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Study: E-Mail Marketing Revenue to Top $2 Billion in 2001

Despite the much-publicized problems now facing the Web advertising industry, revenue from e-mail marketing is poised to more than double during 2001, according to a new study by New York-based research group eMarketer.

Indeed, while industry watchers like Merrill Lynch's Henry Blodget are predicting year-over-year revenue to remain flat at $8 billion, the e-mail marketing industry will rake in a healthy $2.1 billion during the coming year, a 110 percent increase from its take in 2000.

According to the report, a large portion of that is due to the high level of accuracy from opt-in e-mail, which typically sees about a 3.2 percent click-through rate. Banner ads, meanwhile, see only a 0.3 percent click-through, according to the study's findings.

"E-mail is more interactive, personal and intrusive than Web ads, which allows marketers to get in front of customers and prospects in a more concrete and forceful way," said eMarketer senior analyst Jonathan Jackson. "At the very least, e-mail marketers can be assured their advertising message headlines will be seen by particular prospects."

Also in e-mail's favor is the fact that it remains cheaper for companies to use in marketing campaigns than direct mail or telemarketing. According to the study, the average cost per e-mail message -- unsolicited and permission-based -- is less than a cent, compared to between $1 to $3 for telemarketing and $.75 to $2.00 for direct mail.

E-mail also makes it faster for companies to see responses. According to the findings, 80 percent of e-mail marketing messages are responded to within 48 hours, as compared to the six- to eight-week period for traditional direct marketing methods. Additionally, 85 percent of responses to an e-mail offer are received within the first 48 hours, according to the study.

"No marketing communications medium exists that is more targetable, customizable and more flexible than e-mail. That is why e-mail is revolutionizing direct marketing," Jackson said. "E-mail direct marketing, when done correctly, can overcome the limitations of traditional direct marketing by offering limitless targeting ability at pennies per e-mail and allowing marketers to have a one-to-one conversation with each of their customers."

In creating the report, the study's authors aggregated data from sources including advertising research groups like Jupiter Media Metrix' AdRelevance unit and Competitive Media Reporting; consultancies such as Forrester Research, Giga Information Group and IDC; industry groups like the Direct Marketing Association and the Interactive Advertising Bureau; and independent reports by investment bank industry-watchers like Blodget.

While the study is promising news for e-mail marketing service firms and list brokers, e-mail's continued expansion conversely suggests some bad news for Web-based media, if reports are correct about overall industry revenues remaining flat in 2001.

Of course, the entire Internet advertising industry includes not just e-mail, but Web media like banners, interstitials and pop-up ads. And that means that as e-mail marketing makes more money, Web-based media will actually see less income, should Blodget and others be correct in predicting small-to-no growth for the overall industry.

Put another way, Web media would see only $5.9 billion in 2001 revenue if Blodget and eMarketer are both right. That's $1 billion less than banner ads and the like brought in last year -- and gloomy news indeed for the multitude of firms and publishers reliant on income from Web ad sales, planning, and serving.