Q2 2013 email trends and benchmarks

October 2013

3epsilon.com

Executive summary 3

Business as usual email trends 4

Triggered email trends 8

Email activity segment evaluation 10

Conclusion 13

About Epsilon 14

About Email Institute 14

Contents

4epsilon.com

Email continues to reign as one of the most effective communication mediums to reach target audiences, engage consumers and drive purchase behavior.

Epsilon has compiled and analyzed aggregated data from billions of emails since 2002. The benchmark reports have shown consistent data for several quarters indicating that metrics such as non-bounce, triggered email performance compared to

Business as Usual (BAU) messages and percentages of new and mature subscribers on the average email file continue to perform well. These steady percentages for key metrics continue to highlight critical opportunities for email marketers to drive stronger ROI.

Please note this benchmark data should only be used as a guideline. Specifics for each company will ultimately drive results.

Executive summary

5epsilon.com

In this analysis of performance trends by industry and message type, the Q2 2013 Email Trends and Benchmarks offers insight into how the average company in 13 industry categories performs. The study is compiled from 6.1 billion emails sent in Q2 2013 (April through June) across multiple industries and approximately 150 clients.

Open rates decreased quarter over quarter (-8.3%), but increased over the same period last year (+11.5%), resulting in an overall open rate of 28.5%.

Click rates were 4.3%, a decrease both quarter over quarter and year over year.

Non-bounce rates remained strong at 96.1%.

Business as usual email trends

Open rates decreased slightly

over Q1 2013, yet remained

above Q2 averages from 2011 and 2012

26.2%

4.7%

95.7%

5.2%

22.2%

4.3%

28.5%

96.1%

5.1%

31.1%

96.4%

5.2% 4.5%

24.8% 27.4%

96.3% 96.0%96.5%

23.8%

5.5%

95.9%

25.6%

4.4%

96.5% 96.1%

27.2%

4.5%

Q113 Q213Q212Q211 Q311 Q411 Q112 Q312

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

Click-throughOpen rateNon-bounce

Q412

Q2 2013 overall performance

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Nine of the 13 industries analyzed had an open rate increase of 5% or higher when compared to last years metrics: Business Products and Services General, Consumer Products CPG, Consumer Publishing/ Media General, Consumer Services General, Consumer Services Telecom, Financial Services CC/Banks, Retail Apparel, Retail General and Retail Specialty.

Three of the industries analyzed had a click rate increase of 5% or higher in Q2 2013: Consumer Products CPG, Consumer Services General and Retail Apparel.

In Q2 2013, the highest open rates occurred in the Retail General (40.0%), Financial Services CC/Banks (39.6%) and Travel/Hospitality Travel Services (31.8%) categories.

The highest click to open rates occurred in the Consumer Products CPG (40.5%), Retail Apparel (24.4%) and Consumer Publishing/Media General (20.7%) categories.

Epsilon Q2 2013 North American Industry

Non-BounceOpen Rate

Click Rate

Click to Open Rate

Business Products and Services General 93.3% 31.4% 3.7% 11.8%

Business Publishing/Media General 97.8% 19.4% 2.9% 14.7%

Consumer Products CPG 95.4% 19.0% 7.7% 40.5%

Consumer Products Pharmaceutical 92.5% 29.5% 4.3% 14.5%

Consumer Publishing/Media General 98.9% 19.3% 4.0% 20.7%

Consumer Services General 97.1% 25.5% 4.4% 17.1%

Consumer Services Telecom 98.8% 18.5% 2.7% 14.4%

Financial Services CC/Banks 95.8% 39.6% 3.9% 9.9%

Financial Services General 96.5% 29.6% 4.8% 16.2%

Retail Apparel 99.4% 20.0% 4.9% 24.4%

Retail General 97.6% 40.0% 5.0% 12.6%

Retail Specialty 97.3% 24.5% 3.1% 12.8%

Travel/Hospitality Travel Services 97.0% 31.8% 3.7% 11.7%

*Red or blue text indicates an increase (blue) or decrease (red) over last years metrics that was over 5 %.

Industries analyzed

Industry performance

7epsilon.com

As part of the Q2 2013 Email Trends and Benchmarks report, Epsilon also analyzed the types of messages sent and their performance metrics. Down from Q1 2013 (61.4%), nearly 54% of emails deployed through Epsilons proprietary email platform were characterized as marketing messages.

Key metrics analyzed by

message type across

industries

Campaign performance

Message type

Open rate

Click rate

Click to open rate

Acquisition 18.6% 1.4% 7.3%

Editorial 30.8% 4.5% 14.5%

Legal 16.9% 1.8% 10.9%

Marketing 24.1% 3.4% 14.1%

Other 18.0% 2.4% 13.4%

Research 39.2% 4.2% 10.7%

Service 53.7% 10.3% 19.2%

*Message types are based on emails deployed out of one of Epsilons two proprietary email platforms and are defined by the person(s) creating the campaigns, which may not reflect the same definitions as your company.

Research0.1%

Service7.5% Acquisition

0.1%

Editorial1.2%

% delivered in Q2 2013

Industry Industry category

Message type

Open rate

Click rate

Click to open rate

% of total delivered in industry

Business Products and Services

General Editorial 51.4% 9.3% 18.0% 0.0%

Marketing 19.8% 1.7% 8.6% 49.2%

Other 15.4% 1.9% 12.6% 50.8%

Business Publishing/ Media

General Marketing 20.4% 1.2% 6.1% 99.4%

Other 41.4% 1.6% 3.9% 0.6%

Service 90.8% 16.2% 17.8% 0.1%

Consumer Products CPG Marketing 19.2% 3.0% 15.4% 99.9%

Other 38.8% 7.7% 20.0% 0.1%

Pharmaceutical Marketing 17.4% 2.9% 16.9% 93.5%

Other 7.1% 1.0% 14.1% 6.4%

Research 48.5% 3.5% 7.2% 0.0%

Service 32.3% 6.7% 20.8% 0.1%

Consumer Publishing/ Media

General Other 28.4% 5.7% 19.9% 98.6%

Research 32.3% 2.6% 8.2% 1.4%

Marketing53.5%

Other34.4%

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Key metrics analyzed (cont.)

Industry Industry category

Message type

Open rate

Click rate

Click to open rate

% of total delivered in industry

Consumer Services General Marketing 34.7% 5.7% 16.5% 98.0%Other 80.0% 16.1% 20.1% 1.4%

Service 75.4% 24.9% 33.0% 0.6%

Telecom Marketing 28.6% 2.4% 8.4% 95.6%

Research 37.4% 3.0% 7.9% 1.5%

Service 49.0% 10.2% 20.9% 2.9%

Financial Services CC/Banks Acquisition 17.6% 1.2% 6.9% 0.6%

Marketing 31.6% 1.8% 5.6% 38.7%

Other 48.7% 6.4% 13.2% 23.5%

Research 53.4% 9.1% 17.0% 0.0%

Service 51.9% 6.5% 12.5% 37.2%

General Marketing 24.9% 1.1% 4.5% 67.4%

Other 25.7% 1.6% 6.4% 22.4%

Service 59.6% 10.6% 17.7% 10.2%

Retail Apparel Service 71.0% 50.2% 70.7% 100.0%

General Acquisition 65.8% 3.6% 5.4% 0.0%

Editorial 14.9% 8.7% 58.6% 0.0%

Legal 16.9% 1.8% 10.9% 7.2%

Marketing 22.3% 4.7% 21.2% 29.7%

Other 13.3% 1.8% 13.8% 63.0%

Research 27.8% 1.4% 5.0% 0.1%

Service 61.8% 7.9% 12.9% 0.0%

Specialty Acquisition 31.9% 2.2% 7.0% 100.0%

Editorial 23.1% 2.9% 12.6% 1.7%

Marketing 20.0% 1.9% 9.6% 95.4%

Other 28.3% 3.3% 11.5% 2.7%

Research 45.8% 8.8% 19.3% 0.2%

Service 84.7% 6.7% 7.9% 0.0%

Travel/Hospitality Travel Services Marketing 23.0% 3.0% 13.1% 99.9%

Other 85.0% 14.4% 16.9% 0.0%

Service 80.1% 1.6% 2.0% 0.1%

*Message types are pulled from Epsilons proprietary email platform only and are defined by the person(s) creating the campaigns and may not reflect the same definitions as your company.

9epsilon.com

Triggered email trends

Epsilons triggered email metrics are compiled from more than 216 million triggered emails sent from April to June 2013 across multiple industries. These messages were sent as the result of an action, such as a Welcome, Thank You, Abandon Shopping Cart or Confirmation email.

This study also highlights significant differences between triggered email performance and Business as Usual (BAU) email performance.

In Q2 2013, triggered messages accounted for 3.5% of total email volume, a 30.6% increase over Q2 2012 (2.6%).

Non-bounce rates continued to drive strong results for Epsilon clients, only 1.2% lower that BAU metrics.

Triggered message open rates were 72.6% higher than BAU messages in Q2 2013. This is a decrease from Q2 2012, when Epsilon noted a 94.8% lift over BAU.

Triggered click rates continued to perform well, reporting 152.3% higher than BAU. This is higher than the 122.1% click rate lift over BAU noted in Q2 2012.

Overall triggered message

performance

Overall performance

45.9%

10.4%

94.7%

9.8%

40.4%

10.7%

49.2%

95.0%

11.2%

50.0%

95.9%

11.5% 9.0%

48.0% 46.7%

94.7% 95.6%94.8%

46.8%

11.7%

95.2%

49.8%

9.8%

95.2% 94.7%

47.7%

9.7%

Q113 Q213Q212Q211 Q311 Q411 Q112 Q312

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

Q412

5.0%

4.0%

3.0%

2.0%

1.0%

0.0%

Click-throughOpen rateNon-bounce% of Total delivered

-1.2%

+72.6%

+152.3%

Q213 BAUdifference

10epsilon.com

The highest open rates for triggered messages were in the Financial Services/CC Banks (63.9%), Retail General (62.7%) and Consumer Products Pharmaceutical (61.5%) categories.

The highest triggered email click rates were in Retail Apparel (17.6%), Consumer Products CPG (16.9%) and Consumer Products Pharmaceutical (16.4%).

Triggered emails typically have higher open and click rates because they are deployed based on a consumer action. The categories with the most notable

difference in triggered open rates compared to BAU open rates were in the Consumer Products CPG (+178.3%), Retail Apparel (+145.4%) and Consumer Publishing/ Media General (+117.6%) categories.

The most notable click rate differences between triggered and BAU messages were reported in Consumer Products Pharmaceutical (+283.1%), Retail Apparel (+260.4%) and Consumer Publishing/ Media General (+253.5%).

Triggered email by industry

Q2 2013 North American industry

Non-bounce

BAU non-bounce difference

Open rate

BAU open rate

difference

Click rate BAU click rate difference

Business Products and Services General 97.7% +4.8% 40.4% +28.8% 8.2% +120.9%

Business Publishing/Media General 97.9% +0.1% 25.0% +28.5% 8.5% +198.1%

Consumer Products CPG 96.4% +1.0% 53.0% +178.3% 16.9% +119.5%

Consumer Products Pharmaceutical

93.7% +1.3% 61.5% +108.3% 16.4% +283.1%

Consumer Publishing/Media General 96.4% -2.4% 42.0% +117.6% 14.1% +253.5%

Consumer Services General 87.7% -9.7% 39.8% +55.9% 9.4% +113.9%

Consumer Services Telecom 94.1% -4.7% 34.6% +86.8% 7.9% +196.3%

Financial Services CC/Banks 91.4% -4.6% 63.9% +61.4% 6.3% +60.5%

Financial Services General 97.6% +1.1% 58.0% +95.9% 12.3% +155.2%

Retail Apparel 97.1% -2.2% 49.1% +145.4% 17.6% +260.4%

Retail General 92.9% -4.8% 62.7% +56.6% 11.3% +124.4%

Retail Specialty 96.9% +20.3% 41.8% +70.5% 6.3% +100.1%

Travel/Hospitality Travel Services 92.0% -5.2% 59.0% +85.5% 8.3% +121.4%

*Blue text indicates a 50% lift over BAU.

11epsilon.com

Email activity segmentation evaluation trends

Epsilons Email Activity Segment Evaluation, or EASE, analysis included behavioral segments and the overall performance of an average email file across industry categories.

These metrics are compiled from 710 million non-bounced out and opted-in email addresses. These addresses were contacted from July 1, 2013 through June 30, 2013 across multiple industries and from approximately 150 clients.

This analysis divides the email file into two categories: New and Mature. New represents addresses that have been on a marketers file for less than three months. Mature are those addresses that have been on a marketers file for over three months.

Each category is then further segmented based on customer email activity.

The New segment is broken into two categories:

Rising Stars: Subscribers who have both opened and/or clicked on an email

Question Marks: Subscribers who have been inactive for the previous

three months The Mature segment is broken into three categories:

Superstars: Subscribers who have opened and/or clicked within the most recent three months

Nappers: Subscribers who have opened and/or clicked emails more than three months ago

Dormants: Subscribers who have been inactive for the past 12 months

Rising Stars, Superstars and Nappers are considered active segments. Question Marks and Dormants are considered inactive segments.

In Q2 2013, half of an average email list had at least one open or click during the 12 month study period.

Approximately 20% of subscribers in an average email list had opened or clicked in the most recent three months.

Nearly two-thirds (65%) of new subscribers had no opens or clicks.

89% of a marketers email list had been on file for over three months.

Overall performance

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In Q2 2013, 51% of an average email file was active. This percentage continues to increase slightly quarter over quarter, with 50.1% of the average email file active in Q1 2013 and 49.9% active in Q4 2012. In the chart above, active segments are represented by Superstars (16%), Nappers (31%) and Rising Stars (4%).

From the EASE analysis, 11% of an email file was new in Q2 2013, an annual increase of 12% from Q2 2012. The new subscriber population consists of Rising Stars (4%) and Questions Marks (7%).

In Q2 2013, 36% of new subscribers were active after their initial opt-in to an email program (New Clickers and New Openers). This is a 5.8% increase over Q2 2012, when 34% of new subscribers were active

Also in Q2 2013, 64% of new subscribers were unengaged with marketers email programs. This is down 4% from Q2 2012 and continues the downward trend of unengaged subscribers that Epsilon reported in previous quarters. This suggests that marketers are successfully engaging their subscriber base.

In Q2 2013, 53% of Mature subscribers were active in the previous 12 months. Mature subscribers are comprised of Mature Lapsed Clickers (18%), Mature Lapsed Openers (17%), Mature Recent Clickers (8%) and Mature Recent Openers (10%).

The analysis found 18% of Mature subscribers had recently engaged with an email program (Mature Recent Clicker, 8% and Mature Recent Opener, 10%). This is an increase over last quarter when 17.1% of Mature subscribers showed engagement.

Decreasing slightly from Q1 2013, 47% of Mature email subscribers were inactive.

Question Mark7%

Rising Star4%

Dormant42%

Napper31% Superstar

16%

Percentage of segments in the average email file

New subscriber behavior

New Clicker12%

New Opener24%

Mature subscriber behavior

Mature Inactive47%

Mature Lapsed Clickers

18%

MatureRecent Openers

10%

Mature Lapsed Openers

17%

Mature Recent Clickers

8%

New Inactive64%

13epsilon.com

The Financial Services CC/Banks and Consumer Publishing industry categories had the highest amount of engaged subscribers in Q2 2013, with 24% from each categories categorized as Superstars. Retail Apparel continues to stand out from the other categories for their onboarding of new subscribers with 10% categorized as Rising Stars.

Industry performance

Industry Superstar Napper Dormant Rising StarQuestion Mark

Financial Services CC/Banks 24% 36% 28% 6% 6%

Consumer Publishing/Media General 24% 29% 39% 3% 5%

Travel / Hospitality 21% 24% 46% 4% 5%

Retail Apparel 20% 26% 31% 10% 13%

Retail Specialty 19% 43% 29% 4% 4%

Retail General 18% 47% 26% 4% 4%

Business Publishing / Media General 16% 27% 52% 2% 4%

Consumer Services General 15% 25% 49% 3% 7%

Consumer Services Telecom 15% 18% 60% 3% 4%

Financial Services General 15% 29% 51% 1% 4%

Consumer Products 14% 31% 46% 3% 7%

Business Products and Services General 14% 42% 36% 4% 5%

Consumer Products Pharmaceutical 7% 21% 56% 4% 12%

Overall 16% 31% 42% 4% 7%

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Conclusion

Engaging new email subscribers from an early stage is critical. To do so, marketers must leverage consumer data to understand why the consumer initially subscribed to their emails, their preferences, purchase behavior and interests so they may offer relevant content and offers.

However, establishing engagement with a subscriber is only half the battle. Customer engagement is not a linear process; its a continual effort. Mature email subscribers represent the greatest value to email marketers. Not simply because of their increased customer lifetime value,

but because of the insight they offer on subscriber behavior. Their engagement, or lack thereof, can guide marketers to design strategies for new subscribers and enhance lifecycle marketing initiatives.

Marketers must continually learn from customers and apply those insights into every marketing effort, regardless of the channel. A customer acquired is not necessarily a customer for life. Loyal consumers require courting and constant reminders of why they chose a brand over the competition.

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Epsilon is the global leader in creating customer connections that build brand and business equity. A new breed of agency for a consumer-empowered world, our unique approach harnesses the power of rich data, world-leading technologies, en-gaging creativity and transformative ideas to ignite connections between brands and customers, delivering dramatic results. Recognized by Ad Age as the #1 U.S. Agency from All Disciplines, #1 World CRM/Direct Marketing Network and #2 U.S. Digital Agency Network, we employ over 5000 associates in 60 offices worldwide. Epsilon is an Alliance Data company. For more information, visit www.epsilon.com, follow us on Twitter @EpsilonMktg or call 1.800.309.0505.

About Epsilon

Email Institute, powered by Epsilon, was founded with the purpose of educating marketers on email marketing best practices and how it intersects with other channels (Mobile, Social Media, Brick and-Mortar, Catalog, etc). The best practices site features articles from around the industry that focus on improving email marketing by pointing out how-to information on a specific subject and showcasing other companys email marketing efforts. Email Institute also showcases premium webinars, events, whitepapers and Epsilon primary research and benchmarks to provide in-depth information strategically targeted to increase your email marketing acumen.

About Email Institute

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