Why E-Mail ROI Is So Amazing

E-mail campaigns’ ROI (define) has always been phenomenal.

In the early days, 80 percent open rates and 20 percent conversion rates were expected. Today, open and conversion rates are often much smaller, but e-mail campaigns still win every time over other channels. And that’s fantastic news for marketers who can consider e-mail a safe choice. It’s not great news, however, for providers of e-mail marketing technology and strategies because improved services and innovations are expected at low and even commoditized rates.

Because of this misalignment, e-mail marketing ROI has consistently performed at amazing rates.

“E-Mail Usage High, Marketing Spend Low,” eMarketer explored this issue. And groups like the Email Experience Council (EEC) have created roundtables to define and determine an e-mail address’s value to make a case to increase e-mail budgets.

All of this discussion about e-mail and ROI made me think: is there really a way to maintain e-mail’s ROI while de-commoditizing the market?

A year ago, I would have said “probably not.” In today’s digitally driven world, there’s a strong chance e-mail will remain queen of ROI, no matter the investment’s size. Here are three reasons:

• E-mail marketing’s old business model is dead. E-mail’s new business model is predicated on lifestyle relevancy and management. It will remain the backbone of our communications.
• Budget reallocation generates higher ROI through cost savings. You can pay $500,000 for a TV ad. Or you can reallocate $150,000 of that $500,000 for a digital video embedded in e-mail, in display ads, and on the site, creating a very cool viral element. The cost savings alone allow you to set up a higher ROI from the get-go. E-mail gets more funding as part of an integrated strategy, and the digital effort costs less.
• Standalone e-mail campaigns increase brand equity and drive extended ROI. The old way of evaluating e-mail ROI looked at direct sales. However, e-mail has proven to be a branding tool credited with driving sales through other channels. The ability to capture this increased impact allows you to invest more in e-mail without your ROI declining.

What does this all mean? We should increase the e-mail marketing budget for 2008. Think about how you can enhance your program to increase impact. Do this without worrying about the potential negative impact on ROI.

The world of e-mail has changed. Now your ROI can be even higher without sacrificing anything. And each additional investment you make will further increase your ROI.

Want more e-mail marketing information? ClickZ E-Mail Reference is an archive of all our e-mail columns, organized by topic.