E-mail Marketing in the Age of Twitter Higher ROI, increased effectiveness, greater reach and customizable nature are among the chief advantages of traditional e-mail marketing vs. social media. Executive Summary Is e-mail the dinosaur of the digital marketing era, or is it a wily old stalwart that still has a trick or two up its sleeve? There is a common belief that the asteroid of spam killed e-mail marketing for consumer goods (and other) companies as an effective way to cost-effectively reach consumers. Some pundits are of the opinion that the new kids on the block — blogs, Facebook, Twitter, YouTube, Pinterest, etc. — have relegated e-mail marketing to the morgue of the marketer’s repertoire. While spam was and continues to be a challenge for making e-mail marketing campaigns effective, tighter legislation and laws like the CAN-SPAM Acts of 2003 and 2012 have made it easier for companies with reputed brands and big names to reach consumers through e-mail. The CAN-SPAM Act of 2003 allows companies to send unsolicited e-mail to consumers, customers or prospects, provided the e-mails adhere to specific require- ments, such as including “unsubscribe” links and clear and truthful subject lines. Undoubtedly, newer social media technologies and platforms offer their own set of benefits as marketing tools. However, few companies today have figured out their social media strategy and execution, let alone seen the returns on investment on these tools. Confusion pervades the use of these powerful tools as an effective medium for reaching consumers. Moreover, some organizations want to use social media even after seeing others wastefully throw dollars at it, not wanting to be the ones who missed out on the social media revolution. The fact of the matter is, even though it may be losing ground, e-mail marketing is still too relevant to be ignored by consumer goods companies. Why E-mail Marketing Here are a few reasons why companies should consider using e-mail marketing: • Greater ROI: According to a 2011 study by the Direct Marketing Association (DMA), e-mail marketing yields a return of $40.56 per dollar spent, compared with $22.24 for search, $12.71 for social networking and $10.51 for mobile. In fact, the DMA’s 2016 estimate pegs e-mail mar- keting’s ROI at $35.02 per dollar compared with social’s $13.43. Clearly, it will be some years before e-mail marketing will be overtaken in the ROI sweepstakes. A big part of the reason is that e-mail marketing campaigns are much less expensive to operate, and the technology is mature enough to automate many campaign elements. Social media campaigns still need appreciable human bandwidth and involve- ment to run, with the help of expensive Web crawling and sentiment analysis tools. So, in • Cognizant 20-20 Insights cognizant 20-20 insights | november 2012
Transcript
E-mail Marketing in the Age of TwitterHigher ROI, increased effectiveness, greater reach and customizable nature are among the chief advantages of traditional e-mail marketing vs. social media.
Executive SummaryIs e-mail the dinosaur of the digital marketing era, or is it a wily old stalwart that still has a trick or two up its sleeve? There is a common belief that the asteroid of spam killed e-mail marketing for consumer goods (and other) companies as an effective way to cost-effectively reach consumers. Some pundits are of the opinion that the new kids on the block — blogs, Facebook, Twitter, YouTube, Pinterest, etc. — have relegated e-mail marketing to the morgue of the marketer’s repertoire.
While spam was and continues to be a challenge for making e-mail marketing campaigns effective, tighter legislation and laws like the CAN-SPAM Acts of 2003 and 2012 have made it easier for companies with reputed brands and big names to reach consumers through e-mail. The CAN-SPAM Act of 2003 allows companies to send unsolicited e-mail to consumers, customers or prospects, provided the e-mails adhere to specific require-ments, such as including “unsubscribe” links and clear and truthful subject lines.
Undoubtedly, newer social media technologies and platforms offer their own set of benefits as marketing tools. However, few companies today have figured out their social media strategy and execution, let alone seen the returns on investment on these tools. Confusion pervades the use of these powerful tools as an effective
medium for reaching consumers. Moreover, some organizations want to use social media even after seeing others wastefully throw dollars at it, not wanting to be the ones who missed out on the social media revolution.
The fact of the matter is, even though it may be losing ground, e-mail marketing is still too relevant to be ignored by consumer goods companies.
Why E-mail Marketing Here are a few reasons why companies should consider using e-mail marketing:
• Greater ROI: According to a 2011 study by the Direct Marketing Association (DMA), e-mail marketing yields a return of $40.56 per dollar spent, compared with $22.24 for search, $12.71 for social networking and $10.51 for mobile. In fact, the DMA’s 2016 estimate pegs e-mail mar-keting’s ROI at $35.02 per dollar compared with social’s $13.43. Clearly, it will be some years before e-mail marketing will be overtaken in the ROI sweepstakes. A big part of the reason is that e-mail marketing campaigns are much less expensive to operate, and the technology is mature enough to automate many campaign elements. Social media campaigns still need appreciable human bandwidth and involve-ment to run, with the help of expensive Web crawling and sentiment analysis tools. So, in
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our view, e-mail remains the king of the digital marketing jungle.
• More effective: E-mail still tops the charts as far as effective marketing tools go. In a 2011 Mer-chantCircle survey of over 8,000 businesses, e-mail was chosen as one of the top three
most effective marketing or advertising methods by 36% of respondents. The reason e-mail can be more effective than Twitter or Facebook as a marketing tool has much to do with the dynamic nature of social media. It is very easy for a company’s post
to get buried, missed or ignored on rapidly updating Twitter feeds and Facebook walls of consumers. But an e-mail will sit in an inbox until the consumer reads it or deletes it — either way, there is a much higher probability of a consumer noticing it.
• Greater reach: At the end of 2011, more than three billion people had e-mail accounts, while the number of people with Facebook accounts stood at a little over 800 million. The numbers speak for themselves: The chances of success with e-mail are much greater than with social media today.
• Push vs. pull: As described earlier, legislation has made it possible for companies to send e-mails to consumers, without requiring an explicit or implicit opt-in on the consumer’s part. This gives e-mail an edge over tools that make companies dependent on consumers to actively follow, like or subscribe to their social media initiatives. A prospective consumer is more likely to try out an offer in her e-mail from a company she doesn’t buy from than follow the same company’s Facebook page looking for special offers.
• Customizable: Technology and tools like big-data analytics have made it possible for organizations to send highly customized e-mails to consumers or prospects, based on their preferences, buying behavior, loyalty information, demographic data and many other parameters. A customized e-mail is akin to a close friend knowing your needs and wants and addressing them accordingly. On the other
hand, all other marketing initiatives (except direct selling to some extent) are broad-based and miss out on the personalization aspect of the pitch, which plays a big role in a purchase decision.
• Safer: An e-mail exchange between a company and a consumer is a one-on-one conversation, while a post on a social networking site is pretty much open for the world to see. This introduces a big element of risk to social media campaigns, since it is not possible for companies to control what people write on their pages, walls or feeds, nor who sees it. P&G’s diaper discussion and McDonald’s promotional hashtag incidents are examples that serve as warnings about the highly volatile and risky nature of engaging with consumers over social media.1
Looking ForwardThese perspectives provide a few of the key reasons, among many others, for consumer goods companies to continue evaluating e-mail marketing as a strategic marketing tool, in con-junction with newer technologies and platforms.
Conventional wisdom suggests that bigger cor-porations are increasing their spending on social media and mobile at a greater rate than on e-mail. Conversely, small and medium-sized businesses appear to rely on and invest in leveraging e-mail to reach consumers, since it is more personal, builds loyalty and deepens relationships. Our experience suggests that companies big and small should continue to invest in e-mail, since it has greater reach, superior ROI and offers greater potential to drive campaign effectiveness and sales.
Further, it is imperative that companies optimize their effort and the resources spent on various channels (e-mail, social media, direct mailers, telemarketing, etc.) to attain a healthy mix, taking into account variables such as consumer demographics, product life cycle, positioning, brand image and budget, to name a few. This exercise should be conducted on a periodic basis to keep the mix optimal and maximize return on investment. It can either be performed internally by stakeholders across the sales and marketing domains or with the help of external consultants who possess proven social and e-mail marketing expertise and specific knowledge of industry and consumer trends.
A customized e-mail is akin to a close
friend knowing your needs and wants
and addressing them accordingly.
About CognizantCognizant (NASDAQ: CTSH) is a leading provider of information technology, consulting, and business process out-sourcing services, dedicated to helping the world’s leading companies build stronger businesses. Headquartered in Teaneck, New Jersey (U.S.), Cognizant combines a passion for client satisfaction, technology innovation, deep industry and business process expertise, and a global, collaborative workforce that embodies the future of work. With over 50 delivery centers worldwide and approximately 150,400 employees as of September 30, 2012, Cognizant is a member of the NASDAQ-100, the S&P 500, the Forbes Global 2000, and the Fortune 500 and is ranked among the top performing and fastest growing companies in the world. Visit us online at www.cognizant.com or follow us on Twitter: Cognizant.
World Headquarters500 Frank W. Burr Blvd.Teaneck, NJ 07666 USAPhone: +1 201 801 0233Fax: +1 201 801 0243Toll Free: +1 888 937 3277Email: [email protected]
About the AuthorVineet Manghani is a Senior Consultant with the Consumer Goods Practice within Cognizant Business Consulting. He has over five years of consulting experience and has worked across diverse consulting engagements with leading consumer goods manufacturers and marketers. He holds an M.B.A. from MDI-Gurgaon and can be reached at [email protected].
Footnote1 After P&G introduced a new variant of its popular Pampers brand of diapers in March 2010, a Facebook
group was started by some parents, highlighting the negative effects of the new product on their kids. In January 2012, McDonald’s promoted a Twitter hashtag, #McDStories, which was quickly hijacked by users relating stories about animal cruelty, unemployment, stomach problems and the like. As a result of the uncontrolled nature of social media, both companies could do little damage control and had to wait for the storm to die down before launching expensive PR campaigns to salvage their reputation.
References
• “Power of Direct,” Direct Marketing Association, 2011, http://www.magillreport.com/Email-Remains-ROI-King-Net-Marketing-Set-to-Overtake-DM.
