Keep goals in mind to measure return on e-mail marketing

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To calculate a return on investment from your e-mail program, start with your goal and work backward.

"If your goal is to turn prospects into customers, there are a variety of metrics you can use to get a straightforward calculation," said David Gumpert, a VP at, an interactive ad agency based in Baltimore.

But not all campaigns are sales campaigns, as's chief strategy officer, Charlie Tarzian, learned in a recent campaign for Lexmark International Group Inc. The goal there was signing owners of printers, something like a frequent flyer program.

Once you have your goal in mind, you can track any conversion event against the costs of your campaign and the number of people contacted to get a return on investment estimate.

The entry of the DoubleClick Inc. and Engage Inc. ad networks to the e-mail business brings their tracking tools and metrics to the industry, said Mark Stephens, media director for interactive agency Lot21. "Typically a campaign won't just have e-mail. It will have other ad elements. We want to measure everything in the same way," he said.

Using a target page can greatly simplify ROI calculations. "Just create a special or page or form that deals directly with the campaign you're running," said Brent Livingston, CEO of Inc., Rockford, Ill., which owns the list broker e-target. "Anyone who hits it is dealing with a specific campaign. This lets you get the response rate, and calculate ROI.", Renton, Wash., which mainly sends rich media e-mails, embeds cookies to check if the e-mails were read and uses several links leading to information and transactions, said CEO Guio Barela. But even using all this data can underestimate a mailing's power.

"If I know people are clicking on a particular item, whether it's a news article or product, and later on they read it, that's a timing issue with a lot of marketing intelligence. People will pay tens of thousands of dollars for that," he said.

For instance, one of Barela's clients went to an Apple product launch and sent clients an electronic postcard with product specifications and pictures. "How do you calculate things like client satisfaction and long-term loyalty?" he asked. "E-marketing is more than a broadcast medium. It's an interactive personal medium," he said. "You need to measure and capture all sorts of values to calculate a real return." has b-to-b e-mail relationship management programs that keep 40% to 50% of the recipients in the mix-even if they're not responding, Tarzian said. "You cannot predict where people are in the life cycle in b-to-b," he said. "In b-to-b, a lot of purchases are complex and matrixed. No one person makes a decision. You have to be aware of that."

This is where e-mail really proves its value, Tarzian said. It's not just a prospecting tool, but a relationship tool. "You want to use low-cost touches to keep the door warm until they're ready to make a purchase," he said.

Stephens warned that in any case, ROI figures for e-mail should start dropping. "You'll see effectiveness decline next year" as competition increases and e-mail exhaustion sets in among some lists. That should help the industry become more disciplined, making the medium more valuable, he said.

"You'll see list managers manage the inventory better in terms of frequency, and that will make the inventory more valuable," he said. "It's like TV. If you have too many ads, it turns people off."

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