What is the future of e-mail?

From eMarketer, May 27, 2008

An old digital format still has plenty of life left

Compared with today’s virtual worlds, e-mail is solidly Web 1.0—an almost archaic communication channel.Yet e-mail works, and marketers and advertisers keep putting it to new uses. Moreover, consumers—whose opinions are the ones that matter—genuinely like e-mail. Nearly three-quarters of adult e-mail users in North America said they used it every day, according to an April survey conducted by Ipsos for Habeas.

Two-thirds of adult respondents said they preferred e-mail for communicating with businesses. Just as many—and this is the important part—said they expected to still prefer e-mail five years from now.

Mode of Communication Preferred by Adult Internet Users in North America When Dealing with Businesses, April 2008 (% of respondents)

“Far from being eclipsed by Web 2.0 and other emerging communications methods, consumer expectations suggest that e-mail will be the workhorse channel around which future online communications will revolve,” said Des Cahill, CEO of Habeas, in a statement.

That is not to say that consumers are ready for random, untargeted e-mail. Opt-in is still key. Consumers are even willing to help marketers custom-tailor their messages. More than 88% of respondents said they would like more choices in e-mail content and frequency, including options on advertisements and special offers.

So if e-mail is set to remain a consumer favorite for the next several years, that must mean e-mail ad spending will grow during that time, right?

Yes and no.

eMarketer predicts that e-mail ad spending in the US will hit $492 million this year, then increase by 55% to $765 million by 2012.

  

US Online Advertising Spending, by Format, 2007-2012 (millions)

And while e-mail accounts for only about 2% of all online ad spending, eMarketer predicts that percentage will actually drop to only 1.5% of online ad spending in 2012, despite the growth in dollars spent. The amount spent on other formats will dwarf what is spent on e-mail, thanks to its low cost.

US Online Advertising Spending, by Format, 2007-2012 (% of total and billions)

E-mail is cheap marketing. The pricing scales well, too: The cost of sending a million e-mails is little more than the cost of sending a thousand. However, this can also cause problems.

“E-mail is so inexpensive that it lulls many marketers into underestimating its influence on entire campaigns and a company’s brand,” said David Hallerman, senior analyst at eMarketer.

http://www.emarketer.com/Article.aspx?id=1006334&src=article1_newsltr

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