As waves of jittery economic and financial reports wreak havoc on financial markets, CFOs are starting to put pressure on department heads to cut anything and everything that doesn’t contribute directly to top and bottom lines.
Traditionally, since marketing claims a large chunk of the operating budget, companies with weaker balance sheets hack through marketing line items first while financially stronger companies take less risk with their budget, shifting dollars away from other channels with less precise measurement. An economic recession will affect e-mail marketing differently for large, medium and small businesses; in each case, however, the e-mail channel can benefit.
According to Forrester Research, e-mail marketing has matured among larger companies, with 83% engaged in the practice. With the DMA touting an ROI factor of 48 for the e-mail channel, these larger companies are trying to find new applications for their e-mail. For example, an e-mail marketing manager for a large airline can be confident the channel’s budget will stay intact through a recession given e-mail’s low cost. In fact, management may push for ways to increase e-mail’s effectiveness to make up for cost cutting in other channels. However, this marketing manager may feel that increasing the existing budget and e-mail volume could result in a lower ROI since the channel is already saturated.
As the economy forces lower response rates on other direct channels, midsize companies are looking to increase their volume in addition to finding new ways to leverage e-mail. There are a lot of midsize companies now engaged in transactional e-mail that have yet to discover their optimal volume levels. As one marketing manager for an online retailer explains, when the returns on his SEM campaigns started to sink after Christmas, he automatically increased his e-mail volume to try to make up the difference.
“The marginal increase in sales is worth hitting the send button a few extra times a month,” he said. “I’m going to continue to do it until I see a decrease or people start opting out.”
More small companies are finding themselves attracted to the e-mail channel. The president of a regional drug distributor in Los Angeles wants to give e-mail a whirl. Even though he considers his company somewhat recession-proof, he sees his competitors leveraging e-mail and feels he doesn’t have a choice but to follow, because hospitals and clinics will become more budget-strapped and price-sensitive in the marketplace. He feels his relationships with his customers could be at risk and is hoping e-mail will help to protect them.
Given these three sentiments, e-mail looks as though it will fare strongly in a recession. However, many e-mail marketing practitioners are concerned that the channel will become overused, cluttered and diluted, reducing its effectiveness. One thing e-mail marketers can count on in uncertain economic times is that they will continue to squeeze the channel until it loses its ROI luster.
Elie D. Ashery is president/CEO of Gold Lasso LLC. Reach him at [email protected].
