Jun 8, 2008

What is the future of e-mail?

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.

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.

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.

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.

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