The Email Labyrinth

All direct marketers, if they are worth their salt, have gotten clobbered, and more than a few times, and if they haven’t gotten clobbered recently, they are probably sitting on there laurels. Renting email lists is a wonderful way to get clobbered.

The key to being a good direct marketer is to consistently test, and a good rule of thumb is to dedicate 20% of your budget to testing. Why? Two reasons. If you don’t test you won’t grow, and sources burn out, so if you just stick with what works your returns will diminish over time.

Good email lists are fabulous resources. Often they are easy to geo-target and if they are treated gently and kindly, (not bombarded with advertising) they will give you fabulous ROI’s. The key is to use common sense, imagine your target; would he spend time on this site and open the newsletters being sent him?

I have worked on both sides of this business, on creating and selling opt-in lists, as well as renting lists as a marketer and following through on life time value etc. First, as always, it is easier to explain what not to do.

One franchise campaign I worked on bought leads from us, lots and lots of leads, from well over 50 sources (and 40% margins), and a very high percentage (almost 90%) of the leads that closed (person actually bought the franchise) came from one source: Entrepreneur Magazine. Go figure. And it was the only source that we lost money on. The advertiser could have saved sacks of money, as my aunt likes say, by just buying that one list. Lesson to be learned, buy quality email lists that your target is going to read, and don’t let affiliate networks become your marketing department.

Be very wary of generalist opt-in lists created through co-registration. Many large list owners, Permission Data, for example, have very large lists that were created years ago. I am old enough to remember these opt-in (sometimes out) lists when they had 50% open rates and 20% click through rates! I am getting old. That was when people didn’t get email, it was big deal. Times have changed. If the list owner does not have a relationship with the reader, be very careful. What does have a relationship mean? You have to call once a week at least. Weekly communication is crucial, and the quality of the communication is very important. Is it an email with a list of 10 free offers or a well written, quality newsletter that the reader is anxious to open?

You must ask the right questions, but before you do that, sign up for the list you want to use. Have an email that you use just for testing email lists, and see how much advertising the list is getting. The difference in lists can be tremendous. I worked with one list that as soon as the person opted in, they would receive 4 or 5 emails from a third party that had first dibs on the list. They got the virgin emails. If the user opened, they got more, and if they opened and clicked they were bombarded. That was a garbage list that should only be used for CPA (Cost per Action) deals, I would even be nervous about CPL (Cost per Lead) because of the low quality of user.

Good, high end lists may cost $100 (CPM) and upward, but they are taken care of. One drop a week for advertising, always the same day and always identified. The Motley Fool took very good care of their lists, and were quick to ax an advertiser if complaints were generated. The Fool used to always have open rates about 10% and very high click through rates on open.

One other important factor in email marketing is how many emails were actually sent. This has always been a point of contention, because unlike display campaigns, it is not transparent. Open rates (on HTML) and click through rates can be measured objectively, but not how many were actually sent. So when a good advertiser does a drop and the numbers don’t look great, a common practice is so over send. No harm no foul, right? Not really. We are about numbers, and when the numbers are fake, we than extrapolate, compare, and eventually get burned.

Some of the big data providers, I won’t name them to stay out of trouble, but you know who they are, will tell you that they can model you data, and come up with lists that mirror you demographic. For example, you have a list of Forex users, heavy traders, they go into their list, find the dupes, and than come up with demographic models that find more users like the dupe. Makes for a great meeting, and fun ideas, but why give these guys your list so they can mark the dupes than hammer the life out of them. Some of these companies have access to hundreds of millions of emails, and they can most likely find half your list in their database, and sell the list, with a wink, to your competitor. “Hey Howie, I got a deal for you, you know your competitors email list, want to drop to it?” Contract will say “email select, active trader” I wouldn’t let them near my list unless it was total garbage to begin with.

Finally creatives. First, test you creative on your own list. Create an internal list of non-buyers, bench mark it with outside lists, and use it as a test. Put all your creatives through spam filters, watch the language. Remember this rule, subject line=open rate, email creative=click through rate, URL=deliverability. Your first questions to a list owner should be, what is the communication with list, advertising and content, what is the deliverability (you only pay for delivered email, make sure that is in the IO) and what are typical open rates and click through rates for content and for advertising. Run the numbers and see if it makes sense to test. Push them for cheap tests, if the list is that good, they should sell you a cheap test to wet your appetite. Just be very careful about ramping up. I savvy list owner will drop to his openers and clickers for the test, and when you sign the 50K IO he will throw in a lot of garbage.

This is a tricky business, let me help you navigate your way to a positive ROI.
Robert Bonomo- Email: