Category Archives: Strategy

Are high open rates holding you back?

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:

List size:
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!

Avoid these mistaken mobile email head-first tactics

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Editor’s note: This guest post is written by Jordie van Rijn, the founder of emailmonday.

If you haven’t looked at all your marketing messages on the small screen, now is the time to do so. Mobile email is hot, and not in the sense of a hype, but in the sense that you need to take it into account. Otherwise you will lose revenue. E-mail is shifting from a pure desktop orientated task to the real, always-on world. Always on has a strong preference towards mobile. The latest report on mobile email shows that the growth isn’t over yet.

The mobile tipping point
On average 41%. of the opened emails originate from a mobile device according to the latest report by Knotice. These are smartphone as well as tablets. The mobile tipping point, the point where half (or more) of email will be read on a handheld device is just around the corner. Earlier this year there was a mobile email tipping point infographic. The researchers expect that the tipping point will be reached this year, even within 6 months.

That is impressive because just a year ago this was only 27%. Although of course you always need to understand your metrics especially concerning mobile email. The shift to mobile has some real implications because the email marketing engagement takes a very different form on mobile devices. Think about the fact that touchscreen are used instead of the much more accurate mouse. The different interaction with mobile webforms and shopping behaviour as well as the reduced screen sizes.

Clicktrough rates on mobile devices

To get a view of the interaction on mobile devices we also need to look the next levels of interaction. Opens are great but more often it is about clicks and conversions. So in the Knotice report the open statistics are complemented with clickdata. Take notice these are the mobile email clickratios, compared to the clickratio on desktops.

Increased mobile email engagement

The clickthroughs on mobile devices are lower compared to desktops, we can all feel that is quite logical and not bad per se. Take emails from financial institutions for instance or emails that link through to a downloadable PDF. Although you could open those on mobile more often these days, it is also the question if you are in the situation to do so. And if recipients feel comfortable doing so. The context also matters, where you are at that moment. It is interesting to see the clickthrough rates from tablets now beginning to become higher than smartphones, these used to be almost identical.

The clickthrough rates on mobile are increasing, this could be explained by three trends:

More companies are sending mobile optimized email
Recipients are more used to interacting with email and websites on their mobiles.
More websites are responsive and are fit to interact with on a tablet or mobile device.

Differences between industries

Mobile e-mail marketing statistics differ strongly per industry, something which is common in all email marketing statistics. Many of the industries appear to level off in their growth, while others are still growing strongly in mobile email. For instance consumer products (22,3% growth, now 36,22%), Cable and Telco (12,6% growth, now 40,35%), consumer services (19,3% growth, now 50,29%). The data from the report is from last quarters of 2012, the first 2013 numbers show a small decline in opens.

Why mobile email should needs an Upgrade instead of an Update
Being unconscious about mobile is definitely no longer an option. Although some say that mobile email optimization (with responsive design) is just a shiny new thing. Tim Watson wrote an excellent piece about how optimizing your mobile email is a waste of time for many. I would say, going from just the title: that is nonsense.

If you are going to optimize for mobile, the trick is to not to treat it like an update, but as an upgrade. This means avoiding the triple play of mistaken mobile-head first tactics.

* Don’t just make your current design “fit for mobile”,
* Don’t just add some “mobile best practices”,
* Don’t just make a new template which the designer filled with things he thinks are cool.

Instead treat it like a chance to swing your emails around and put results first instead of “mobile first” .Go ahead and design a new template if you will, one that takes all the above head-first tactics if you must. But think about your conversions and how you are going to increase your results. As an anecdote, I was involved in a new template design which had already been mobile optimized. But we made a different, new one, Guess what? The new mobile optimized design outpreformed the old mobile optimized design by 75%. 75% revenue that is.

How the Obama campaign succeeded with low open rates

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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.

Why?

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.

If you want to replicate Obama’s success for your own email program, then feel free to use these strategy ideas from this post from our blog: FIVE reasons why open reach will revolutionize your email marketing.

1. Joshua Green, The Science Behind Those Obama Campaign E-Mails, 29 November 2012, http://www.businessweek.com/articles/2012-11-29/the-science-behind-those-obama-campaign-e-mails

Is it your time to get engaged with the Email Marketing Council?

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The election season is upon us. And it is important to both the DMA and the Email Marketing Council to ensure this is as widely publicised as possible as the work of the EMC requires a full council and one that is as widely representative of all constituent stakeholders as possible.

Over time we have had members that have been very active participants, who for whatever reason have stood down and the election time lends itself to be the perfect time to bring new members to assist with the work of the council. Two such recent members that have stood down are Denise Cox of Newsweaver and Simon Bowker of Teradata/eCircle both of whom have contributed to numerous projects and outputs in their time as a council members and I’d like to extend my personal thanks to them both for their efforts and valuable contributions over numerous years.

Immediately post-elections the council must align its outputs and objectives for 2013-2014 in line with the DMA’s business plan and the initiatives from the Chairs of all of the DMA councils which include; putting the foundations in place for greater cross-council collaboration and supporting development of the value chain and improving the customer journey.

The Email Marketing Council has some objectives that are on-going including the updating of the Council’s Best Practice Document, the production of White Papers all of which are designed to help the membership and support our desired goal to champion email as an essential part of the greater marketing mix and an effective direct marketing channel.

In short there is much work to do and those with an appetite for helping should consider standing and getting involved as proactive council members – now is the perfect time to get involved. I consider us to be an accessible council as we maintain an open door policy to observers that wish to attend our council meetings as well as encouraging active participation to the work of one of our hubs. If you have previously considered standing for election and for whatever reason have not done so historically then I would encourage you to reconsider, but do so quickly as you do not have long at all – the closing date for entries is this coming Friday 22nd March at 5:30pm.

The website to register as a candidate can be found here, if you have any questions please contact either myself or Georgina Lippa (Project Manager, Media Channels) directly via email: georgina.lippa@dma.org.uk or via telephone: 020 7291 3317.

Richard Gibson, Chair Email Marketing Council and Director Client Services, Return Path.

What do your emails say about you?

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In my last DMA blog I made the mistake of highlighting the “branding” gap in Apple’s emails. And I was duly punished by the “Apple gods”, who caused me to drop my new iPhone 5 in the loo. Actually, a recent YouGov survey showed that 21% of people check their emails in the toilet, and I can tell you that there are literally hundreds of web posts advising on how to repair iPhone water damage. So, though it probably wasn’t a personal punishment, I’m certainly going to be more careful about what I say in future. But I would still like to explore further one of the areas that this blog touched upon, and that’s the importance of keeping consistent and relevant branding in all email communications. There’s a profusion of advice on how to optimise your email marketing, a deluge of articles about how mobile is impacting email, and a large wash of commentary about new functionality – testing, responsive design, HTML 5 etc. And this is all good stuff. But there’s not much marketing advice on how to get your employee email up to scratch, for those one-to-one customer communications, and consequently there are still many email basics that businesses are not getting right. If you were to send a mail now from your work email address to a client, what impression would that give them of your brand? Would it help reinforce your business proposition or increase awareness of your company’s services? Well, I received an email today from one of the team at the DMA and I think this is a great example of how email signatures can be used as a marketing tool. (And I haven’t turned from criticism to sycophancy out of fear of retribution before you ask….). Here’s their current email signature:-

The email footer delivers the powerful message “180 days to save your industry”, with a strong call to action “Act now”, and this links directly to the event sign-up page for the DMA Data Conference. As well as linking directly to their site, and helping to promote registrations, it also helps to demonstrate one of the core activities of the DMA – that they lobby on our behalf, and ensure DMA members are informed about the implications of any proposed marketing legislation. And what’s good about their signature is that it also works on mobiles. So if, like me, you are reading their emails on the loo, you will still experience their branding. – And, actually, you’ll get an even better experience on your phone than on Outlook…they have used an animated gif in their signature, that looks particularly good on my (new) iPhone, creating a neat “countdown effect” that shows that time is running out, and increases the urgency of their message.

Having a good email signature can make all the difference to your communications. Here are my top tips of things to think about for your email signatures plus any headers or footers that you include, to help increase the marketing potential of the thousand individual emails that each employee in your organisation will send every month. • Define your objectives: Is it to achieve a consistent corporate look? To generate sales? To increase awareness? To distribute content? Do you need to measure the results? (These factors will impact the design style plus the kind of solution you’ll need to implement your signatures.) • Aim to keep image weight under 30KB • In terms of image size, don’t make your designs wider than 650 pixels or deeper than 100 pixels. • In signatures, use web safe fonts, so that they will render consistently for all recipients • Use basic HTML without nested tables as these can cause issues with reply mail chains • Try to avoid background colours in the HTML layout as these render differently in different email clients • Try to avoid using background images as many email clients do not support them • Minimum font size should be 8pt or size 1 for best legibility

Email engagement, often discussed now defined

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Everyone wants it, but there is no industry consensus on the best way to measure it. I’m talking about engagement in the email channel.

Take an example, a fashion brand might send two or three emails per week. It’s not realistic to expect that most people are going to be interested in buying a new fashion item every week or even to review offers each week.

Just because someone is not in the mood to buy or look at current offers does them make them no longer engaged with a brand? Of course not, they gave permission to receive the emails, they showed engagement, ignoring a few emails does not mean a lack of engagement.

Classically campaign open and click rates are used to judge engagement. This was fine when brands sent one campaign per month. Email volumes have increased considerably in the last five years but metrics have not moved on.

A re-think is needed as the classic metrics measure campaigns not customers and as a result promote the wrong behaviour in email marketing.

Its customers that need to be engaged so measuring campaigns makes no sense, its customers that should be measured.

I’ve been working on a paper, along with my fellow DMA Email Council hub members, Dela Quist, Skip Fidura and Kath Pay. The paper goes to the core of how to measure customer engagement in the email channel and delivers a verdict, based on analysis of brand data.

The paper has been put together to kick-start the discussion in the email industry about just what should be measured and the debate is starting at Email Evolution 2013 conference in Miami this week. For DMA blog readers we’re releasing the paper to you ahead of the event.

I hope you download the paper and find it thought provoking. If you leave a comment one of the paper authors will reply.