Is e-mail marketing on the way out?

Latest figures from Epsilion in the US show that the opening rates and click through rates are in sharp decline. Baffling for me, they say that ‘Despite concerns about the declining effectiveness of advertising and the challenging economy, e-mail continued to perform consistently in 2008.. .’

The figures contradict this. There is no need to see the full set Q by Q as they have declined steadily period on period. So I quote from the first and the last:

Q3 2006 has an Open Rate of 23.9% and a Click Through Rate of 7.3%

Q3 2008 has an Open Rate of 19.8% and a Click Through Rate of 5.9%

That means that the Open Rate has declined by 20% and the Click Through Rate by 19%
These don’t look like healthy figures at all.

The reasons are simple:

- the novelty rate of getting e-mail marketing messages has declined

- as more e-mail marketing is done, the content quality has declined both generally and that irrelevant messages are being sent.

- spamming is increasing

- marketers aren’t personalising their message in the way that will increase engagement

If I were Epsilon, I would be worried.

　

The Rosser Reeves Fallacy

Follow your audience is the fundamental mantra of media planning. Today, that audience is spread increasingly wide and thin, and the fact that an audience is present on a media platform doesn’t necessarily mean that advertising there is effective. The evaluation of media’s effectiveness is the single biggest issue for planners today (or at least advertisers hope it is) and there are a variety of effects that contribute to the confusion surrounding it. Here is one common mistake.

Confusing cause and effect is a specific example of the Questionable Cause Fallacy. The QCF has the general form:

- A and B occur together.
- Therefore A is the cause of B or vice versa.

In fact, there may be no common cause that links A and B.

This fallacy is made when it is assumed that one event must cause another just because the events occur together: the conclusion is drawn, without adequate justification, that A is the cause of B simply because A and B are in concurrence. It is possible that cause and effect are both present but the mistake is in choosing which is which, or it is possible that both are caused by a third event. When people put up umbrellas cars generally become get wet, but putting up umbrellas does not cause cars to become wet, the rain causes both. A typical mistaken causal effect might be:

- People wear shorts when it is sunny.
- People wearing shorts causes sunny weather.

To bring this closer to the reality of media, Rosser Reeves, who fifty years ago was head of the Bates advertising agency in the US, demonstrated what became known as the ‘Rosser Reeves Fallacy’. He showed that consumers aware of his client’s ads were more favourably disposed towards those clients’ brands across a range of measures, including likelihood to buy. Did this mean his advertising was more effective?

No. Generally, brand purchasers have a higher awareness of a brand’s advertising than non-purchasers. We tend to remember better those things we like or are familiar with. So rather than those aware of the ads being more likely to buy the brand, it’s actually those who buy the brand being more aware of the ads.

Is there a direct lesson for media here? Yes. All media suffers the same plight: namely that more often than not, proxy measures such as brand and advertising awareness are used to measure effectiveness.

There is not one single piece of proof that demonstrates that increased awareness is a measure of advertising’s ability to build sales. Indeed the only measure of success for media that has any validity is the ability of adverts on that media to build sales.

‘I saw ad A and so I bought brand B’

Measuring and linking exposure to advertising to consumer behaviour is the Holy Grail for all media owners from Google to the Puddlewick Gazette, and it is Google who are putting the most effort behind this.

Media Fragmentation: the new media ecosystem

Today’s media ecosystem has clear characteristics that are radically different from just ten years ago:

● Abundant

● Cheap to buy - and sometimes free

● Cheap to populate with content

● But more expensive to reach mass audiences due to fragmentation

● Blurred…where once a channel had one platform, now it has many

● A shift of advertising away from mass media towards personalised forms of marketing including direct mail, the internet, mobile, retail media, word-of-mouth and so on.

● But all media is under pressure because of issues of accountability and ROI

In the US, the Number One TV show in 1970 was ‘All in the Family’ watched regularly by 60% of households. In 2007 it was American Idol watched by 17% of households. (Source: OMD)

Highlights from a recent US Nielsen study concluded:

• In 2006, the average U.S. home received 104.2 channels, an increase of almost eight channels since 2005 and a record level.


• As the number of channels available to a household increases, so does the number of channels tuned. In 2006, the average household tuned to 15.7, or 15.1% of the 104.2 channels available for at least 10 minutes per week.


• The 30-second commercial is still the television advertising standard in prime-time accounting for 57% of all commercial units.

In the UK, BRAD’s data-base has over 13,500 media platforms (from newspapers to hot-air balloons as they describe it) where advertising can be bought; and BARB currently measures 227 TV channels.

It has been estimated that it was possible to reach 85% of the UK population with three TV spots in the late 1980s. Now it takes 180 spots. (Source: Campaign 2005)

This fragmentation of media and audiences has led to an undermining of the traditional, mass media-based advertising model but this should not be over-exaggerated. TV is still dominant. TV can still work effectively at building brands as can print and radio. And in times of economic uncertainty marketers will even more err towards the familiar as we have seen in 2008.

Whatever media choices are made, consumers are estimated to be exposed daily to over 3,000 advertising messages. (Source: The Guardian) It is possibly more, indeed numbers of up to 6,000 can be found quoted - though rarely with any attribution. None the less our own experience, if we only stop to think about it, would lead us to believe there that whatever the actual number there is a lot.

POPAI described 50 or more different types of in-store communication. Their research indicated that shoppers pass 1.6 items every second. In a 30 minute shop that would mean they pass 2592 pieces of communication. And then think that each brand’s packaging itself is a piece of communication.

However, despite this seemingly over-powering dominance and confusion of commercial messages, marketing does work. (Just that in its old form not as effectively as it should.)

This might well be due to our ability to absorb information with only a fleeting need to experience it. Dr Robert Heath of Bath University has used neuroscience to demonstrate the brain’s capacity to absorb certain types of brand information even when we pay virtually no attention to it. His research has shown that we routinely scan press ads in under 1 second yet we can still recall the salient message. In his opinion and experience, advertising is most often about fleeting glances and that we can build high levels of awareness and interest without ever being consciously aware that we have seen an ad. He has dubbed this Low Attention Processing. (Source: http://www.lowattentionprocessing.com/ )

This leads to the belief that much of what we do is sub-conscious and intuitive - including what we purchase. This is very much at the core of Benjamin Libet’s ground-breaking and seminal work on consciousness. (It might also explain why most new products fail but more of that later.)

Opt Out Rates

The more you e-mail your customers, the more likely they are to ignore, or worse, opt out.

So the simple answer is to only e-mail with an optimal frequency. This can be tested of course.

The problem is that customers sign-up to more than one company to receive e-mails from and the more they get, the more likely that they will ignore everything. After all, none of your customers wants to waste time checking and filtering all their e-mails.

So you might be behaving responsibly but other`s won`t.

So how do you cut through the clutter?

The obvious answer is to be consistently relevant but more importantly ensure that each e-mail offers a real and immediate benefit. Too many e-mails are the equivalent of a `nice weather today` conversation. They don`t have anything to say.

And neither going on for the umpteenth time about a brand benefit will gain any traction.

E-mails should only communicate a call action; it should be immediate and should truly benefit the customer.

Have you ever asked your customers whether they like the e-mails they get from you?

You may be relevant and personalised but is your tone right? Perhaps the e-mails you send are just plain boring.

And do you assume that because someone has given permission you can send them any old junk? And what about your e-mail agency? How responsible are they?

Have you thought about using a preference centre?

And have you got an on-line research panel?

More customers are ignoring more e-mails. Do something now!

SEO

On-line search ad-spend fell by 8% year-on-year in the US in Q4 2008 according to Efficient Frontier.

A lot of money has been wasted on SEO and organisations should be looking at the money they spend. Wasted not because SEO is a misplaced discipline but because the methodology has been crude and fails to place a brand in the search results that it really needs to be in.

The first issue is that few SEO specialists (or brands) seem to know how consumer’s search. A recent example was for a company involved with pets. They had a wonderful web-site whose architecture clearly mirrored core category drivers and the needs of their consumers. But they came nowhere in natural search despite the fact that they had used SEO. Reason? Their SEO clearly didn’t match the way that consumers were searching for pet topics on the web.

The problem with SEOs is that they peddle a methodology that is all about how to include the right nifty content to get results but they don’t start with the way that consumers think and then search. Result? The site can get good natural search results…but on the wrong pages.

Another problem is that brands want to own some esoteric brand equity. In this instance someone has told them that they should own ‘pet care’, so they build their SEO around that. The problem is that few consumers search for pet care or anything like that.
So the downturn in SEO expenditure might lead to the necessary re-evaluation as to how what money left is spent.

Define Marketing

‘The right product, at the right price…and making sure your (potential) consumers know about it in the most compelling way possible.’

Simple really.