Email Remains ROI King; Net Marketing Set to Overtake DM, Says DMA

10/4/11

By Ken Magill

Once again, commercial email is returning vastly more for every dollar spent on it this year than every other marketing channel, according to the Direct Marketing Association’s just-released Power of Direct economic impact study.

Separately, non-email Internet marketing, which includes display, search and social networking, is expected to surpass direct mail in sales for the first time next year, according to the study.

Internet marketing is expected to drive $576 billion in sales this year compared to direct mail’s $630.5 billion, according to the DMA 

But then in 2012, Internet marketing will drive $651.8 billion in sales compared to direct mail’s $642.4 billion, according to the study. 

Internet marketing will far surpass direct mail in 2016, driving $970.3 billion in 2016 compared to direct mail’s $724.1 billion, according to the DMA.

And while email’s ROI is still fairly stunning, every year it softens just a bit more.

Email is bringing in $40.56 for every dollar spent on it this year, according to the DMA. This is compared to catalogs’ ROI of $7.30, search’s return of $22.24, Internet display advertising’s return of $19.72 and mobile’s return of $10.51.

However, email’s ROI has dropped significantly from its estimated $52.23 returned for every dollar spent on it in 2006. Also, email’s ROI is expected to continue to drop, according to the DMA.

Email is projected to bring in $39.40 for every dollar spent in 2012, and $35.02 for every dollar spent in 2016.

“Part of this is the maturation of the channel,” said Yory Wurmser, the DMA’s director of marketing and media insights. “Whenever you have a mature channel, you still have innovation but the easy opportunities are gone. Also, percentage wise, we’re talking about a very small drop.”

And while email’s ROI is headed downward for the foreseeable future, mobile’s is headed upward, according to the study.

Mobile’s return for every dollar spent this year is $10.51, according to the study. It is expected to be $11.37 in 2012 and $12.45 in 2016, the study said.

Social networking’s ROI is also expected to rise, according to the DMA. Social networking’s current ROI is $12.71, the study said. Social networking will return $12.90 for every dollar spent on it in 2012 and $13.43 for every dollar spent in 2016, according to the study.

In other news, commercial email is expected to drive $63.1 billion in sales this year, compared to $57.8 billion last year, according to the study.

The DMA projects email to drive $67.8 billion in sales in 2012 and $82.2 billion in sales in 2016.

Social networking is expected to drive $31.9 billion in sales this year, $38.8 billion in 2012 and $81.8 billion in 2016, according to the study.

Not surprisingly, search is the king of driving online sales.

The channel is expected to drive $309.7 billion in sales this year, $350.2 billion in 2012 and $506.1 billion in 2016, according to the DMA.

Internet display advertising is projected to drive a respectable $168.1 billion in sales this year, $186.9 billion in 2012 and $279.2 billion in 2016, according to the study.

“Display is being driven by its ability to target,” said Wurmser.

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Terms: Feel free to be as big a jerk as you want, but don't attack anyone other than me personally. And don't criticize people or companies other than me anonymously. Got something crappy to say? Say it under your real name. Anonymous potshots and personal attacks aimed at me, however, are fine.

Posted by: Bill h
Date: 2012-09-26 11:41:36
Subject: Dubious email ROI

Highly likely this does not capture true aquisition cost of email subs. Otherwise email driven businesses like groupon and living social would be highly profitable. The suggestion that this study has calculated an accurate "social media" ROI is absurd. McKinsey is still "estimating" it.

Posted by: Peter
Date: 2012-01-18 11:15:45
Subject: Re: Email campaigns

Matthew,

I suspect open rates of obvious spam (i.e. Meet singles, cheap viagra etc.) to be about 2.5%. See Campaign Monitor's typical open rate chart here:
http://tinyurl.com/84h3nys
An open rate of about 30% seems average.

ROI varies greatly, but to say the vast majority fail to break even is obviously incorrect, if DMA says it's over 4000%.

I'd be most interested to find out where your statistics come from. If they are your own then perhaps email marketing is not something you should pursue.

Posted by: Hanna Andrzejewska GetResponse
Date: 2011-10-17 02:52:53
Subject: email vs social and mobile

The figures for email, social and mobile set the trend for the future. Email services providers have to face a growing demand in software that enables seamless integration with other channels - those who'll be the first to do it will sweep the board.

Posted by: Matthew Stone
Date: 2011-10-12 13:08:57
Subject: Email campaigns

I would love to know what email campaigns this is based on!!?? Response rates on the vast majority of email lists have fallen through the roof., making open rates of around 2.5% the norm. The vast majority of email campaigns come nowhere near to hitting ROI.......What are the statistics based on????