The Online Advertising Playbook: Proven Strategies and Tested Tactics from The Advertising Research Foundation

Advertiser Spending on Email

Email is the most widely adopted electronic communications channel. Yet, compared with the major segments of measured online ad spend (search and display advertising, which combined for 75% of the $12.6 billion spent in 2005), commercial emailers’ spending was small—less than 10% of the total.

Much of email spending is not captured in widely reported sources. Thus, we expect that the spending on email is much higher because many companies handle their email functions in-house, usually spread across a number of departments, each of which is going about its business and not necessarily coordinating email sends or strategy (Beck 2006).

Seems low, doesn’t it? Especially when you consider that more than half of B2C (business-to-customer) marketers use email to communicate with customers, and B2B marketers use email to reach 80% of their prospects. However, unlike search or display advertising, email advertisers don’t have to spend much on production, media, or vendor costs that push budgets up.

JupiterResearch (2006) expects advertisers to allocate half of their spend on email marketing in 2010 to customer retention programs.

Advertiser spending for customer retention reflects the value marketers place on email for managing customer relationships through time. This is noticeably different from the way marketers use online search and display advertising, for example, which are used more for finding new customers, generating qualified leads, or for building ...