February 08 2007

Are your competitors measuring email ROI?

Almost half of companies are failing to track their return on investment from email, according to research by online publisher E-consultancy and email marketing agency Adestra.

The overriding and most worrying finding of the Email Marketing Industry Census 2007 is that 47% of in-house marketers are not measuring how much revenue their email campaigns are making despite a high level of investment in this channel, reports

The Census also found that, on average, companies are spending a fifth of their online marketing budget on email marketing (second only to website spend). But despite this high level of investment, 81% of email marketers say they are not using email marketing as effectively as they can, compared to only 13% who are.

"Email is such a widely used weapon in the online marketer's armoury that it is surprising that so many companies are struggling to use it as effectively as they would like. Tracking return on investment is crucial but too many organisations are not doing this," said Linus Gregoriadis, Head of Research at E-consultancy.

Other findings from the research include:

Some 42% of respondents said that lack of skills and training was an issue.

The next biggest barriers to effective email marketing were lack of budget / finances (39%) and lack of strategy (36%).

More than half of company email marketers (57%) said their organisations were using less than 50% of their email systems' functionality. Less than a third said they were using more than 50% of their email systems' functionality.

Organisations are being held back by their inability to integrate email with other sales & marketing activities. Three quarters of respondents said there is 'some integration but room for improvement'. One in ten respondents said there was no integration at all and only 12% said 'they are on top of this'.

Of companies that were able to measure ROI, the figures are promising: more than half of company email marketers (55%) say that their ROI from email is three times or more. Almost a third of company respondents (32%) say that their ROI is five times or more.

With its major sales and communications potential, and relatively low cost, email marketing is undeniably a fast growing industry: 78% of companies are set to increase their email marketing spend (according to DMA, November 2006); and the email services market is growing at 20% per annum (according to E-consultancy). However, the growth cannot continue in the longer term without the systems in place for tracking the results back to spend.

Given that £178 million was spent in the UK on email marketing platforms and services in 2006, the findings of the census suggest that up to £84 million of this investment may be untracked marketing budget which may or may not be working.

"It is critical for future growth, and makes basic business sense, to be able to measure ROI. In fact, it can severely stunt growth if you can't measure ROI as it will make proving the business case for extra investment almost impossible," said Paul Crabtree, Marketing Director at Adestra. "The point is that email marketing is probably the most direct channel to be able to measure ROI - and it is a relatively simple process to enable it," he continued.

Emma Herrod