Emerging Innovations in Email Marketing

Making Leaders Successful Every Day

August 19, 2011

Emerging Innovations In Email Marketingby Ari Osurfor Interactive Marketing Professionals

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For Interactive Marketing Professionals

ExEcutIvE SuMMAryEmerging email innovations — from real-time, web-like content to tools that help simplify the complex email production and digital marketing environment — are poised to meet interactive marketers’ standards. Unlike overhyped email marketing innovations of the past, new advancements show promise — they offer lower implementation hurdles and measurable benefits. To succeed, interactive marketers and their vendors must embrace innovation and re-imagine email as more nimble and attuned to customers or face the marginalization of the high-performing channel.

tAblE OF cOntEntSEmail Is A Critical But Stagnant Interactive Channel

Re-Think Email As A Center For Nimble Direct Customer Communications

Actionable, Measurable Email Innovations command Attention

rEcOMMEndAtIOnS

Craft A Testing Plan Based On Program Needs And Risk Tolerance

WHAt It MEAnS

Innovations Will Push Email To Evolve . . . Finally

Supplemental Material

nOtES & rESOurcESForrester interviewed 12 vendor and user companies, including Adobe, liveIntent, Microsoft, Movable Ink, redeemio, and responsys.

Related Research Documents“competitive Strategy In the Age Of the customer”June 6, 2011

“the Future Of Interactive Marketing” April 4, 2011

“How to test Emerging technologies” February 22, 2011

August 19, 2011

Emerging Innovations In Email MarketingAnd Why Interactive Marketers Will re-Imagine the Email channelby Ari Osurwith Emily riley and James Mcdavid

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www.forrester.com

http://www.forrester.com/go?docid=59159&src=60274pdf




© 2011, Forrester research, Inc. reproduction ProhibitedAugust 19, 2011

Emerging Innovations In Email Marketing For Interactive Marketing Professionals

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EMAIL IS A CRITICAL BuT STAgNANT INTERACTIvE ChANNEL

Email remains a mainstay among marketers despite lacking the buzz of other digital channels. Nearly all interactive marketers report that they currently use email as a marketing channel.1 And as consumers continue to spend time in their inboxes using various devices, marketers will maintain their reliance on the original “killer app” (see Figure 1). But even though email has served as a go-to tool for interactive marketers for many years, notable innovations such as improvements in content assembly and campaign deployment have advanced at a slow pace.

Pulling back the curtain, this is what the current state of email reveals:

· The sky is not falling. The surging popularity of social and mobile will bolster, not torpedo, the importance of email for marketing and customer communication purposes. Both social and mobile users are significantly more likely to be active email users according to Forrester’s North American Technographics® Benchmark Survey, Q2 2010 (US, Canada).2

· High ROI and low cost continue to make it an easy internal sell. The commoditization of transmitting email messages has driven CPMs lower, propping up the email channel’s overall ROI.3 The efficiency of email has enabled it to grab a larger share of budget dollars previously earmarked for more costly direct mail.4

Figure 1 Email continues Its role As A Significant channel Among Interactive Marketers

Source: Forrester Research, Inc.60274

Source: December 2010 US Interactive Marketing Online Executive Panel Survey

Mostly businesses (B2B)

Equally split between B2B and B2C

Mostly consumers (B2C)

16%14%71%

17%80% 3%

10%88% 2%

“Does your company use the following in its US marketing?”(Email marketing, including email for acquisition and retention)

Currently using Plan to use in the next 12 months No plans to use

Base: 252 interactive marketers

© 2011, Forrester research, Inc. reproduction Prohibited August 19, 2011


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RE-ThINk EMAIL AS A CENTER FOR NIMBLE DIRECT CuSTOMER COMMuNICATIONS

Customers are empowered, digitally connected 24x7, actively seeking information, and shaping their interactions with marketers. For email marketers, it’s the perfect time to innovate and think about the channel as a hub for direct customer communications that reflect the real-time environment. Here’s why:

· Content management for email is catching up. Vendors and ambitious marketers are ushering in real-time content to inboxes that until now was reserved for the Web and mobile apps. Interactive marketers can present information and offers based on when and where recipients open a message, instead of freezing content at the time of send.

· Roadblocks are clearing. Inbox providers like Gmail, Windows Live Hotmail, and Yahoo Mail are in a capabilities “arms race” to win consumers’ attention. This competition is leading to greater cooperation between the inbox providers and marketers, and inbox providers are loosening the reins on what marketers can execute in the inbox.5 For instance, transactions within a message — previously taboo due to technological restrictions — are now on the table with Hotmail’s Active Views platform pilot program.

· Many innovations are manageable to test. All of the vendors interviewed emphasized their willingness to prove the value of their innovations, and most have simplified the testing process to help encourage adoption. For example, MSNBC could quickly test LiveIntent’s email advertising services due to the minimal technical requirements.

Actionable, Measurable Email Innovations Command Attention

Heralded email innovations of the past, such as certified delivery and streaming video, never sustained momentum for a host of reasons: technical limitations with inboxes, poor user experience, operational complexity, and questionable ROI due to incremental fees.

This time around, several promising email innovations aim to woo interactive marketers’ adoption by appealing to their practical and data-driven nature (see Figure 2). And, critically, they can be implemented without burdensome requirements. Here are emerging developments that forward-thinking email marketers must put on their short-list for evaluation and testing:

· Static email content to evolve into real-time, Web-like pushes. By refreshing content in real-time upon open, marketers can avoid presenting stale content or expired deals and instead spotlight urgency drivers such as counts of remaining items in stock, integrate up-to-the-minute social posts, and even use the opener’s geolocation for content decisioning. Working with vendor Movable Ink, daily deal aggregator Redeemio optimizes email content when a recipient opens the email, a tactic that has generated a 17% lift in click-through rates compared with the static version (see Figure 3).



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· Recipients to execute transactions within an email. LinkedIn, LivingSocial, Netflix, and Posterous are testing in-message “windows” to their web environments within Hotmail (see Figure 4). This function, called Active Views, allows recipients to conduct searches and execute transactions such as booking a hotel room without leaving the email. Microsoft anticipates opening the pilot program to other marketers.

· Behaviors to dictate message content and timing. The bulk of marketers still broadcast uniform email campaigns to an untargeted list, thereby treating all recipients the same. Service provider Sailthru can send messages to microsegments at precise times based on an analysis of each recipient’s inbox activity. Publisher Business Insider, using Sailthru’s web analytics, decisioning engine, and automated dynamic content assembly, has dramatically increased response rates for its newsletters by showcasing content each subscriber is most likely to read but has not yet consumed on the website.

· Device detection to optimize creative presentation and provide deeper insights. Several providers, including LiveIntent and Sailthru, can identify the email program (e.g., Outlook, Apple Mail, Gmail, etc.) and device (e.g., desktop, iPhone, Android, BlackBerry, etc.) used to read an email and serve creative assets versioned for that experience. Similarly, provider Litmus offers post-send reporting by email program and device, as well as the ability to measure recipients’ time spent reading a message (see Figure 5). Using reporting from Litmus, a large pizza chain identified iPhone users within its customer base and sent them a highly relevant

“sneak peek” invitation to download the chain’s new iPhone app.

· Ad management to improve monetization and efficiency. Vendor LiveIntent is extending the practices of online display ad management to email (see Figure 6). Partnering with media companies including Maxim, MSNBC, and Newsweek/Daily Beast, LiveIntent has launched an ad exchange and trading desk to monetize undersold email inventory. The exchange features ad units commonly used in online display advertising, in addition to the ability to buy dayparts, set frequency caps, and optimize based on real-time performance. According to Jason White, EVP of marketing at automotive pricing destination TrueCar, the email ad exchange can provide advanced targeting at a scale previously difficult to achieve in the channel.

· Video and email to finally date after years of flirting. Marketers and inbox providers have recently found ways around inbox video restrictions. Sports leagues such as the NFL and NBA have regularly included in their emails short video clips in the form of animated GIFs, which does not require the services of a specialized vendor; marketers can implement them using Adobe Photoshop and a media server.6 Even more straightforward: If a marketer includes a link to a YouTube player, Hulu player, or Flickr photo album within a message sent to a Hotmail recipient using Active Views, the player or album will render in the message and allow the recipient to consume the rich media content in the email.



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· Integration to facilitate more coordinated interactive marketing efforts. ESPs such as ExactTarget and Responsys have developed interactive marketing suites that enable data management; campaign scheduling and coordination; and reporting across email, social, mobile, and websites. Working with the Adobe Online Marketing Suite and ExactTarget, retailer Finish Line has significantly increased conversion rates of remarketing campaigns by using web behaviors to trigger emails with customized product recommendations.



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Figure 2 current versus Emerging capabilities in Email Marketing


Static, defined at timeof campaignproduction or atcampaign deployment

Messagecontent

Current capability Message contentSamplevendors/providers

• Movable Ink• Adobe Online

Marketing Suite• Microsoft Hotmail

Active Views• Sailthru

Real-time, tied to live content and functions onweb pages or other environments• Copy, URLs, and images optimized each time

message opened• Urgency drivers such as deal countdown

clocks and number of remaining items on sale• Search, commerce, and social posting

functions that enable multistep experienceswithout leaving the inbox

• Full versions or content blocks assembledbased on geolocation identified upon open

Not generallyaccepted by mostemail clients,animated GIFs used bysome marketers

In-messagevideo

• Adobe Photoshop• Gmail: YouTube• Microsoft

Hotmail: YouTube,Hulu

Embedded video and animated GIFs morecommonplace with less technical complexity

Integration with webanalytics, campaignmanagementplatforms, and otherrelated systems

Multichannelintegration,

execution, andreporting

• ExactTarget• Responsys• Bronto• Yesmail

Improved integration and coordination withsocial, search, display, and mobile• Campaign scheduling and reporting available

across channels through unified dashboard• Email link click data used to inform display

ads, search marketing, and online experience

Standard delivery andresponse metrics(bounces, opens,clicks, conversions)

Reporting • Litmus• Return Path

Deeper behavioral trends that inform moreeffective messaging• Measure “session time” for email: time spent

reading• Reporting dimensions available by specific

device (PC, Mac, Android, iPhone, etc.) and byemail program (Outlook, Gmail, etc.)

Render HTML or textbased on recipient’semail client

Formatoptimization

• Sailthru• LiveIntent• Movable Ink

Serve optimal message versions at time of openbased on recipient’s device

Campaigns sent todesignateddistribution list atscheduled time

Behavior-baseddeployment

SailthruMicro-segments deployed based on optimaltime-of-day

Ads usually hard-coded, someintegration with adserving providers

Display admanagement

• LiveIntent• Datran Media

Improved monetization opportunities• Ads served and optimized upon open• Better alignment with media buying practices

such as dayparts and frequency caps• Web-based ad units extended to inbox (i.e.,

takeovers)



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Figure 3 redeemio With vendor Movable Ink Optimizes content upon Open


Source: Redeemio

Offers are prioritized based onreal-time performance and geolocation.



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Figure 4 livingSocial Is Piloting Hotmail’s Active views to Present real-time content


Source: Microsoft website



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Figure 5 litmus Provides behavioral reporting based On Email clients And devices


Source: Litmus



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Figure 6 liveIntent Enables Email Publishers to Insert Ad units like takeovers


Source: LiveIntent



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r E c O M M E n d A t I O n S

CRAFT A TESTINg PLAN BASED ON PROgRAM NEEDS AND RISk TOLERANCE

Interactive marketers should test innovation candidates that match their program needs and complement their existing competencies. While some innovations noted here are driven by smaller, younger providers, we are optimistic that these emerging approaches will gain traction among interactive marketers due to their focus on improving program performance, enhancing the customer experience and lowering implementation requirements.

As you develop a strategy for considering and executing email innovations:

· Master the “big wins” with your vendor partners first. As it is, many interactive marketers still do not take advantage of the current sophistication offered by vendors. Prioritize “big wins” already proven in the marketplace like regular A/b tests, automated campaigns based on profile information or customer behaviors, dynamic content to improve relevance, value-based segmentation, and acquisition touchpoint improvements to grow lists. then layer in new innovations to test.

· Filter innovation candidates based on your needs and competencies. Prioritize based on which advancements would deliver the most value as well as your ability to execute and evaluate the outcome. Publishers and media buyers should investigate email ad inventory management innovations from companies like liveIntent and datran Media. due to their familiarity with direct response, retail and travel marketers are best equipped to test real-time content and behavior-based deployment from vendors like Adobe, Movable Ink, and Sailthru. And interactive marketers seeking to understand recipients’ email engagement by device could uncover new insights with more thorough behavioral reporting from providers like litmus.

· Determine email innovation partner strategy based on risk tolerance. Early stage innovators have demonstrated promising initial success but in the short term are better suited for lower-risk pilots. Work with your core email partners to evaluate innovation prospects and then test small-scale executions such as a real-time content campaign to a segment of your customer file. determine if the innovation vendor can scale in terms of client service, infrastructure, and delivery before signing up for large rollouts.

· Follow the Five P’s framework to assess innovations. To help navigate which email innovations make sense to pursue, we recommend that interactive marketers use Forrester’s

“Five P’s” framework for testing emerging media and technologies: adoption position, POSt (people, objectives, strategies and technologies), project plan, pilot, and performance evaluation.7



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W H A t I t M E A n S

INNOvATIONS WILL PuSh EMAIL TO EvOLvE . . . FINALLy

the next generation of advances in email marketing promises to improve recipient engagement, simplify execution, deepen reporting, apply successful practices from other channels, and facilitate integration. Most importantly, these advancements can help to forcefully nudge interactive marketers to become more customer-obsessed in the “age of the customer.”8

As emerging advancements go mainstream, we expect these trends to alter the landscape for email marketers and their vendors:

· Marketers will regard email as “live” and truly interactive. the technological restraints holding back email marketers will slacken, and fresh approaches to the channel will grow. richer and more interactive experiences will become more commonplace in email, especially as HtMl5 and other next-generation technologies are adopted. the ability to transact within the inbox will stimulate new ways for interactive marketers to engage customers, collect data, and drive performance. Expect email managers to lean on their ebusiness and development teams to integrate features like in-message search, commerce, social media integration, and real-time shipping notifications.

· Progressive marketers will demand innovation from providers. In the battle for customers’ attention, proactive marketers will push their vendors to develop email advancements that build more effective connections with recipients. A new era in the previously commoditized email service provider category will unfold as innovations that drive response, build value, and improve customer Intelligence will create separation among vendors. Expect the more established ESPs to absorb the smaller, younger vendors driving many of the innovations and roll the capabilities into their existing platforms in a bid to differentiate.

· More rigorous ad management practices will improve email profitability. Publishers and media buyers will applaud as time-tested methodologies that built the online display industry will finally migrate to email such as ads served at the time of engagement, more compelling ad units, and audience buying with scale. the benefits: more efficient management of inventory, sophisticated targeting for stronger performance, and better alignment with other digital channels.

· Email advancements will serve as steppingstones to CORE.9 detecting a recipient’s device will facilitate customization of marketing experiences and address the many ways recipients consume information. More comprehensive reporting of email behaviors will better inform customer Intelligence and optimize marketing strategies. Multichannel platforms that include email will help coordination within marketing organizations and enable interactive marketers to respond to changing market conditions more nimbly.



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SuPPLEMENTAL MATERIAL

Companies Interviewed For This Document

Adobe

Email Predict

Litmus

LiveIntent

Maxim

Microsoft

Movable Ink

MSNBC

Redeemio

Responsys

Sailthru

TrueCar

ENDNOTES1 Ninety-eight percent of B2C marketers and 85% of B2B marketers use or plan to use email as a marketing

channel. Source: December 2010 US Interactive Marketing Online Executive Panel Survey.

2 Ninety-five percent of social media users reported that they use email at least once per month, compared with 85% of non-social media users. For smartphone users, 95% indicated they use email at least once per month, compared with 89% of respondents who do not have smartphones. Source: North American Technographics® Benchmark Survey, Q2 2010 (US, Canada).

Merkle reported similar findings: Social media users are significantly more likely to check their email four or more times a day compared with non-social media users who are online, and two-thirds of mobile device users check their email accounts at least once per day. The study also indicated that even though consumers are spending less time on personal email, time spent on commercial email has increased between 2007 and 2010. Source: “View from the Digital Inbox 2011,” Merkle, February 23, 2011 (http://www.merkleinc.com/vfdbwhitepaper/).

ComScore found that personal email was the top activity for mobile users, demonstrating 30.7% growth from March 2010 to March 2011. Source: “The State of the U.S. Mobile Advertising Industry and What Lies Ahead,” comScore, March 2011, (http://www.comscore.com/Press_Events/Presentations_Whitepapers/2011/The_State_of_the_US_Mobile_Advertising_Industry).

3 Commercial email returned $43.62 for every dollar spent. Source: “Power of Direct Marketing,” Direct Marketing Association, October 19, 2009 (https://imis.the-dma.org//bookstore/ProductSingle.cfm?p=0D440979|13129F63F480B12CBC5B448193E960F1).

4 Email surpassed direct mail in terms of percent of the overall marketing budget (18% versus 17%). Source: “Digital Marketing Practices and Trends,” Direct Marketing Association, July 19, 2010 (http://www.the-dma.org/cgi/disppressrelease?article=1429+++++).

Also, email was named most often as a program respondents planned to increased spend, while direct mail was named most often as a program planned to decrease spend. Source: “2011 Marketing Trends Survey,” StrongMail, December 9, 2010 (http://www.strongmail.com/pdf/SM_Trends2011.pdf).



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5 One consequence of the new capabilities and technical differences across the major web-based inbox providers: Email marketers should consider segmenting customers by inbox domain to account for varying user experiences.

6 Adobe Photoshop version CS5.5 can convert video files to animated GIFs, which can be hosted by a media server and inserted into email content.

7 For full details about the Five P’s framework for testing emerging technologies, see the February 22, 2011, “How To Test Emerging Technologies” report.

8 Forrester proposes that only the companies obsessed with their customers can succeed in a landscape where historically important competitive advantages have been neutralized due to customer empowerment. See the June 6, 2011, “Competitive Strategy In The Age Of The Customer” report.

9 CORE represents the interactive marketers’ directives for adapting to the empowered customer and technology disruptions of the next digital decade. They are: customize marketing experiences, optimize decisions and processes, respond to changing marketing conditions, and empower staff and customers to advocate for you. See the April 4, 2011, “The Future Of Interactive Marketing” report.




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