Dela Quist, has nearly 15 years of online media, advertising and marketing experience, the last 10 of which have been in the email space. He is CEO of Alchemy Worx, a digital marketing agency with a 100% focus on email and a diverse client portfolio of global and UK based brands such as Tesco, Vodafone, Hilton Hotels, Lilly, AOL, Intercontinental Hotels Group, The Carphone Warehouse and Virgin Holidays.
Dela is regularly invited to speak on the creative, legal, commercial and technical issues that affect email marketers.
Sky News Producer and Data Directive litigation Troll Roddy Mansfield has apparently won his 3rd “victory” against a brand – in this case John Lewis, who (soft) opted-him-in for marketing by using a pre-ticked consent box after he had registered his details with John Lewis’ website.
This was breathlessly reported on Sky News as “Spammer To Pay Damages After Court Victory,” Roddy – the spam troll argued that “an opportunity to opt-out that is not taken is simply that. It does not convert to automatic consent” Well he would know that! Given his track record one would think he more than anyone else in the UK would know what that pre-checked box meant.
The irony of it all is Sky his own employers operate an enforced opt-in policy which means anyone who registers for a Sky ID is automatically put on their mailing list whether they want it or not and the only way to prevent that happening is to tick a box and actively opt-out. Interestingly they do it the opposite way to John Lewis and most brands as you can see below and their approach is as good an example of psychological sleight of hand as you are likely to see. To add insult to injury Sky would seem to be opting you into receiving 3rd party offers from brands you may not actually ever want to hear from, something John Lewis do not.
One of the challenges with the 2003 EU Directive is that it is open to interpretation and as such many Experts, Brands and even Countries apply it in different ways. I have no doubt that Sky’s lawyers are pretty certain that their interpretation stands muster, but I know many brands and commentators who would not feel uncomfortable with their approach and might argue that consent for 3rd party mailings should not or cannot be via opt-out. Most websites require registrants to explicitly opt-in to receive 3rd party mailings.
So what does this mean to those of you out there who concerned by this ruling? My understanding is that County Courts have no power to set legal precedent and as such you are free to use a pre-checked box, particularly as it is one of the most widely accepted interpretations of the Directive. My guess is that John Lewis could have appealed and most likely succeeded, but decided it would be cheaper to pay up and move on. Which is precisely why it is so difficult to stop litigation trolls using the small claims courts as a handy way to top up their holiday fund by suing large employers and brands.
So if there are any other people like Roddy out there go register with Sky and fill your boots!
Our findings last month on the Obama campaign caused a lot of debate but the bare facts of our analysis still stand – had Obama’s team optimized for improved open rates, their send volumes would have dropped and their all-important donations would have followed.
Open rates remain a widely used and hugely misleading measure of performance and engagement in the email industry. At best they give you an idea of a campaign’s performance in isolation but at worst they lead email marketers to focus on optimizing the wrong strategies for their email program.
Here we discuss how to identify if maximizing open rates is holding you back and how to go about identifying the strategies that will have the biggest impact on your results.
The open rate paradox
Using EDS Analyst we examined the relationship between open rates and total unique opens for the top 200 email senders by list size in the US for 2012.
We were confident that, like the Obama campaign, there would be an inverse relationship between rates and totals – so as rates increase, totals decrease and vice versa. We call this the open rate paradox or to paraphrase a popular sports trusim: rates are for show, totals are for dough.
Each dot on the graph below represents a single sender and we picked out some well-known brands as reference points.
Sure enough, the graph shows that for most large senders, there is an inverse relationship between open rates and the total number of opens – the higher the open rate, the lower the number of total opens. Rates are for show.
It’s also no coincidence that nearly all of the brands with the biggest lists (orange dots) also have highest number of total opens because they are sending more opportunities to open.
Although opens don’t directly correlate to revenue, even the most avid fans of open rate maximization would agree that the more people that actually open your emails, the more engaged your database and the more revenue or conversions you are likely to generate. Totals are for dough.
Keep it simple – focus on just three strategies
If your goal is only to improve open rates, then your strategy is simple: halve your list by suppressing your less active subscribers and watch those rates soar… and those total opens plummet! But if your goal is to increase total opens, then the bell curve in the graph above helps define three clear strategies:
Has the biggest impact on totals and can be improved independently of the other two.
Increase send volume: Significantly increases total opens for relatively little effort (low effort to gain ratio).
Optimize for rates
Increases total opens but requires the biggest effort (high effort to gain ratio).
Most brands are clustered towards the lower middle of the curve because it’s the easy place to be. By and large, they all put a similar amount of effort into their program and use the same undefined strategies.
The outliers, however, go above and beyond in one of three ways – those to the right have very high open rates, those to the left have high send volumes and those at the top are combining high send frequency with very big lists to produce massive send volumes.
In effect, this is the three different strategies implemented to their extremes.
Of course, there are limits to the effectiveness of each strategy and these are defined in the graph above by the orange line to the left (frequency cap) and green line to the right (optimization cap).
These boundaries exist because for any given list size there is point at which diminishing returns kick in for both frequency and open rate. And, as the big empty space to the right of the green optimization cap shows, it’s very hard to send a large volume of email while still achieving a high open rate.
So the basis of a successful email program is to continually grow your list while finding a balance between increasing send volume and maximizing open rates with better offers, targeting, subject lines, etc.
And you find that balance by ignoring your open rates…
Define your strategy by ignoring open rates
To illustrate the effect these strategies have on an email program, we have created a simple optimization chart, below. The green curves represent the impact of send volume on total opens and the brown lines represent the impact of open rate on total opens.
Each intersection represents a hypothetical 10-hour unit of resource, as a means of comparing the effort required to implement each strategy. As you get closer to each cap, the effort required to improve your totals with your chosen strategy increases exponentially.
Imagine your brand is the star in the middle of the curve and you want to take on your leading competitor, the lightning bolt.
If you use open rates to define your strategy, then you focus your resource on maximizing those, route A. Your open rate may now be much better than your competitor’s but they are out-mailing you, so they are still creating twice as many opportunities to buy or convert.
If you choose to increase your send volume, ‘route B’, then your open rate drops but your total opens more than double. However, as you approach the frequency cap, the impact of your strategy diminishes and you still trail your competitor.
If you use totals to define your strategy, then you take ‘route C’, which balances resource between increasing send volume and maximizing open rates. Your open rate drops but you are finally creating more opportunities to buy than your competitor.
Smart email marketing is not just a case of increasing send volume indiscriminately or of only focusing on ever tighter targeting. There is a balance that exists for each brand, you just have to find your own sweet spot.
Total opens the key to optimizing your program?
In this instance, we have highlighted the open rate paradox using total opens because that was the data available. However, we’re confident you will find the same inverse relationship in your own campaigns with total clicks and, more importantly, revenue. And in the end that’s the only metric that matters!
There is little doubt in my mind that email was the No.1 non-political contributor to Obama’s win in the 2012 US Presidential race. 75% of the $934 million raised by Obama was attributed to digital and nearly all of that $700 million was raised through email1. That fact alone is phenomenal.
But it’s not until you start to drill down into the data to find out why Obama’s email campaign was significantly more effective than Romney’s that the exciting insights start to appear.
Marketing pundits from all channels have offered their opinions. Just look at the word cloud based on the top 15 blogs about Obama’s email strategy – targeting, testing, creative, subject lines – everything but the two biggest contributing factors: list size and mailing frequency.
Why have these been missed? Because it is relatively easy to get a sense of a campaign’s creative, subject line strategy, frequency and, to some extent, personalization by simply subscribing to a list. What you can’t find out is how large that list is or how much segmentation is being done. That makes it almost impossible to know how many emails are actually being sent. Enter eDataSource …
Scratching below the surface with eDataSource
So, we recently took out a subscription to eDataSource and let our analytics team loose on their web-based tool that combines active monitoring of over 800,000 consumer inboxes with a library of millions of digital marketing messages from thousands of brands. This impressive breadth and depth of reporting gave us everything we needed to find out what really made Obama’s email strategy so effective.
First up was to prove my prediction back in October that Obama would win because he was sending significantly more email to more people. Using the Federal Election Commission, we were able to attribute all donations over $250 to each campaign for the 79 weeks running up to the election. We then plotted this against the corresponding weekly send volumes taken from eDataSource in graph 1.
Graph 1: Donations Received vs Emails Sent
The trend lines tell the story more succinctly than any blog: the more emails each campaign sent, the more donations each campaign received. If the purpose of each campaign was to generate revenue, then it was frequency and list size that had the biggest impact on performance.
What I couldn’t predict was what we found when we dug deeper into the data – the send volumes for each campaign had a striking correlation with the probability of each campaign winning based on the opinion polls …
Obama – the President who ignored open rates
On graph 2 below, we pulled the send volumes and open rates for both campaigns in the two month run-up to the election and compared these to Nate Silver’s Poll aggregator for the 2012 election. His algorithm has correctly predicted the winner of 99 out of 100 states in the last two elections, so it gave us a highly accurate winning probability at each point during the campaign.
Graph 2: Email send volumes vs Probability to Win (Romney volumes scaled up by x15)
As Obama ramps up his send volumes early in the race, his probability of winning increases. Romney also increases his frequency at a similar rate but, because his list size is 15 times smaller, his growth has little effect on the polls. List size matters.
When Obama reduces his send volumes by 38% his probability of winning drops by 42%. By contrast Romney’s campaign grows by 180% and his chances of winning increase by 160%.
In the final push, Romney reduces his send volumes and with it his probability of winning. But his open rates improve by an impressive 14%. Obama takes the opposite approach and aggressively increases his send volumes, which improves his probability of winning.
And Obama’s open rates? They plummet by 14% to a campaign low … and he wins the election.
Obama’s email strategy? Send more, raise more
Had Obama chased open rates would he have lost the election? Well, what we do know is the best way to achieve that goal, as shown by Romney, is to reduce send volumes. Of course, send volumes don’t win elections, donations do. So we set about finding a correlation between send volumes and donations to add weight to our theory.
Graph 3: Open Rates vs Volumes vs Probability to Win
Graph 3 plots annual donations against annual send volumes and open rates for the Obama campaign. The correlation between send volume and donations is undeniable – in fact, they are close to an exact match. The general trend is for a steady increase over the year until a drop off at election time.
But more interestingly – and this may surprise some people – the relationship between open rates and donations is an inverse one! Or, to put it another way, the higher the open rate, the lower the number of donations.
Because, broadly speaking, there is an inverse relationship between send volumes and open rates. The more email you send, the lower your open rate is likely to be. But if doubling your send volume only results in a 15% fall in your open rates, then you will be significantly better off.
So why is revenue so closely linked to send volumes? Because people cannot engage with an email they do not receive. Replace the word ‘email’ with ‘opportunity to donate’, and “an extra email send to 1 million people” becomes, “let’s send another 1 million opportunities to donate”.
While relevance, engagement, creative, subject lines, testing and targeting all played a part in Obama’s success, they pale into insignificance when compared to the impact of reach, frequency and list size. And best of all? With email, you can optimize all of these at near-zero marginal cost.
But does it work in retail? Hell yeah!
Obama’s campaign is one of the few examples of a noted sender admitting that increasing frequency works. The data backs it up, too. But does it work outside of the rarefied world of political fundraising? The answer is “hell yeah!”
Are you being out-mailed by your competitors? If the answer is “yes”, then they are probably out-selling you as well – and we shall be digging down into the data for that particular topic in the coming months. Keep your eyes peeled.
I just got this email from LinkedIn Subject Line “A change to your DMA: Direct Marketing Association (UK) Limited digests” – the 3rd such email I have had this week about a group I belong to.
In it they tell me that they are going to ignore my mailing preferences and unsubscribe me from the group digests of which I get 1 a week a frequency selected by ME! I have now been forced to go and re-subscribe to the weekly digests of groups that I want to hear from 3 times this week. Do LinkedIn really think that is a good use of my time?
Just in case anyone was wondering, while I am not really a FB kind of person I definitely am an UBER LinkedIn user.
- I am a paid subscriber and highly active – I post, place jobs, recommend stay in touch connect etc.
- I have several thousand connections
- I check my page multiple times a day and use it as my primary vehicle for maintaining my business network. I have my preferences set exactly the way I want them for some groups – no email, others weekly and some daily
- I get 10 or more emails a day from linked in and open about 1 in 3 on my desktop and 80% of them on my mobile
- I click on at least one a day and some days 3 or more
- I save all my emails I currently have 2900 in my Linked in folder of which less than half 1427 are “unread”
- I regularly search for old messages or invites and click on them
So how on earth can a bunch of engineers and/or too clever by half marketers come to the conclusion that they know what I want better than me?
The irony is by stopping the DMA group weekly digest, they are going to reduce the chances of me ever visiting again! I wonder how the DMA and other group managers feel about that.
I can’t understand why having gone to the trouble of asking me to set my preferences LinkedIn should choose to expressly ignore the stated preference from a highly engaged – dare I say knowledgeable – paying subscriber. Surely that is as bad as spamming after all what is so different about these 2 scenarios?
1) I use LI preference centre choose to receive 1 email a week – after 3 months LI decide to unsubscribe me for not visiting the group.
2) I use LI preference centre and choose to receive 1 email a week – after 3 months LI decide to send me daily digests or 3rd party emails from partners they think I should hear from
LinkedIn are insulting their members’ intelligence one would think that someone like me would know how to both unsubscribe or hit the spam button. So if I haven’t done either of those things, it’s probably because…I DON’T WANT TO!
One of the big stories in digital marketing in recent months has been about a campaign whose results have a major impact on people around the world – the US Presidential Election. Marketing pundits representing all channels have had an opinion on how Obama’s campaign led to his re-election but I would argue none was more significant than the use of email.
Let me start by saying there is no doubt this election was won by email. Here is a direct quote from an article published by Business Week; “Most of the $690 million Obama raised online came from fundraising e-mails”. And by the way, $690 million represents nearly 75% of the $934 million raised in what ended up being the most expensive Presidential election in US history. This makes email, by far and away the No1 non-political contributor to the drubbing of Mitt Romney.
So why has there been so little said about this incredible achievement by email marketing pundits, ESP’s or their PR machines? When you look at the fuss made over the 2008 campaign – allegedly won by social media – the silence from the email industry has been deafening. When anyone does mention it, there has been a tendency to attribute the success of Obama’s email fundraising activities to anything other than email.
Some may suggest that without the “age old lessons [and presumably wisdom]” passed down from wise-old DM to rather awkward, gauche and somewhat unattractive email marketing the story would have been very different.
Nothing could be further from the truth. Here is what really happened. Obama won because he sent more email to more people more often than Romney period!
According to numbers put out by eDataSource and Return Path, Obama mailed a staggering 40+M subscribers compared with Romney’s 4M, on some days they sent 350M compared with 26M from Romney. So while relevance, engagement, creative – ugly or otherwise, Subject Line testing etc. did play some part in his success, they pale into insignificance compared to the impact reach and frequency had in his success.
What seasoned email marketers might find surprising (I see this as further proof of the fact that frequency drives engagement) is that the Obama database was more engaged and less likely to view the emails they received as spam. The figures below which I extrapolated from numbers published by eDataSource and Return Path illustrate this clearly:
Obama Delete Unread
Romney Delete Unread
Obama ISP Spam
Romney ISP Spam
Obama User-Marked Spam
Romney User-Marked Spam
The Obama campaign raised an average of $17.25 per subscriber, if you assume Romney was able to do the same, he would have generated $69M from email compared to Obama’s $690M. So if you were Romney what would you have learned from this, A) Segment and test your way to $172.50 per subscriber or B) Send email to a lot more people more often?
Email delivers something DM cannot. Broadcast reach at near zero marginal cost.
If you don’t want to leverage that, stop sending email!
I have read lots of peoples’ take on the article and what they found most interesting and would like to share mine – something Bloomberg Business Week chose to call a counterintuitive. I don’t and I think it is an awesome admission: “Most people have a nearly limitless capacity for e-mail and won’t unsubscribe no matter how many they’re sent”. Now read the comments made by the very people who made the campaign successful. Note how few said they enjoyed the blitz yet on average they donated $17.25 each.
Now that’s an insight!
I know for certain that they are not the first people to have worked this out, but they are the first significant entity to come out and say it.
Let’s give credit where credit is due in the 2012 presidential election; segmentation, targeting and testing techniques were the tail, reach and frequency were the DOG!
As a well-known sceptic of the less email = more revenue theory, I have always found it puzzling and somewhat insulting that members of the anti-frequency brigade assume that anyone who follows my advice will by definition simultaneously shut down their brains and start sending 100’s of completely pointless, ugly emails containing terrible offers or irrelevant content; while everyone who follows their advice will automatically start sending out works of art and be given a knighthood for their creative genius.
That’s just stupid!
What I advocate is that everyone who increases send frequency ALSO significantly improves their creative, targeting, offers and analytics. My point is simple – most companies expect their email
program to at the very least pay for itself. And to get budget or funding or additional resource you need to generate the cash to pay for it.
By far the cheapest way to do that in the short term is to increase frequency.
You then have a choice be stupid, bank the cash and send more and more crap or irrelevant email OR maintain or continue to increase frequency for the long-term by re-investing the gain in GROWING your list and/or trying to deliver more value or as some would prefer “relevant” emails.
The inconvenenient truth is that all things being equal a 2nd email a month sent to the same list (even a resend to non-openers) will ALWAYS beat 1 email a month however well targeted and is without doubt quicker and cheaper to do.
The biggest returns in email come in order of priority from (again all things being equal and you don’t do anything stupid):
1. List size
2. Mailing Frequency
3. Offer value
4. Segmentation and Targeting
If I was to advise a client that wanted to increase their investment in email how to spend their money that’s what I would tell them. I would also point out that while frequency is the quickest and cheapest win, it is the most likely to suffer from diminishing returns and the most dependent on investment in the other tactics.
Ours is the only channel that promotes itself by telling the world less is more and that 1 email a year is better than 12. Can you imagine Radio and TV telling the world that 1 slot a night is better than 2 or Google telling you that to be effective you should buy less keyword or banners?
Take it from me a, marketer who tries to get customers and prospects to enjoy receiving more email will be more successful than one who spends time and money trying to find a way to grow their business by sending less email!
If you don’t believe that simple truth here is a simple test – go ahead and significantly reduce your email send frequency and see if any of your competitors follow suit.
If you are involved in email marketing that comment – or something similar is something you will have heard many times. In fact I would be very surprised if none of your relatives or friends made a comment like that over Christmas lunch! I did and as always I found out what he did (Publishing) and ripped his industry to shreds
The term “spam”, with all its infernal catchiness and infinite adaptability, is the albatross round our industry’s neck. It’s given everyone a charge that they can lay at our door – one we feel obliged to defend with monotonous regularity. In fact I have had several clients say that they would like to do more email marketing, but can’t because the CEO thinks consumers hate email.
Changing the narrative
The bottom line is that most readers of this blog NEVER spam deliberately and are not stupid – they learn from their mistakes. So why do so many people equate email from legitimate email marketers working for well-known high street brands to Spam when every piece of available research indicates that email is the no 1 way that consumers like to be contacted by brands they know?
I believe that it is partly because we do a poor job of promoting legitimate email marketing to consumers, but also the fact that email marketing experts are happy to accept – actively promote even – the view that spam is anything that a person says is spam, even if the recipient double opted-in to receive that email from a well-known and respected company selling legal products or services.
Serves you right for sending irrelevant emails; spam they say self-righteously is anything that a subscriber says is spam. Gee thanks.
Let’s think about that for a second; if that’s the case we are all spammers because we can’t be relevant to everyone on our list all the time. It’s no wonder people spend more money in every other channel and spend so much time looking for the next best thing. RSS, SMS, Social, whatever.
The legitimate email marking industry needs to stop apologising for the sins of others because and to paraphrase Ken Magill: it’s like a WI member in Shropshire apologising for having an 8” carving knife when she is told about an increase in London knife crime!
So how do we change the narrative? We need to flip the telescope round.
We are all spammers get over it!
Let’s start with a harsh reality spammers don’t give a damn about either the law or permission, so lecturing readers of this blog about spamming is completely pointless. Then we have to look at the notion that anything a consumer chooses to call spam IS spam. If that is true then anything a consumer doesn’t call spam or chooses to respond to by clicking or buying isn’t spam! This is why spam exists.
But us legitimate marketers do care! Passionately. It therefore stands to reason that if the difference between us and a true spammer or phisher is NOT whether the recipient gave us permission to mail them or even that what we do is within the law; it is the fact that we will stop mailing you as soon as you ask us to and will NOT sell your name without your explicit permission.
We should be proud of that fact and shout it out to the whole world!
I am not suggesting that we stop trying to promote permission based email marketing. I am saying that we should educate consumers about the difference between us (legitimate companies with a reputation to uphold) sending you an email, whether you deem it to be relevant on the day or not and spam.