You Decide: The E-Mail Marketing Budget
This might represent the marketing budget for a multichannel cataloger:
Marketing Budget (Dollars in 000s) | ||||
Profit = Variable Profit, Before Fixed Costs | ||||
Annual | Total | Total | ||
Budget | Demand | Profit | ROI | |
Catalog Marketing | $10,000 | $37,500 | $3,125 | 31.3% |
E-Mail Marketing | $1,000 | $10,400 | $2,640 | 264.0% |
Search Marketing | $3,500 | $14,000 | $1,400 | 40.0% |
Online Marketing | $2,000 | $6,500 | $275 | 13.8% |
Total Marketing | $16,500 | $68,400 | $7,440 | 45.1% |
Let's assume that the e-mail marketing program is reasonably basic in nature. In other words, the customer can opt-in on the website, or if the customer purchases online, the customer is automatically opted-in to the e-mail program, and can elect to opt-out at any time.
The e-mail marketing program has 1,000,000 addresses. The company does not execute targeted campaigns (i..e. unique creative to different customers with different interests), executes a weekly campaign to all 1,000,000 addresses, and generates on average $0.20 per e-mail. The program typically offers free shipping as a purchase incentive.
The company has tested targeted versions of e-mail campaigns, observing a 35% increase in productivity.
Here's the question, folks. So many e-mail marketers feel that e-mail does not get its fair share of marketing dollars. In this case, what should the e-mail marketing investment be, what are the tactics this company should employ, and what is the expected increase in demand and profit (profit = 0.35 * demand - marketing cost)? Please let my readers know what you would do, how much you would spend, and what the financial benefit would be to this company.
Labels: E-Mail Marketing, ROI
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