Despite the current economic situation, and the uncertainty of when things will turn around, 2007 was another record year for online advertising. E-marketer stated in a recent article that, for the full year 2007, online ad revenues totaled $21.2 billion- setting a new record from the previous $5.9 billion record in 2006. Search, display ads, and classified ads, were the main cause of the spend increase, but e-mail was not a disappointment. Despite many people’s beliefs with e-mail not being an active component of Web 2.0, e-mail marketing still holds its own in regard to online ad spending.
E-mail is still one of consumer’s favorite ways of communication. It is used as a tool not just between business associates, but also between family and friends as a way of staying in touch. Even though other media channels such as, Instant Messenger, MySpace, Facebook, Linked In, etc have grown in popularity, e-mail is still the preferred choice of communication when dealing with businesses. So what does that mean for e-mail marketing? Is it still considered an effective channel to include in a marketing plan?
E-marketer predicts that e-mail ad spending in the US will hit $492 million this year, and then increase by 55% to $765 million by 2012. There are several ways to reach a consumer via e-mail. The most common would be sending e-mail blasts to either a list purchased from a vendor, or a list created by a consumer’s choice to opt in. The blasts can be promotions, newsletters, videos, etc. Another way to reach consumers via e-mail is CPC ads that display behaviorally, based on the content of the e-mail the consumer is reading. For example, if the body of an e-mail is about wedding planning, the ads to the right of the e-mail will often be about photographers, wedding cakes, flowers, etc.
As long as e-mail ad spending continues to increase, the options of e-mail marketing will continue to grow. Even though search and display ads tend to get the spotlight, e-mail marketing is not out of the race. As you are planning your online marketing plans for 2008/2009, keep in mind the value of having a multi-channel media plan. A strong plan that includes a mix of search, display, rich media, and e-mail marketing increases the chance of effectively reaching and engaging your online consumer.
Marketers should always be focused on ROI and tracking whether each bit of spending is driving sales, or not. In my experience, I have come across companies that claim to be focused on ROI, but they are calculating it in the wrong way, which is just as bad as not tracking it at all.
Advertising on the web brought with it the now popular metric of Click-Thru Ratio, CTR. This is the ratio of impressions versus actual clicks which took off with the rise of banner advertising. This metric is also monitored in paid search campaigns and provides insight into campaigns, but should not be the metric used to gauge the performance of a campaign unless you are solely focused on driving traffic to your site.
Most sites generate revenue from sales, not serving ads to visitors, so more traffic does not automatically equal more revenue. Traffic has to convert and therefore conversions, cost per conversion and average sale are the metrics that matter most.
These should not only be tracked at the campaign level, but should be tracked at the ad group, ad and keyword levels. I have seen many campaigns where some keywords have low CTRs but higher conversions and average sales than other keywords in the campaign with much higher CTRs.
Managing a campaign by the CTR of specific ads and/or keywords misses the true goal of marketing — driving sales. A campaign with low CTRs but high sales is better than one with high CTRs and poor sales. Some campaign managers routinely delete “underperforming keywords” but the definition of underperforming is too often limited to the CTR instead of the level of conversions/sales, cost per conversions and average sale total.
Before you delete another low-CTR keyword, research those 3 metrics and determine the true performance. Separately, you should never delete underperforming keywords until you test different landing pages, because you might be blaming the wrong part of the chain for the outcome, but that is for another post.
Microsoft Corp has proposed to buy Yahoo Inc’s search business, stopping short of a full-out merger. Earlier this month, Microsoft walked away from a proposal to acquire Yahoo for $47.5 billion. If the new deal is completed it would forge an alliance between the two companies that would represent an alternative means of competing with rival Google Inc. Microsoft confirmed on Sunday that it was talking with Yahoo about an alternative transaction that did not involve a full buyout.
The proposal from Microsoft would likely complicate ongoing discussions between Yahoo and Google. The two companies are still working on a possible search advertising partnership. Talks between Yahoo and Microsoft resumed after Microsoft insisted for two weeks that it had moved on from its pursuit of Yahoo. Yahoo shareholders criticized its board for mishandling negotiations with Microsoft. Last week Carl Icahn launched a proxy fight to force Yahoo to reopen talks with Microsoft and formally filed on Monday to nominate 10 new board members.
It seems that Microsoft is also interested in purchasing Facebook, which they already hold a small share of. Microsoft is definitely making moves to increase its market share. Google holds a 60 percent market share according to comScore. With a purchase of Yahoo’s search marketing company and possibly a purchase of Facebook, this would give Microsoft a great opportunity in gaining a larger piece of the internet pie.