I listened to a very successful email marketer give a presentation yesterday. She runs a large ecommerce business that is doing very well.
She said her return on email was 40 to 1, meaning she got $40 in business for every $1 she spent on email. Wow!
She said her return on paid search was 8 to 1.
And paid search is a $3bn business. And email marketing is probably less than $1bn.
So what gives?
Well, she went on to say that she views email as a “finite” opportunity. She believes she is limited to mailing to her “house file” and she is limited in the frequncy she mails to it so that she doesn’t “burn it out”. I totally agree with the “burn out” comment, but not entirely with the “house file” comment and I don’t think email is a “finite” opportunity.
But regardless, $40 of business for $1 spent is a huge return. And there’s an arbitrage opportunity in the difference between 8 to 1 and 40 to 1 for marketers to play with. Email is the single most profitable marketing channel that I’ve ever seen. And so it’s going to grow. Possibly at the same rates as paid search going forward.