retention campaigns always outperform acquisition:
Unique Open Rates
Unique Click Through Rates
(Source: DMA Email Marketing Benchmark Study Q4 2007)
As a rule, I'd encourage email marketers to build their own databases organically, rather than through list rentals. External data does not perform as well as your own data and can lead to long term delivery issues.
That said, if some rules are followed external data sets can be safely part of your marketing strategy. If you don't follow these rules, it can damage your retention activity to your own databases and potentially your sender reputation:
Relevant email works best. Apply the same logic when segmenting external data. Ensure it is recently cleaned and segment using profile information that was collected recently - allowing you to be confident these people want to receive your email.
Big is not (necessarily) beautiful
Many companies have set high acquisition targets of new email addresses to be added to their databases. They look at this as the starting point of better returns. Indeed, the larger the database, the more revenue will be created. Although this is true to a point, there is a law of diminishing returns.
Email marketers should be looking at their campaign metrics and working on how to improve them. A small increase in conversion rate amounts to a considerable increase in revenue. Just as more data is available, don't fall into the trap of weakening your selection criteria as your results will be affected.
Test sends first
20% of email marketers are achieving ROIs of 5X (Source: eConsultancy Email Marketing Industry Census 2008. Most have achieved this through continual testing.
Going forward, testing will be the most important element of any email marketer's program. When using a third party data rental, I'd encourage you to take a small sample and run your campaign to a small test sample to ensure it works effectively. Not only will this reduce the risk of delivery issues it will allow you to make sure the open, click through and conversion rates are in line with your expectations and make any corrective tweaks necessary.
As database size rises, so do risks
This focus on database size is pushing many email marketers to resort to third party data rentals. Many have experienced delivery issues with these campaigns leading to bad campaign results, damaged brand and a soured relationship with ISPs.
Even worse, they can lead to long term delivery problems if your sender reputation is tarnished. If you are using an in house broadcast tool rather than an ESP, then repairing your reputation requires careful management which will be very difficult and time consuming.
Only rent data from a reputable data owner. Ensure that they have specific information about each contact including:
The date of sign up
How the contact signed up. Double opt-in data is the gold standard.
The contact was recently acquired/cleaned
A robust suppression policy is being followed.
Don't expect to get the data yourself: Be wary of any company who sends you the data in excel. Most reputable companies will carry out the broadcast on your behalf- after all, that list is their most valuable asset.
Test the data to a small sample before doing the full list; to reduce the risk of delivery issues and to ensure campaign response is in line with your expectations.
Consider how popular the list is; popular lists will be used considerably that may lead to wear out, especially if suppressions are not managed properly.
Tell the recipient where you got their name from: Co-brand your creative and explain in an obvious place that the recipient is receiving this email as they have opted-in to third party communications to this company. Make the unsubscribe button clearly visible.
Ensure your message is relevant; as with all email communication, relevancy to your audience is critical. It seems obvious, but is all-too-often forgotten.
So email marketing is not dead as an acquisition tool, as long as you are careful in how you use it, and follow the simple rules. Acquisition campaigns to external lists do have a future, but they are diminishing in number.
Email marketers will focus more on optimising their campaign strategies and achieving improvements in response. Therefore, the need for larger databases will be replaced by smaller, better segmented databases enabling an improved response.
List rental companies who allow marketers to follow the rules above will flourish. Those that don't will find their market rapidly dries up.
Henry Hyder-Smith is the MD of Adestra .