In the latest DMA National Benchmarking report (Q207), all contributing ESPs were asked what value their clients could allocate to an email address.
The average result came to £9.11 – but how did the DMA come to this figure and is it right to use it to inform your marketing activities?
Although rather simplistic, the value allows marketers to:
- Estimate the ‘cost’ of unsubscribe rates and help calculate the true cost of badly targeted campaigns.
- Monitor acquisition campaigns, setting maximum acquisition cost for different channels.
- Quantitate the value of cleaning and ‘update my detail’ campaigns.
But how did the DMA come to this figure?
Early in 2006, we published an article for our clients on this very subject – ‘measuring the value of an email address’.
What is worth remembering is that the DMA figure is an estimated average.
Although the intentions are admirable, there are many factors that mean the value to your organisation will be different. It may actually be dangerous to use in your own calculations.
The factors affecting the value of an email address include:
The value of your offering & number of respondents – high involvement products typically carry higher purchase prices meaning the ROI calculations can be influenced significantly by a small number of respondents.
Lifetime value - measuring immediate transactions ignores the true lifetime value of an address, so the time period over which revenues are calculated can massively influence the figure.
Your expectations – different companies find different values more acceptable. Niche B2B marketers will invest more acquiring the name of a key contact when compared to a B2C mass marketer.
There are more, especially the ‘soft’ benefits of recommendations leading to referring business and those that provide useful feedback helping you evolve your offering.
Not every company sells the same products to the same people, and using £9.11 in your calculations could lead to making bad decisions.
I’d encourage everyone to take a leaf from the DMA book but carry out this calculation for themselves.
Henry is the MD of email marketing agency