Email marketing gives 246% return for mid-sized businesses, but there’s a cost

If there is one thing marketers enjoy, it is getting more money back than they paid out. In fact, that is pretty much the job description.

In a new study on email marketing solutions from Jon Cifuentes — in which he studied a broad audience of 1,300 marketers, and evaluated over 48,000 companies — it is clear that email is still both king and queen of return on investment (ROI).

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In fact, mid-sized businesses are enjoying an average of 246 percent ROI thanks to email marketing.

If only that were the whole story.

While the returns are high, email marketing is also one of the most expensive marketing channels to manage.

“You can think of email as the center of orchestrating all of your customer relationships,” Cifuentes, an analyst at VB Insight, said. “It can be an expensive control booth, just based on all the things you can accomplish with it. The infrastructure costs add up. Email infrastructure partners, ESPs, analytics partners, agencies and content services, media spend for growing subscribers, and finally talent to run the show. It adds up, but the potential ROI you can achieve with email marketing shows you how vital it is to get it right.”

I discovered a similar cost pattern in my State of Marketing Technology Winter 2015 report, where a separate set of 2,119 marketing technology users told us that email marketing required high levels of resource to manage properly — 85 percent of email marketing users are at manager level or above, and that is expensive time in anyone’s book.

But while email marketing is costly to maintain, there is no doubt as to the results it produces.

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VB’s new email marketing buyer’s guide is available for
$299 on VB Insight, or free with your martech subscription

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Mid-sized businesses are clearly the big winners. Small to medium businesses gain 183 percent return. And enterprise-level organizations average 117 percent ROI — which is put into perspective somewhat when you consider the revenues at play in the Fortune 500 space.

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And in a world where instant and in-app messaging solutions grab the headlines, email is quietly still gaining traction, even after all these years. Market research firm Radicati is predicting worldwide email users to grow over the next four years to over 2.8 billion users. And it’s easy to see why. Email remains the most prevalent and ubiquitous form of online communication today.

In fact, email is so much part of our everyday life now that we insist that marketers personalize the messages that hit our inbox; if they don’t, we consider that message as spam. Compare that to how we feel about personalization in other forms of marketing, such as location-based triggers, or retargeting campaigns on social platforms.

“For a number of reasons, we’ve been trained to be sold to via email,” Cifuentes said. “It may be that with targeting on a mobile device, there’s just a finer line between useful and creepy. I’m watching that space with interest, and am excited to see new research on data privacy, and consumer preferences”

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With up to 246 percent average return at risk, high internal costs, and an ever-expanding target audience, it seems email marketing requires as much of your attention now as it did when it was the new kid on the digital marketing block.

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Jon Cifuentes’ report — Buyer’s Guide: How to navigate the email marketing landscape — is available now for $299, or free with your VB Insight subscription.