Warming Up to E-mail Marketing (1,004 words)
What's colder than contacting a cold prospect? Contacting a cold prospect using an untested list, an untested offer and an untested medium. To avoid a big chill when it comes to response, some e-mail marketers are taking several steps before they jump into the hot technique of e-mail marketing.
Why? E-mail list rental options are still limited, so direct marketers are exploring how to push existing e-mail lists—their own and rentals—to the limit through multi-step roll-outs. Two Web catalogers—Harvard Business School Publishing and N2K's Music Boulevard (which merged with CDnow in March)—show how this approach to Internet marketing led to successful e-mail prospecting.
Harvard Business School Publishing
Harvard Business School Publishing (HBSP) is a small company with a big brand name. Although Cambridge, MA-based HBSP, as part of an educational institution, is not-for-profit, the way it operates its Web site would make an MBA proud.
Explains marketing manager George Pratt, "Every Web site needs a raison d'etre. We decided early on that our site would be an e-commerce site, not an advertising-based content or community site."
With its e-commerce site built by Cambridge Web developer TVisions, HBSP had a mission to sell subscriptions to Harvard Business Review and other products. The site had built a 90,000-name e-mail house list through an e-mail newsletter developed by E-Dialog, an e-mail communications firm based in Cambridge. Some subscribers were catalog or Web site buyers, but many had never purchased from HBSP.
Instead of using rented lists to begin its e-mail marketing efforts, Pratt decided to market to this newsletter list to reach pre-qualified prospects who would respond favorably to the Harvard name, whether or not they had opted in to receive e-mail marketing messages. HBSP sent the e-mail messages promoting Harvard's publications using an E-Dialog technology called QuickReply. Prospects could accept a subscription offer simply by replying to the message—Web site visit not required.
The ease of ordering paid off. In a split test against fax and postal mail, QuickReply generated a 5,000 percent ROI, and a response rate four times that of fax and six times that of post.
Once the offer and medium were tested, HBSP delved into prospect lists. Says Pratt, "We tested an e-mail list from IDG, and the early indications were that the response was nowhere near the response of our own opt-in list."
That's to be expected, since a house list is "warm" in a way a prospect list can't match. Pratt acknowledges this and plans to use the proven offer and method in additional list tests. HBSP is also testing e-Append, an E-Dialog product that appends e-mail addresses to an existing customer database using a patented algorithm.
In fall 1998 Music Boulevard, an online music store founded in 1996 in New York, was already using e-mail marketing to communicate with its house e-mail list. Its My MusicBlvd program, administered by Post Communications, a San Francisco Internet marketing company, allows individuals to register their music choices, then receive messages from Music Boulevard about related new releases and offers.
The re-marketing method increased the frequency with which customers ordered, but Music Boulevard faced an imperative: Acquire new customers as online competition for music dollars threatened to whittle its customer base.
Instead of renting prospect lists, Music Boulevard leveraged an existing strategic alliance with Ticketmaster. E-Dialog was chosen to handle the e-mail campaign, which was to include personalized messages to the Ticketmaster file and a three-week split test with 10 different acquisition offers.
E-Dialog constantly monitored and tweaked the campaign to find Music Boulevard's winning acquisition offer—$10 off the recipient's first CD purchase. The e-mail prospecting campaign delivered new customers less expensively than banner advertising or direct mail, and once recipients made purchases, they were captured in the Music Boulevard house file to be targeted for future marketing efforts.
Next, Music Boulevard took its acquisition offer to outside lists. The company turned to Acxiom/Direct Media, which provides e-mail list management, brokerage and campaign management. Music Boulevard continued its success using the $10-off control, but experienced a few glitches due to immaturity in the e-mail list market.
Says Regina Brady, vice president, interactive services at Acxiom/Direct Media, "How many e-mail lists are really out there depends on your definition of a list." While datacard systems may include hundreds of lists, Brady says many of them are really subsets of other lists based on different selects.
Despite limitations on the availability of lists, the attractiveness of the offer opened up some lists that weren't officially on the market. Brady says that the $10-off deal was so appealing that some list owners were willing to co-brand the offer as a benefit to their members.
While costs for an e-mail campaign are lower, the savings earned by eliminating printing and postage is offset by the high price of e-mail lists, most of which start at $200/M without any additional selections.
Brady doesn't think that the high prices will hold, saying, "There is going to be pressure to drop those prices, but right now these lists are the only game in town. Eventually, marketers are going to demand lower pricing and more consolidated, streamlined mailing methods."
As e-mail marketing proves successful, the options for direct marketers will increase, but to what extent is difficult to say. The postal list industry developed in a different decade, and today's controversies over data privacy muddy the waters, discouraging some list owners from putting e-mail lists on the market.
"I don't think the same sort of marketplace will develop for e-mail as for postal mail," predicts Bill Herp, president of E-Dialog. Instead, he suggests that the affinity marketing model used by Music Boulevard will be the dominant model for e-mail customer acquisition programs.
Brady believes that affinity marketing may actually open the way to wider availability of lists for rent as list owners realize how effective they are. Until then, e-mail marketers will need to be more inventive to come up with e-mail names as Internet list rental models and methods sort themselves out.