NORTH AMERICAN MARKETING TRENDS 2014

Transcription

1 NORTH AMERICAN MARKETING TRENDS 2014 AN INBOX MARKETER WHITEPAPER 1

2 Executive Summary Throughout the last year Marketing continued its momentum and reaffirmed its effectiveness as a digital messaging channel. Inbox Marketer data showed upward trends for all key metrics. The increased penetration of mobile devices has had a positive impact on because mobile allows people to check their anywhere and when they are on the go. A report published by McKinsey & Company affirms that 91% of all US consumers still use daily and that remains a significantly more effective way to acquire customers than social media nearly 40 times that of Facebook and Twitter combined. In the 2014 edition of our North American Marketing Trends Report we discuss the major factors impacting marketing including, the impact of mobile devices, increasing regulation and legislation, Inactives & list fatigue and list growth vs. unsubscribe rates. We also provide a commentary on metric trends and North American benchmarks at the yearend The data from this report is from a cross-section of B2C & B2B clients across a variety of industry sectors. Most of the campaigns were deployed from opt-in permission lists (house files) and the following charts highlight the annual averages and the commentary that follows further explains the year over year changes and any significant differences. Highlights metrics continually improved over the past few years In 2013, Open Rates improved and now average 24.3%; Click-Through Rates increased slightly and now average 6.0% marketers are taking a more diligent approach to list hygiene, as well as implementing content strategy best practices Deliverability is a critical factor for better metrics; eleaders should strive for deliverability over 90% IPR When comparing metrics, adjust your benchmarks against your sector competitors, but also look at what leaders in other sectors are doing and learn from their successes and failures marketing is powerful but getting more complex; marketers need a plan to keep their content & contact strategies relevant 2

3 Introduction The following is a commentary on metric trends and North American benchmarks up to Q Inbox Marketer tabulated the engagement metrics from B2C and B2B clients across a variety of industry sectors. Some industry pundits describe as the old diva who is a bit battered. Sure she may be a little older but she still has talent and longevity. In numerous 2013 industry polls of marketing executives, marketing ranks as the first or second digital tool for generating response results. is strong even with competition for time from social and mobile. is an entrenched habit for many people and the penetration of mobile devices (smartphones and tablets) is well over 50% for most sectors. s core strength is its adaptability and role as a response medium that allows marketers to send a variety of relevant information in a cross-section of vehicles. An often overlooked benefit of is its retention impact. In 2013, one of Inbox Marketer s clients generated a +2% incremental increase in retention from their program. As outlined in Frederick Reichheld s Loyalty Effect, a 5% increase in retention can have a 30% - 70% lift in profits. Other clients also have seen better retention, higher ROI and have proven that can change buying behavior. Using strategically and using journey paths can further reduce customer churn (source: McKinsey & Company). In this whitepaper you will see that many of the clickstream metrics are improving or holding steady. is strong (despite some industry naysayers) because marketers are becoming more disciplined and they are constantly testing and optimizing. Technological advancements in graphics and dynamic targeting are also keeping fresh. Responsive design is making sure that messages are readable on any type of device. SECTION 1: 4 Major Factors Impacting Marketing 1. The (Continuing) Penetration of Mobile & Devices In 2013, mobile devices continued to significantly impact the marketing industry. Buzzwords like responsive and scalable are no longer buzzwords, but are now part of the vernacular. The proportion of Opens attributed to mobile is growing. As of Q over 55% of all opens are from a smartphone or tablet. 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 made these adjustments in 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 2014 it will be important for marketers to optimize their messaging so that subscribers can view and interact with their messaging using their preferred device (i.e., phone, tablet, desktop). 3

4 2. List Growth Challenges marketers face constant pressure to grow their lists. leaders with mature lists typically grow their list by 15%-20% per year. The accepted theory is that the more records on a list the greater the revenue likely earned. As a result, many marketers are pressed to increase the number of records within their lists. On top of this, marketers are also tasked with reducing unsubscribes rates by keeping their current subscribers active and engaged. This is a challenging task as, according to Ipsos-Reid, the average Canadian subscribes to 13 commercial programs including their financial services relationships, retailers and hobbies (we would expect similar numbers across North America). As a result, marketers are in a constant battle for customer attention. An exploratory analysis indicates that there is 10%-20% subscriber overlap between lists. Most marketers understand these pressures all too well, but still give in to their strains by trying to accomplish too much with too few resources. Instead a marketer s first step should be creating a plan. They should decide early on what the goals are and how they re going to be achieved. While interruptions are inevitable, having a good road map to start will ensure that you remain on task. 3. Inactives & List Fatigue Subscriber fatigue can become a problem if sending frequency is too high and messages are not relevant. Be selective on the messages you send. If someone is not in the market for your product then suppress their messages for a period of time. In the world, Inactives are often defined as valid subscribers who have not opened or clicked in the last six months. Typically 40% of Inbox Marketer s clients base is classified as Inactive. These Inactives can have an impact on your overall metrics, but they may also be an unmined segment rich with potential revenue. marketers should design campaigns targeted at these Inactives focusing on reactivating and reengaging them. First steps can include a simple questionnaire asking if they d like to continue receiving messages. From there, design a message series to reengage and inspire them to interact with your messages. Last year, Inbox Marketer introduced the Active Depreciation Rate (ADR), which measures the percentage of Active subscribers who turn Inactive. The longer time period that individuals are part of a subscriber list, the higher the probability they may simply get bored of receiving your messages, particularly if the messages always appear similar (same template, look and feel). 4. The Impact of Greater Scrutiny Consumers are getting more sensitive. In 2013, there were several reported data breaches at several large U.S. companies. Data practices at Google and Facebook are also under the microscope. Industry Associations are trying to be proactive and have set more stringent guidelines for practices. The Canadian market is dealing with Canada s Anti-Spam Legislation (CASL) which comes into force on July 1, CASL targets spammers and encourages legitimate marketers to follow best practices. 4

5 A Word on Inactives Subscriber inactivity is a fact for many marketers. Customers can become saturated with information from your company. Sometimes their priorities shift and they don t have time to open and read your messages or even let you know of their preference changes (i.e., unsubscribing). Our research shows that a between 17%-40% of an Active base will turn Inactive. Your goal should be to mitigate a portion of that. Inactives can be calculated using a few different time periods. Epsilon uses a 12 month window which is, in our opinion, too broad for today s digital world. For example, in their Q Trends and Benchmarks Report, Epsilon reported a 42.0% average dormant rate for subscribers who have been inactive for the past 12 months. A 12 month window is a wide window and the Inactive proportion would likely have been even higher if adjusted to a sixmonth window. Inbox Marketer suggests using a 6 month window or less. Figure 1 shows that the proportion of Inactives is gradually decreasing with time. This suggests that marketers are doing a better job at targeting their Inactive segments. Notice that there was a significant drop (4.5% incremental) between H and H which can be partially attributable to the increased penetration of mobile. Please note that 43.7% still represents a significant proportion and marketers should continue to look for new ways to reactivate and re-engage these Inactive subscribers. Not All Inactives Should Receive the Same Treatment Depending on the nature of the list and the type of messaging subscribers typically receive, there are a number of methods in which to retarget Inactive segments. The first step is to think carefully about the types of subscribers you are trying to reengage and create relevant messaging that will resonate with that audience. For example, if a customer typically only receives a monthly newsletter, try to reengage them by executing a simple Reactivation campaign. Send Inactives a survey, special offer or incentive that entices subscribers to interact once again. The way you treat Inactives also varies depending on their purchase cycles. A food retailer would likely want to stay in regular contact with their customer, keeping them up to date and informed on product information and in-store sales. Whereas, with a prospect list, the time between messages may be much greater but, it may be still worthwhile to mail someone for up to two years as they may still be in a contract with a competitor. 5

6 SECTION 2: Open Rates Trending Up In 2013, Open Rates (OR) increased +2.3% to 24.3% (up from 22.0% the previous year)! While Open Rates are a good metric in which to measure and benchmark subscriber engagement from one campaign to the next, Open Rates simply indicate that recipients have viewed an message in their inbox which, doesn t always tell the whole story. It is also 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). As a result, it is important that marketers set benchmarks using their own data and keep this in mind when comparing the metrics of competitors within their respective industry. The calculation for Open Rates is OR% = (confirmed unique opens)/ (sent messages - bounces). A Closer Look at Open Rates Inbox Marketer data shows that Open Rates peaked in 2009 and then declined to 19.2% in However, Open Rates have stabilized in the past few years and in 2013 rose to 24.3%, nearly equal to 2009 levels. This year, looking at ORs from a quarterly perspective, Open Rates increased each of the first three quarters and declined slightly in Q4 (2013 Quarterly Results: Q1: 24.0%, Q2: 25.0%, Q3: 26.0%, Q4: 22.8%). Click-to-Open Rates (CTRO) In simple terms, CTRO% tells the marketer: Of the people who opened an , what proportion clicked? CTRO% is important when analyzing the effectiveness of content. It helps normalize the impact of Open Rates and provides a more true indication of how engaging the content appears. Figure 3 shows that CTRO% behavior has been relatively steady for the last few years and there isn t any noticeable seasonality. 6

7 SECTION 3: Click-through Rate Trends Click-through Rates (CTRs) declined from but have since been on an upward trend. 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 you, make it about them. Diligent testing, optimization of offers, calls-to-action and links/buttons, as well as optimizing messages for individual screens all positively impacted CTRs. marketers embraced responsive and scalable design, enabling readers on any device to click easier this year than in previous years. Average CTRs are healthy but there are significant variances between marketers. The 2013 Epsilon Trends and Benchmarks Report states that the average CTR in the USA was 4.5% (Q3 2013). Like Open Rates, it should be noted that comparing CTR benchmarks can be difficult because, according to Marketing Sherpa, only 39% of marketers in the United States use the correct methodology for calculating CTR which is: CTR% = (total clicks/total delivered). SECTION 4: List Quality and Hygiene Marketers are getting better at list hygiene and, as a result, list issues are nominal. Marketers who properly manage their lists have low unsubscribe rates (below 0.2% of messages delivered) and complaints are a mere fraction of that. In 2013, the combined soft and hard Bounce Rate is low (less than 1.6% of all messages delivered). This is the lowest we ve recorded in the past five years. In fact, Bounce Rates have decreased by almost half since It is very important, especially for high frequency senders, to closely monitor the Bounce Rates on each campaign as well as on 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 into why this is happening. 7

8 Bounce Rates Declined 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. SECTION 5: List Churn Metrics There are also other small but equally important list quality measures that marketers should closely monitor because, if they get too high, they can negatively affect sender reputation and deliverability. These list quality measures include Hard Bounces, Unsubscribes and Complaints. Hard Bounces What Are They? A permanent reason as to why an cannot be delivered to a certain address and 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 in the industry 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 your subscribers value. Complaints What Are They? Feedback Loops are tools made available to marketers that enable users to report spam. By removing subscribers from your list who don t want to receive your s, you ll: Reduce your 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 your messages to reach the inboxes of those subscribers who really do want to receive them. Hard Bounces, Unsubscribes and Complaints all factor into what is known as list churn. List churn is the average percentage of address that marketers can expect to lose in a given year. List churn is typically around 30% but can be reduced by practicing better list hygiene and adhering to industry best practices. Automated Feedback Loops are key and your deliverability team needs to be diligent in keeping lists updated. 8

9 SECTION 6: Deliverability Deliverability is a quality assurance metric that is measured by a third party QA tool like Return Path. Deliverability measures the destination of the messages and it forecasts the proportion of messages that are delivered to one of three places: the inbox, the junk folder or missing. Deliverability is a critical variable and if done poorly it will lead to reduced engagement metrics and in turn a lower ROI. Marketers often get confused with the differences between delivered versus deliverability. Delivered is defined as the number of messages that did NOT bounce (# Delivered = # Messages Sent - # Bounced) and this metric is highlighted on the deployment interface. Experience Council (EEC) standards refers to delivered as the accepted number of messages which make it directly into a recipient s inbox. 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 2013, the North American IPR was 86%, Missing was 9% and Bulk folder deliveries were 5% (Source: Intelligence Report, Return Path H1 2013). This is up from 80% the previous year which is a good sign that marketers are making real progress toward solving their deliverability challenges. However, 86% is still too low for legitimate marketers since 14% of messages aren t reaching the intended target and industry leader typically obtain IPRs of more than 95%. In addition, losing 14% of messages can have a significant negative impact on your metrics and marketers should continue to look for ways to engage with their subscribers so that a greater percentage of their messages make it to the inbox. Note: according to Return Path the average Global IPR for 2013 was 85%. Leadings ESP s, like Inbox Marketer, have ESP s that are 95%-98% IPR. Using Benchmarks Benchmarking is a good exercise for marketers because it helps assess how your programs are performing relative to the average. However, keep in mind that although average benchmarks can help gauge performance, these benchmarks vary depending on the sender s brand and reputation, how marketers calculate their metrics, and the industry sector they are in. Inbox Marketer suggests calculating your own weighted benchmarks using a crosssection of sources and not against the general standard. Find the leaders in your sector throughout the world and also look outside your industry. Use these benchmarks to gauge your organization s performance. Observations from eleaders The divide between best-in-class and rest-in-class marketers is widening. leaders are typically more disciplined and do more planning, segmentation and targeting. Campaigns should not be intermittent and rushed. is an opportunity for a two way dialogue and too many marketers miss the opportunity to gather information from their subscribers. is more than just a timely touch point and leaders craft their campaigns into different streams and ensure they deliver the best customer experience possible. Leaders prioritize the key journeys for their industry and this enhances customer satisfaction and revenue growth (source: McKinsey & Company). 9

10 In the next year, data will be where smart marketers focus. There is more real-time data now than ever before and it s never been easier or quicker to get to it. It s literally in the palm of our hands. However, this availability and pure mass of data can be overwhelming. Marketers can fall into the dangers of trying to do too much, measuring the wrong things and making incorrect assumptions based on correlations they ve found. Marketers don t only need to focus on their metrics; they also need to THINK about the so what? and now what? of their campaigns and strategies. It s not as simple as it sounds, but it s a critical point that too many marketers are missing in this age of Big Data. Begin with analyzing your data, then sit back for a moment and think so what? When the so what? is known, then you can apply these insights and start the now what? The now what? can be something easy and quick (change the subject line, amend the frequency of the message) or it can be more tough and longer-term (our strategy isn t working, our product needs an update). Asking yourself those questions is what brings the art into marketing. When the two are blended together, amazing campaigns and results are sure to follow. A Tip for Today s Marketer from Geoff Linton, President marketers are under enormous pressure. There is pressure to grow lists, pressure to send more messages, pressure to put together more targeted offers, pressure to increase ROI it goes on and on. All of this pressure can be blinding and, in fact, it is blinding many marketers from real, relatively simple opportunities that are rich with ROI. Take a deep breath, and a step back. There is low-hanging fruit all around. Start with a Welcome Program or a Best Customer-targeted program. If you re in retail, create a Next Best Product component to your program. Start somewhere and don t be one of the marketers that gets swept up in just keeping up. Geoff Linton President, Inbox Marketer Geoff Linton is President and co-founder of Inbox Marketer Corp. and a direct marketing expert with more than 20 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. About Inbox Marketer Inbox Marketer is a digital direct messaging company that helps organizations use , mobile, social media and the web to build engaged online communities of customers and prospects. For more information about Inbox Marketer s products and services, please contact us at: GUELPH OFFICE 381 Woolwich Street Guelph, Ontario Canada N1H 3W8 TORONTO OFFICE 1075 Queen St E Toronto, Ontario Canada M4M 1K inboxmarketer.com 10