Consumers Balance on Verge of 'Offer Anarchy'

Email Marketing Is a Cost-Effective Tool, But as Marketers Overdo It They Risk Long-Term Brand Damage

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Countless circulars and credit-card pitches stuff mailboxes. An unrelenting amount of emails -- from daily deals to sales announcements to of -the-month clubs -- clog inboxes. Text messages look like spam. Social-media feeds swell with offers. The phone constantly rings with cold calls from telemarketers.

Even as databases become more sophisticated and direct more targeted, many companies cling to a nasty habit of blasting unwanted messages to consumers. They call it marketing. Consumers call it annoying.

Chad White, director-research and development at Responsys, a digital direct-marketing agency, said that most consumers view their personal email addresses and mobile phones as personal property. "Violating that space ticks people off, no question."

But marketers have compelling reason to do so: It's cheap and delivers high return on investment. Email typically costs a marketer a fraction of a cent to send, and is far less expensive than traditional direct mail.

And email leads other media when it comes to return on investment in direct marketing. According to the Direct Marketing Association, email in 2011 brought $40.56 for every dollar spent on it; mobile brought in $10.51, social media brought in $12.71, display brought in $19.72 and search brought in $22 .24

These days, the average subscriber will get about 177 emails a year from a single company -- and most consumers subscribe to at least a handful. Last year the number of emails sent by marketers grew 16% over the prior year, according to Responsys.

But the low cost of digital communications essentially shifts the burden to the consumer from marketers in the form of time spent sifting through massages. And in the long term, it could hurt the brand.

"We're on the verge of what we call "offer anarchy,' where everyone is pushing their own agendas," said Doug Rozen, senior VP at the loyalty agency Aimia, formerly named Carlson. "Marketers are more interested in themselves as marketers than they are consumers' interests. They have short-term high financial goals, and they're willing to sacrifice the long-term relationship for immediate success."

The recession meant more marketers looking for a quick fix to keep Wall Street happy. "It was hard for marketers to go to shareholders and say "We don't want to jeopardize the long-term consumer relationships,'" said Mr. Rozen.

But email marketing doesn't increase simply when business is bad. In January, the volume of emails on a per-subscriber basis rose 27% over the prior January, in part because retailers had a decent holiday season and figured they'd have luck with post-holiday sales.

Experts said there's a fine line between sending emails to customers on a consistent basis and crossing into annoyance-marketing territory. "The more that email climbs on a per-subscriber basis, the more at risk brands are," said Mr. White.

To avoid the bombardment, many consumers have a separate email account just for email lists, which Mr. White said is an "indication of distrust" on the consumer's part.

As consumers become savvier about personal data, they're also becoming more cynical about it. According to a survey conducted by LoyaltyOne, 88% of consumers believe companies gain from collecting personal information, but 74% feel they don't receive a benefit for having shared their data.

That shows that there's not a lot of faith in marketers, but it's also an opportunity for them. "The more sophisticated you are in leveraging data and using communication technology, the better relationship you can create with consumers," said Mr. Rozen.

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