MARKETING BENCHMARK REPORT
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1 2015 MARKETING BENCHMARK REPORT
2 Executive Summary In 2014, marketing reaffirmed its effectiveness as a digital marketing channel. Technologies like countdown clocks, scratch and win, animated GIFs, and video in have given a much needed refresh to many marketing programs. MarketingSherpa reported that a large majority of American adults 72% prefer companies to communicate with them via over any other channel. The Direct Marketing Association (DMA) also proclaimed that is still the best channel in terms of return on investment with an average of 40:1. In this 2015 edition of our North American Marketing Benchmark Report we discuss the major factors impacting marketing including; the impact of mobile devices, Canada s Anti-Spam Legislation (CASL), the changing competitive landscape, and Big Data. We also provide a commentary on metric trends and North American benchmarks for Inbox Marketer calculated averages using campaign metrics from B2C & B2B clients across a variety of industry sectors. The following charts highlight the annual averages and the accompanying commentary further explains the year over year changes. Highlights Over the past few years, metrics have continually improved and stabilized In 2014, open rates improved and now average 25.5% while click-through rates decreased slightly and now average 4.3% Deliverability is a critical factor; eleaders should achieve an Inbox Placement Rating (IPR) of over 90% When comparing metrics, set your benchmarks against your sector competitors but also look at what leaders in other sectors are doing and learn from them marketing is powerful but becoming more complex. Marketers need to consider the impact of mobile devices, big data, the changing competitive landscape, and the effect of CASL There is increasing demand to distribute oneto-one content using personalization, dynamic content, and predictive intelligence 2
3 SECTION 1: 5 Major Factors Impacting Marketing 1. The (Continuing) Impact of Mobile & Devices In 2014, mobile devices continued to significantly impact the marketing industry. Responsive and scalable are no longer buzzwords, but have become part of the vernacular. The proportion of opens attributed to mobile is growing. In 2014 we have seen mobile opens level off at around 53%. As a result, marketers have had to shift their strategies and tactics to a mobile-first mentality. It s much easier to adjust a mobile to a desktop than it is to do the opposite and more marketers have made these adjustments. marketers are in a battle for customer attention. Providing a positive experience is a critical factor in gaining and keeping this attention. marketers must consider the full experience from the design, copy, subject line, and call to action through to landing pages and web forms. In 2015 it will be important for marketers to optimize their messaging so that subscribers can view and interact using their preferred device (i.e., phone, tablet, desktop). 2. Increased Competitive Pressure 2014 saw companies from varying industries use more focused contact and content strategies. These leaders are forcing batch and blast companies to become more strategic. Subscribers are constantly raising the bar on relevance; there is increasing demand to publish one-to-one content using personalization, dynamic content, and predictive intelligence. In 2015, we will see more companies transition from mass to mass personalized . Industry leaders will leverage triggered programs, preference centres, and will pay close attention to their inactive subscribers, sending them fewer, but more targeted s. 3. Proliferation of Marketing Technology Companies The market is overloaded with marketing technology vendors. In 2014 the number of these companies more than doubled from 900 to over 1800! Most marketers (63%) at midsize companies say they have too many vendors to manage them effectively. According to a 2014 report from DNN Software, CMOs are uncertain which tech they should even consider for their marketing infrastructure. Marketers still feel their job is more challenging despite tech advances, meaning technology has yet to make marketing any easier. In 2015, smart marketers will look to reduce the number of 3 rd party vendors they work with to those only addressing programs related to their core business. 3
4 4. Connecting Data Companies operate in a world of data. With so many digital messaging channels churning out a seemingly endless amount of metrics, how can anyone make sense of it all? How does one find insights in their data to move the needle and improve their ROI? When it comes to , data provides an opportunity for marketers to create their ideal engagement scenario with their customers. The challenge is to mine the customer data for patterns, actionable insights, and ways to connect them with other data sets to help drive your marketing strategy. 5. The Impact of Canada s Anti-Spam Legislation On July 1 st, 2014, CASL came into force. If you are not already familiar with CASL, it creates a framework of rules and restrictions for sending commercial electronic messages (CEMs). CASL prohibits the: sending of CEMs without the recipient s consent (permission), including messages to addresses and social networking accounts, and text messages sent to a cell phone; alteration of transmission data in an CEM which results in the message being delivered to a different destination without express consent; installation of computer programs without the express consent of the owner of the computer system or its agent, such as an authorized employee; use of false or misleading representations online in the promotion of products or services; collection or use of personal information or electronic addresses through accessing a computer system in violation of federal law (e.g. the Criminal Code of Canada) The Canadian Radio-Television and Telecommunications Commission (CRTC) has a range of enforcement tools available. While there are no automatic penalties for violations, the CRTC judges each case based on a series of factors, including the nature of the violation, your history with CASL, whether you benefited financially from the violation, and your ability to pay a penalty. Penalties for the most serious violations of the act can go as high as $1 million for individuals and $10 million for businesses. Since CASL was implemented on July 2014, the short-term implications have already passed and many marketers are now waiting on the results of the initial rounds of investigations from enforcement agencies covering CEMs. The initial level of work CASL imposed varied by marketer, ranging from cosmetic changes on websites and message templates, to full re-permission campaigns in an effort to properly capture consent and track subscriber confirmations. 4
5 SECTION 2: A Word on Inactives Inactives can be calculated using a few different methods. According to our data collected over the past three years, the average percentage of inactives has been steadily decreasing. This suggests that marketers are doing a better job at targeting their inactive segments. However, 41.6% still represents a significant number of subscribers and marketers should continue to look for new ways to reactivate and reengage this segment. Inbox Marketer defines inactives as: subscribers who have not clicked or opened your s in the last 6 months. Quick Tips to Reengage Your Inactive Subscribers! Depending on the nature of the list and the type of messaging subscribers typically receive, there are a number of ways to retarget inactive segments. Think carefully about the types of subscribers you are trying to reengage and create relevant messaging that will resonate with them. Begin by profiling your inactive subscribers. Find out what devices they use, when do they open messages, and how often do they engage. If a customer typically only receives a monthly newsletter, try to reengage them by executing a simple Win-Back campaign. Try incorporating enhanced solutions like countdown clocks or time sensitive offers to create urgency and increase the likelihood of engagement. The way you treat inactives also varies depending on their purchase cycles. A marketer for baby food would likely want to stay in regular contact with their customers, keeping them up to date and informed. Whereas with a prospect list, the time between messages may be much greater; however, it may still be worthwhile to mail someone for up to two years as they are still in a contract. 5
6 SECTION 3: Open Rates Reach 6 Year High! In 2014, open rates (OR)continue to trend up, reaching 25.5%, up 4.9% from While open rates are a good metric to use to measure and benchmark subscriber engagement, they only indicate that recipients have viewed an message in their inbox, which doesn t always tell the whole story. It is important to note that there are often differences in measurement methodologies, which explains why some ESPs often report higher open rates (i.e. some ESPs use total or gross opens instead of unique opens which skews their OR upwards). It is important that marketers keep this in mind when comparing the metrics of competitors within their industry and set benchmarks using their own data. The calculation for open rates is OR% = (confirmed unique opens)/ (sent messages - bounces). Inbox Marketer data shows that open rates peaked in 2009 and then declined to 19.2% in However, open rates in 2014 rose to 25.5%, surpassing 2009 levels. SECTION 4: Click-Through Rate Trends Click-through rates (CTRs) declined from but have since rebounded and stabilized. This is great news for marketers as CTRs indicate the relevancy of content and are an excellent measure of engagement. Three factors that have contributed to the increase in average CTR over the last three years are: better list hygiene, a more diligent approach to implementing marketing best practices, and click optimization. marketers have done a much better job of segmenting their lists, enabling them to send more relevant messaging to their subscribers, in formats that are optimized for their preferred device (i.e. phone, tablet, desktop). As a rule of thumb, messaging that is customer ( me ) focused performs better. In other words, don t make messaging about the company, make it about them. Diligent testing, optimization of offers, calls-toaction, and links/buttons, as well as optimizing messages for individual screens all positively impacted CTRs. marketers embraced responsive design, enabling readers to engage on any device. Average CTRs are healthy but there are significant variances between marketers. The 2014 Epsilon Trends and Benchmarks Report states that the average CTR in the USA was 4.0% (Q3 2014). 6
7 Like open rates, it should be noted that comparing CTR benchmarks can be difficult. According to MarketingSherpa, only 39% of marketers in the United States use the correct methodology for calculating CTR% which is: (total clicks/ total delivered). Click Through Rate as a Percentage of Opens (CTRO) The click through rate as a percentage of opens is a true measure of engagement. It indicates what percentage of people who open a message actually click on the . The average CTRO has been very consistent over the past 3 years. This tells us that marketers are doing a good job of getting subscribers to open their s and act on the CTAs within their message. Ensuring content is tailored to subscribers and employing testing to optimize all areas of a message is essential to maintaining high CTRO%. There are two primary forms of testing, A/B Testing and Multivariate Testing. A/B testing involves sending out different versions of an campaign to segments of an existing subscriber list to determine which version resonates the most. A/B testing typically changes only one element at a time, while multivariate testing includes multiple elements. Marketers may have many variables to select from when running an test, however, it is advisable to test no more than 3-4 items for each campaign. With either forms of testing, marketers should always analyze the results and determine why a specific treatment performed better than another. 7
8 A Quick Note on Image Rendering & Open Rates GIF tracking is a rough measure used to calculate open rates. GIF rendering and image blocking are two factors that often cause open rates to be both over and under reported. GIF images are sometimes activated in the preview pane even though the message has not actually been read leading to inflated open rates. Image blocking occurs due to a large proportion of clients and mobile devices having images turned off in their default settings which often leads to lower open rates. Quick Tip! There are tracking tools available now that categorize opens between read, skim, and deleted. SECTION 5: List Quality and Hygiene Bounce rates on an annual basis are very stable and in 2014 only 1.2% of messages bounced, the lowest we have recorded in the past five years. In fact, bounce rates have decreased by more than half since It is still very important, especially for high frequency senders, to closely monitor the bounce rates on each campaign as well as on a monthly basis. For example, a 2.5% bounce rate over a 12 month period is respectable, but if each campaign had this rate the list erosion would be exponential and marketers should investigate why this was happening. Overall, the drop in bounce rates is a good indication that marketers over the past few years have taken a more diligent approach to list hygiene, as well as implementing content strategy best practices. This is important for marketers to commit to as it ensures that they maintain a good sender reputation and relevance with their subscribers. 8
9 SECTION 6: List Churn Metrics Hard bounces, unsubscribes, and complaints are other small but equally important list quality measures that marketers should closely monitor. If they get too high, they can negatively affect sender reputation and deliverability. addresses that marketers can expect to lose in a given year. List churn is typically ranges between 20-50% but can be reduced by practicing better list hygiene and adhering to industry best practices. Hard bounces, unsubscribes, and complaints all factor into list churn. List churn is the average percentage of Hard Bounces What Are They? A permanent reason why an cannot be delivered to an address. These records should be flagged and suppressed immediately. Reasons for Hard Bounces: The recipient s address does not exist. The domain name does not exist. The recipient server has completely blocked delivery. Impact/Fix: Failure to remove hard bounces from future campaigns can severely hurt sender reputation and one s ability to get future s delivered to the Inbox. Unsubscribes What Are They? When users manually opt-out from receiving all future messaging from a specific brand or company. Subscribers are most likely to unsubscribe when: They receive impersonal and irrelevant They don t recognize the sender They receive more than they expect or want Impact/Fix: While unsubscribe rates are typically low at 0.2% per mailing, it is an important metric to pay attention to, as it provides good insight into what type of content subscribers value or, in this case, don t value. Complaints What Are They? Feedback loops are tools made available to marketers that enable subscribers to report spam. By removing subscribers from a list who don t want to receive s, one can: Reduce the complaint rate Increase customer satisfaction Reduce sender questions and end-user complaints Impact/Fix: With lower complaint rates, ISPs are much more likely to allow messages to reach the inboxes of those subscribers who actually want to receive them. 9
10 SECTION 7: Deliverability Marketers often get confused with the difference between delivered and deliverability. Delivered is defined as the number of messages that did not bounce (# Delivered = # Messages Sent - # Bounced). A highly inexact number because not all receiving ISPs report accurately on which s didn t go through and why not. It is also important to track where the delivered messages end up - that s where deliverability comes in. The proportion of messages that make it straight into the inbox is called the Inbox Placement Rate (IPR). In the first half of 2014, the average Canadian IPR was 83%, lower than the reported US IPR of 87% (Source: Inbox Placement Benchmark Report 2014 ). IPRs fewer than 90% are considered too low for good marketers as 10% of messages aren t reaching the intended target which, can have a significant negative impact on your metrics. leaders (who have a plan) typically obtain IPRs of more than 95%. Good deliverability requires constant vigilance and discipline and marketers should continue to look for ways to engage their subscribers so that a greater percentage of their messages make it to the inbox. Smart Marketer Tip: Deliverability is a quality assurance metric that can be measured by a third party Inbox Placement Rate (IPR) monitoring solution tool like 250ok. IPR tools measure the destination of the messages and it forecasts the proportion of messages that will be delivered to one of three places: the inbox, the junk folder, or missing. Deliverability is a critical variable and if managed poorly will lead to reduced engagement metrics and a lower ROI. These tools give great insight into the potential placement of s and provide an opportunity, pre-deployment, to evaluate messages and make any necessary changes to improve deliverability. Domain-based Message Authentication, Reporting & Conformance (DMARC) New delivery tools continue to emerge to assist with brand and consumer protection, the most recent of these being DMARC. This new service allows companies to receive feedback from global ISPs regarding any potential misuse of their corporate brand, including fraud or phishing for a recipient s personal information. In Q1 2014, our partner, Agari Inc. saw a 500% increase in phishing attacks targeting major bank brands, payment processors, health care providers, and e-tailers. Inbox Marketer has implemented this technology to protect our brand and, over the course of 2014, we monitored and stopped hundreds of thousands of misleading s from using our brand. These s targeted consumers with illegal service offerings, scams, and pharmaceuticals, stating they were from one of our domains. Talk to Inbox Marketer s Delivery and Privacy team to get more information on how you can stay informed and stay ahead of these misleading s. Using Benchmarks Benchmarking is a great exercise for marketers because it helps assess their program s success relative to the average. Keep in mind that although average benchmarks can help gauge performance, these benchmarks vary on several factors including: the sender s brand and reputation, how the metrics are calculated, and the industry sector they are in. We suggest calculating your own weighted benchmarks using a cross-section of sources. Find the leaders in your sector but also look outside your industry. Use these benchmarks to gauge your organization s performance. 10
11 Thoughts on the Future of Marketing Utopia Smart marketers are pulling ahead of the rest of the pack. Their testing and monitoring habits show that is a consistent and result-generating vehicle. While social and display advertising are adequate for above-the line awareness, delivers better traffic and higher value conversions. How does do this? The McKinsey Quarterly states that leading Marketers are boosting their precision, broadening their scope, moving more quickly and telling stories better. The five new core marketing capabilities are: Science, Substance, Story, Speed, and Simplicity. Welcome to the Dawn of Marketing s new golden age (McKinsey Quarterly February 2015). Inbox Marketer agrees wholeheartedly. The marketing industry is evolving rapidly and our vision of marketing in 10 years is... A world of smart marketing where CMOs have a seat at the boardroom table and marketing decisions are based on data and measurement. Where leading marketers optimize ROI, carefully monitor customer Lifetime Value (LTV) and run scenario simulations. Where agencies and marketers work together in a highly disciplined manner to find the right balance of Above the Line (ATL) vs. Below the Line (BTL) & Acquisition vs. Retention. Where marketers optimize their promotional mix and spend more time on strategy to ensure they are aligned with other divisions. Where marketing is a Sustainable Competitive Advantage (SCA) for the leaders. Geoff Linton President, Inbox Marketer Geoff Linton is President and co-founder of Inbox Marketer Corp. and a direct marketing expert with more than 25 years of applied experience in both client and agency roles. His experience spans many industrial sectors, including financial services, telecommunications, consumer packaged goods, technology, manufacturing and entrepreneurial businesses. Previously Geoff was Associate Director for the Air Miles program where he spearheaded major launches and was actively involved in targeted marketing initiatives and customer/campaign measurement. Geoff Linton holds both a P.Eng and MBA from Queens University in Canada. Chris Winter Marketing & Research Coordinator As Inbox Marketer s Marketing and Research Coordinator, Chris is responsible for managing marketing content and social media channels for Inbox Marketer. Chris also assists in research and data gathering, supporting executive, Marketing and Sales, and Account Management. Chris holds a Bachelor of Arts Degree in Business Administration from the University of Oregon. In addition to his work with Inbox Marketer Chris also competes for Canada internationally in Track and Field and is looking to qualify for the 2016 Summer Olympics in Rio de Janeiro, Brazil. About Inbox Marketer Inbox Marketer is a leading Canadian marketing and technology solutions agency. We provide our clients with expert end-to-end campaign services including strategy, management, programming, and creative. Our services combined with our technology help our clients create and deliver industry leading marketing campaigns. please contact us at: inboxmarketer.com 11
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