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The State of the Email Marketing Industry 2010

Bruce Biegel, Managing Director of The Winterberry Group gave a very interesting keynote at the Email Insider Summit in Captiva Island, Florida last week. He presented his outlook on the email marketing industry from an investor’s perspective, including shifts in marketing spending, email revenue projections and mergers and acquisitions. The content was so valuable, that I have recapped his presentation for you here.

First the good news. According to Biegel, GDP Growth is back. Q309 officially marked the end of the recession; however, unemployment is still up, which is holding back spending. Companies are finally shifting dollars back into new customer acquisition, but they’re doing it cautiously because spending is lagging. We are seeing some growth in advertising, but not a lot. Surprisingly, television advertising is up 5.6%, while everything else is still down. Print advertising has been hit the hardest, with a significant amount of marketers abandoning it in favor of digital channels. According to Beigel, U.S. digital ad spending in the US will hit $154.3 billion in 2010.

The Winterberry Group focuses their investments exclusively on the Advertising and Marketing industries, and is therefore in touch with a broad swath of marketing technology providers and agencies. To stay current with market demand, Winterberry is seeing a widespread trend where traditional offline agencies are attempting to move into digital marketing.

Marketing Budgets Are Shifting Online
The good news for email marketing providers is that we’ve already mastered the digital space and continue to innovate in it. To keep pace with increased demand, email suppliers are increasing their staffing levels. Email is the #1 area where marketers are increasing spend, but that shift isn’t showing up in the marketing forecast because of declining CPM fees and the fact that marketers have slashed their budgets during the recession.

Of the $1.4 billion that Forrester Research projects will be spent on email marketing in 2010, 80% of email marketing spend is in retention marketing, 17% is spent on acquisition marketing and 3% is spent on transactional or event-triggered email. Acquisition direct mail spend is making a small come back, but retention direct mail spend is moving almost entirely to email. According to Biegel, if email can pick up a fraction of direct mail spend, it will beat its forecast. He predicts that email marketing spend will hit $1.6 billion instead of $1.4 billion in 2010 because of this shift.

The Move Towards Relevant Messaging
Marketers have started consolidating data and systems down to one centralized system so that they can leverage it to send targeted, personalized communications based on specified preferences and behavior. Surprisingly, only 16% of e-commerce companies send personalized or behavior-based email, leaving a huge market for that type of integration. According to Biegel, there is more data available from online transactions than there has been in the offline database in its entirety. This is a lot to manage, so there is a big push by enterprises to consolidate those reams of data down into a single source and make it actionable.

To plug into this new centralized data structure, email marketing providers today are moving towards becoming an "integrated campaign execution stack." Biegel’s message to ESP’s is that if you only provide email, you'll be left behind. When selecting an email marketing vendor, he recommends that marketers look for a provider who offers email in conjunction with social, mobile, e-commerce and analytics integration, services, and an international presence.

Will Social Media Kill Email? Absolutely Not.
Email marketing is still the most powerful way to reach consumers. When asked if social media is going to kill email, Biegel stressed that social media is a partner to email. It's not going to stand alone or replace it. Interestingly, he pointed out that of the $1.2 billion projected for social media spend in 2009, $700 million of that figure is display advertising and $200 million of it is applications. Should that really be categorized as social media spending or is that display and mobile? This drives home how pervasive social media is and how it touches multiple departments and marketing channels. As the wild social frontier continues to evolve, email marketers can rest easy knowing that the channel still remains the backbone of business critical communications.

Posted by: Kristin Hersant at 8:36 PM
Categories: the winterberry group, social media, industry forecast, forrester research, email marketing integration, email marketing, digital ad spending