Email Marketing - Closing the Loop from Acquisition to Retention - Jupiter, June 2000

1. Jupiter
E-Mail Marketing
Closing the Loop from
Acquisition to Retention
Michele Slack
Senior Analyst
Online Advertising Strategies

2. © 2000 Jupiter Communications
Jupiter
2
E-mail Marketing – What are
We Talking About
E-mails from Commerce or Content VenturesE-mails from Commerce or Content Ventures
Focused on:Focused on:
• Acquiring New CustomersAcquiring New Customers
• Driving Repeat VisitsDriving Repeat Visits
• Cross-Selling; Up-SellingCross-Selling; Up-Selling
In the Following Formats:
• RetentionRetention – messages out to house lists– messages out to house lists
• AcquisitionAcquisition – messages out to purchased lists– messages out to purchased lists
• SponsoredSponsored – placing ads in existing content driven– placing ads in existing content driven
messagesmessages
• Driving LoyaltyDriving Loyalty
• Promoting ProductsPromoting Products
• Reinforcing the BrandReinforcing the Brand

3. © 2000 Jupiter Communications
Jupiter
3
Key Questions
• How Effective is E-mail Marketing?
• How Are Consumers Reacting to E-mail
Marketing?
• How Are Companies Using E-mail
Marketing?
• What Is the Expected Growth for
E-mail Marketing?
• How Will Marketers Maintain a Valuable
Dialog with Consumers Through E-mail
Over the Long Term?

4. © 2000 Jupiter Communications
Jupiter
4
Key Finding
• The number of marketing e-mails the average
consumer will receive per year will increase
over 40-fold in the next 5 years.
• In order to maintain high e-mail response rates
and low unsubscribe rates in this new
competitive environment, companies must
perform end-to-end integration across:
– Media
– Channel
– Data
• And they must do so today.

5. © 2000 Jupiter Communications
Jupiter
5
Metrics E-mail
Direct
Mail E-mail Direct Mail
Sponsor-
ships Banner
Variable Prod. $0 $50 $0 $50 $0 $0
Media CPM $0 $0 $200 $110 $25 $15
Deliver CPM $30 $500 $0 $500 $0 $1
CTR 10% N/A 7% N/A 1.5% 0.5%
Conversion 5% 3% 2.5% 1% 2.5% 2.5%
Cost/
Conversion
$6 $18 $114 $66 $67 $128
Execution Time
3
Weeks
3
Month
3
Weeks
3
Months
3
Weeks
3
Weeks
Response Time
48
Hours
3
Weeks
48
Hours
3
Weeks
48
Hours
48
Hours
Up-front
Creative Costs
$1K $20K $1K $20K $1K $3K
For Marketers Focused on Direct
Response: E-mail is the Killer App
Retention Acquisition
Pub. 4/00

6. © 2000 Jupiter Communications
Jupiter
6
One to Two
Percent:
31%
Three to
Five
Percent:
34%
Six to Ten
Percent:
13%
Ten
Percent or
More:
9%
Zero:
13%
Marketers Are Not Blind to the
Power of E-mail
Source: Jupiter Executive Survey (3/00); n=32
Percentage of
Marketing
Budget Spent on
E-mail Marketing

7. © 2000 Jupiter Communications
Jupiter
7
Acquisition Is Difficult Because
Consumers Focus on the Known
14%
13%
14%
22%
24%
47%
68%
6%
0% 20% 40% 60% 80% 100%
None of the Above
Site/Prod. Info.
Useful Reminders
Promotions/Offers
Entertainment
Useful Information
Site/Prod. Info.
Promotions/Offers
Companies with Previous Contact
Companies with No Previous Contact
Reasons
Consumers Find
E-mail Marketing
Messages Useful
Source: Jupiter/NFO Survey (1/00); n=1,287

8. © 2000 Jupiter Communications
Jupiter
8
Focus on Deepening Customer
Relationships and Acquiring New
Customers
11%
29%
29%
46%
61%
18%
0% 20% 40% 60% 80% 100%
Other
Shorten Purchase Cycle
Up-sell
Cross-sell
Acquire New Customers
Deepen Relationships
Source: Jupiter Executive Survey (3/00); n=28
What is the
Goal of Your
E-mail Marketing
Efforts?

9. © 2000 Jupiter Communications
Jupiter
9
E-mail Is Rarely Incremental…
Comparisons Hint at Growth
39%
32%
11%
4%
14%
0%
20%
40%
60%
80%
100%
Online
Advertising
Direct
Marketing
Off-line
Advertising
Incremental Other
How are You Funding
Your E-mail Marketing?
Source: Jupiter Executive Survey (3/00); n=28

10. © 2000 Jupiter Communications
Jupiter
10
0
50
100
150
200
250
1999 2000 2001 2002 2003 2004 2005
E-mail Is Growing in Leaps in
Volume
3
billion
268
billion
Retention-based Acquisition-based
E-mail
(in billions)
Source: Jupiter Internet Direct Marketing Model, 3/00
Sponsored

11. © 2000 Jupiter Communications
Jupiter
11
Spending on E-mail Grows
Concurrently $7.3
billion
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
1999 2000 2001 2002 2003 2004 2005
$164
million
($ in billions)
SpendingonE-mail
Retention-based Acquisition-basedSponsored
Source: Jupiter Internet Direct Marketing Model, 3/00

12. © 2000 Jupiter Communications
Jupiter
12
Direct Mail to be Cannibalized by
13 Percent by 2005
$47.8$48.5$48.3$47.5$46.0$44.1$41.9
$7.0
$4.2$2.4$1.3$0.6
$0.2
$0.1
12.8%
8.0%
4.8%2.6%
1.2%0.4%0.1%
$0
$10
$20
$30
$40
$50
$60
1999 2000 2001 2002 2003 2004 2005
0%
10%
20%
30%
40%
50%
($ in billions)($ in billions)
Source: Direct Marketing Association, Jupiter Internet Direct Marketing Model 3/00
DirectMailSpendingDirectMailSpending
PercentageofDirectMailCannibalizedPercentageofDirectMailCannibalized
Cannibalization Cannibalized Direct Mail Spending
Percentage of Revenue Displaced

13. © 2000 Jupiter Communications
Jupiter
13
The Fight Is on for Consumers’
Attention in Their Inbox
1999 2000 2001 2002 2003 2004 2005
1,746 2,059 2,420 2,758 3,094 3,511 3,990
40 131 276 482 761 1,133 1,612
E-mail Received per User per Year
Non-work
Related,
Personal
Marketing
40-fold
Increase
Pub. 4/00

14. © 2000 Jupiter Communications
Jupiter
14
Marketers Must Perform End-to-End
Integration to Maximize Value of E-mail
Acquisition Retention
Media:Media:
Increase AcquisitionIncrease Acquisition
EffectivenessEffectiveness
Channel:Channel:
Shift CommunicationShift Communication
to High Efficiencyto High Efficiency
MediaMedia
Data:Data:
Increase MarketingIncrease Marketing
Intelligence/ValueIntelligence/Value
ValuetoConsumer
Pub. 4/00

15. © 2000 Jupiter Communications
Jupiter
15
Integrate Messaging to Maximize
Response Rates Degree of Response
Change due
to Additional
Advertising Exposure
Much More Likely:
10%
More Likely:
39%
Indifferent:
44%
Less Likely:
2%
Much Less Likely:
3%
Almost 50%
Positively
Influenced
Source: Jupiter/NFO (1/00), n=1,287

16. © 2000 Jupiter Communications
Jupiter
16
Aggressively Growing House Lists
Requires Channel Integration
RetailRetail
WebWeb
PhonePhone
HOUSEHOUSE
LISTLIST
AcquiredAcquired
ListList
ViralViral
Sponsors’Sponsors’
E-mailE-mail
Pub. 4/00

17. © 2000 Jupiter Communications
Jupiter
17
Initial Sign-up Data Provide
Valuable Targeting Information
How Often: Daily, WeeklyHow Often: Daily, Weekly
When: Morning, EveningWhen: Morning, Evening
What: Subject/Offer InterestsWhat: Subject/Offer Interests
Who: Gender, AgeWho: Gender, Age
Profile
Database
Pub. 4/00

18. © 2000 Jupiter Communications
Jupiter
18
Begin Data Loop by Using All
Available Targeting Information
Name:Name:
Location:Location:
Interests:Interests:
Purchase Information:Purchase Information:
Pub. 4/00
Explicit User
Provided Data
• InterestsInterests
• DemographicsDemographics
Observable
User Data
• Purchase InfoPurchase Info
• Surfing InfoSurfing Info
DifficultyinObtainingInformation

19. © 2000 Jupiter Communications
Jupiter
19
Test to Optimize Results
Offer/SubjectOffer/Subject $5.00 Off, Free Shipping, 10% Off$5.00 Off, Free Shipping, 10% Off
Text, HTMLText, HTML
Past Purchasers, Men, Teens, etc.Past Purchasers, Men, Teens, etc.
Creative FormatsCreative Formats
SegmentSegment
TimingTiming Time of Day, Time of WeekTime of Day, Time of Week
Pub. 4/00

20. © 2000 Jupiter Communications
Jupiter
20
• Open Rate*Open Rate*
• UnsubscribesUnsubscribes
• Click-throughClick-through
RateRate
• Clicked LinksClicked Links
• ConversionConversion
RateRate
• Pass AlongPass Along
Rate*Rate*
Close Loop by Tracking Results
and Growing Targeting Data
E-Mail Outputs
* Available only for html messages
• Level ofLevel of
InterestInterest
• FatigueFatigue
• EffectivenessEffectiveness
of Targetingof Targeting
• Subject/PromoSubject/Promo
InterestsInterests
• Purchase InfoPurchase Info
Pub. 4/00

21. © 2000 Jupiter Communications
Jupiter
21
Summary
• Do Not Let Current High Results Lure You
into a False Sense of Complacency
• Competitive Heat Is Turning Up
• Nail the Basics
• Integrate Message, Channel, and Data
• Do it TODAY
• Or Risk Having Your Dialog Drowned Out
by the Rising Din

22. Jupiter
Thank You