Email marketing - Measure of success

Paul Crabtree, marketing director of email marketing agency Adestra, which sponsored the research, believes that the reason email has gone unmeasured for so long is that it has been seen as a cheap medium, and as such, has been adopted without the need to significantly justify spend on it. "Trying to backward engineer tracking processes on to existing ways of doing things is very often difficult," he says.

Traditionally, the industry has relied on rates such as clickthrough, open and deliverability as a way of measuring email marketing's effectiveness. Bryan Black, managing director of email marketing provider Email Reaction, doesn't mince his words when it comes to giving his opinion of using these metrics for calculating ROI.

"None of them bears any relevance at all to ROI," he says. "You don't get any money if someone clicks on a link, so there's no return on your investment. It's nice to know that people are clicking on your links and going to landing pages and we marketers can all congratulate ourselves that we've produced some great emails. But as a brand, you want to measure how effective you've been at selling, otherwise it's just a case of marketers saying they've done a great campaign."

Board-level buy in

Indeed, as email comes of age as a marketing channel and is taken more seriously by brands, it's crucial that marketers report on it in a way that the rest of the business understands. How this is done will vary from company to company. For example, for some firms the important measure will be simply how much revenue is being generated, but for others it will be factors like the average order value achieved, or the revenue made from high margin products versus low margin ones.

"The key thing for marketers is to work out the metrics for their business," says Simone Barratt, managing director of E-Dialog. "A lot of marketers miss a trick here and they don't report on metrics in a way their peers are used to. For email marketers to get board-level buy in, they need to raise the profile of what they're doing in a way the board understands." She adds that clients must move away from "process metrics", like clickthroughs, and move to "profit metrics", based on how much money is being made.

Although ROI is ultimately the ratio that marketers really want to get their hands on, to prove how effectively they're using email, this does not mean other measures are redundant. In fact, savvy marketers are increasingly measuring a variety of different responses to email marketing campaigns in a bid to improve them in future and boost ROI. One factor holding the industry back has been the fact that email has always been treated as separate from other online disciplines and, as such, has not been well integrated into the mix.

Clickstream tracking

Only now is the relevant technology for tracking consumer behaviour falling into place. For example, email marketing firm Lyris purchased web analytics company ClickTracks in 2006, but the new software enabling the behaviour of email recipients to be tracked was launched only two months ago. Lyris UK general manager Kieran Cooper says: "What this allows you to do is see much more closely the results of what happens when someone clicks on an email and arrives on a landing page. It gives you the ability to look at not just how many clicked on the landing page, but where they actually went from there." Lyris calls this type of measurement "clickstream tracking" (also referred to as "creative tracking") and uses it to identify which creative, copy, images or triggers prove most successful in getting customers to do what the clients want them to do.

Another technology, Intimis 3.0, was launched in October. This online tool enables marketers to track individual responses to an email in real time and thus increase ROI in real time. For example, it can recognise when an individual has clicked on an email link, looked at the promotional offer but left the site without making a purchase. Intimis can be programmed to follow up this behaviour immediately with another, more targeted email incentivising the customer to go back and buy. "On average, clients' conversion rates have doubled, but sometimes trebled, when using it," says Kevin Mason, director at Intimis.

Adestra's MessageFocus ASP tool performs a similar job and, in a recent campaign for an online gift retailer, it significantly improved ROI by sending a second, more personal message to customers who had abandoned their baskets. Half of these customers opened the email and, of this group, half clicked through to the site, where 53 per cent made a purchase. Consequently, an extra 14 per cent of those to whom the original email was delivered went on to convert.

Technology that helps marketers determine how email works with the rest of the marketing mix is also gathering momentum. Online marketing agency RedEye, for instance, uses its web analytics Media Mix Analysis tool to identify how email works with other channels, like natural and paid-for search, in the customer journey. "If you know this type of information you get a much better picture of where to invest your spend," says Matthew Kelleher, commercial director at RedEye. "It may be that it took lots of different interactions before an individual took action and with a good analytics package you can understand how someone is being influenced by banners, search marketing and email together."

A future challenge will be to measure the impact of email marketing on a brand's value. Initially, email was recognised for tactical benefits only but that is starting to change. "Email definitely plays a role in a brand's value," says Kelleher. "But when it comes to metrics, no one has got that one sorted yet."

POWER POINTS

- Email used to be viewed as a cheap marketing medium

- Marketers need to raise email's profile with managers to achieve board-level buy-in

- New software can track the behaviour of email recipients more closely

CASE STUDY: WHY RAMADA JARVIS VALUES USABILITY
Client: Ramada Jarvis Hotels
Brief: To boost email marketing's ROI
Supplier: In-house/CheetahMail

When Gareth Gaston joined Ramada Jarvis a year ago as head of e-commerce and distribution, the ROI on email marketing "was almost negative," he says. Now the ROI is 30:1. As well as achieving this impressive ratio, he's managed to double the revenue generated from the channel too.

He started by bringing the email marketing responsibility in-house and purchased a technology package from CheetahMail. He also focused on improving the tracking, testing and analytics of Ramada's email campaigns. He says the trick is to view sending out an email like sending out a web page.

"An email might contain five or six different sales messages and links. To improve ROI, you need to look at factors such as which part of the page is proving most popular and why, and the impact of the design on responses," he says. "It's much more helpful to think about email marketing as an exercise in web usability, when you have to look closely at how people are responding to it, rather than approaching it as you would plain advertising."

Gaston constantly tries different page ideas and layouts. Ramada also tracks variables such as the impact of the subject line, the time of day the email was sent and the type of offer included. "None of this is mind-blowing - it's simply a case of trying to understand what works for your brand," says Gaston. But while he is encouraged by the development of technology in the sector, he believes the value of real-time information is probably exaggerated.

"Real-time feedback is good, but you shouldn't necessarily expect instant results with email and in many cases you won't know immediately whether someone is going to respond to your message," he says. "People don't necessarily react immediately. Most open a link, close it, then think about it for up to a month afterwards." Ultimately, though, the metric Gaston has his eye on is the number of conversions, as these relate directly to ROI. "You might have got people to click through but what you really want to know is, are they actually buying?" he says.

EMAIL MARKETING - THE PITFALLS - HEADLINE

Cheap is not necessarily best Brands can send huge numbers of emails for little cost. Yet this can be immensely damaging to a brand's reputation if it sends a communication to a recipient who is not interested. "One rubbish email could damage years of brand development," says Matthew Kelleher, commercial director of RedEye.

Spam definitions - ISPs tweak the rules by which they define spam to keep one step ahead of unscrupulous mailers. For example, at certain times particular words may be deemed an indicator of spam and the ISP will deposit the message in the bulk folder. "It means we have to send out thousands of emails ourselves to try and identify how the rules are changing and how we can ensure our clients' emails aren't labeled as spam," says Bryan Black of Email Reaction.

Spam traps - Also known as honey-pot addresses, these are posted on the internet in order to identify spammers. If you email one, it can result in your brand being blacklisted.