Emerging Innovations in Email Marketing

August 19, 2011
Emerging Innovations In Email Marketing

by Ari Osur for Interactive Marketing Professionals
Making Leaders Successful Every Day
For Interactive Marketing Professionals
August 19, 2011
And Why Interactive Marketers Will re-Imagine the Email channel

by Ari Osur with Emily riley and James Mcdavid
ExEcut I v E S u M MA ry
Emerging email innovations from real-time, web-like content to tools that help simplify the complex email production and digital marketing environment are poised to meet interactive marketers standards. Unlike overhyped email marketing innovations of the past, new advancements show promise they offer lower implementation hurdles and measurable benefits. To succeed, interactive marketers and their vendors must embrace innovation and re-imagine email as more nimble and attuned to customers or face the marginalization of the high-performing channel.
tAbl E O F cO n tE ntS
2 Email Is A Critical But Stagnant Interactive Channel 3 Re-Think Email As A Center For Nimble Direct Customer Communications Actionable, Measurable Email Innovations command Attention
rEcOMMEndAtIOnS
n Ot E S & rE S O u rcE S
Forrester interviewed 12 vendor and user companies, including Adobe, liveIntent, Microsoft, Movable Ink, redeemio, and responsys.
11 Craft A Testing Plan Based On Program Needs And Risk Tolerance

WHAt It MEAnS
Related Research Documents competitive Strategy In the Age Of the customer June 6, 2011
the Future Of Interactive Marketing April 4, 2011 How to test Emerging technologies February 22, 2011
12 Innovations Will Push Email To Evolve . . . Finally 13 Supplemental Material
2011 Forrester Research, Inc. All rights reserved. Forrester, Forrester Wave, RoleView, Technographics, TechRankings, and Total Economic Impact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective owners. Reproduction or sharing of this content in any form without prior written permission is strictly prohibited. To purchase reprints of this document, please email clientsupport@ forrester.com. For additional reproduction and usage information, see Forresters Citation Policy located at www.forrester.com. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change.

EMAIL IS A CRITICAL BuT STAgNANT INTERACTIvE ChANNEL Email remains a mainstay among marketers despite lacking the buzz of other digital channels. Nearly all interactive marketers report that they currently use email as a marketing channel.1 And as consumers continue to spend time in their inboxes using various devices, marketers will maintain their reliance on the original killer app (see Figure 1). But even though email has served as a go-to tool for interactive marketers for many years, notable innovations such as improvements in content assembly and campaign deployment have advanced at a slow pace. Pulling back the curtain, this is what the current state of email reveals:
The sky is not falling. The surging popularity of social and mobile will bolster, not torpedo, the
importance of email for marketing and customer communication purposes. Both social and mobile users are significantly more likely to be active email users according to Forresters North American Technographics Benchmark Survey, Q2 2010 (US, Canada).2
High ROI and low cost continue to make it an easy internal sell. The commoditization of
transmitting email messages has driven CPMs lower, propping up the email channels overall ROI.3 The efficiency of email has enabled it to grab a larger share of budget dollars previously earmarked for more costly direct mail.4
Figure 1 Email continues Its role As A Significant channel Among Interactive Marketers
Does your company use the following in its US marketing? (Email marketing, including email for acquisition and retention) Currently using Mostly consumers (B2C) Equally split between B2B and B2C Mostly businesses (B2B) Base: 252 interactive marketers Source: December 2010 US Interactive Marketing Online Executive Panel Survey
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Plan to use in the next 12 months
No plans to use 88% 80% 71% 14% 10% 17% 16% 2% 3%
August 19, 2011
2011, Forrester research, Inc. reproduction Prohibited

RE-ThINk EMAIL AS A CENTER FOR NIMBLE DIRECT CuSTOMER COMMuNICATIONS Customers are empowered, digitally connected 24x7, actively seeking information, and shaping their interactions with marketers. For email marketers, its the perfect time to innovate and think about the channel as a hub for direct customer communications that reflect the real-time environment. Heres why:
Content management for email is catching up. Vendors and ambitious marketers are ushering
in real-time content to inboxes that until now was reserved for the Web and mobile apps. Interactive marketers can present information and offers based on when and where recipients open a message, instead of freezing content at the time of send.
Roadblocks are clearing. Inbox providers like Gmail, Windows Live Hotmail, and Yahoo
Mail are in a capabilities arms race to win consumers attention. This competition is leading to greater cooperation between the inbox providers and marketers, and inbox providers are loosening the reins on what marketers can execute in the inbox.5 For instance, transactions within a message previously taboo due to technological restrictions are now on the table with Hotmails Active Views platform pilot program.
Many innovations are manageable to test. All of the vendors interviewed emphasized their
willingness to prove the value of their innovations, and most have simplified the testing process to help encourage adoption. For example, MSNBC could quickly test LiveIntents email advertising services due to the minimal technical requirements.
Actionable, Measurable Email Innovations Command Attention Heralded email innovations of the past, such as certified delivery and streaming video, never sustained momentum for a host of reasons: technical limitations with inboxes, poor user experience, operational complexity, and questionable ROI due to incremental fees. This time around, several promising email innovations aim to woo interactive marketers adoption by appealing to their practical and data-driven nature (see Figure 2). And, critically, they can be implemented without burdensome requirements. Here are emerging developments that forwardthinking email marketers must put on their short-list for evaluation and testing:
Static email content to evolve into real-time, Web-like pushes. By refreshing content in real-
time upon open, marketers can avoid presenting stale content or expired deals and instead spotlight urgency drivers such as counts of remaining items in stock, integrate up-to-the-minute social posts, and even use the openers geolocation for content decisioning. Working with vendor Movable Ink, daily deal aggregator Redeemio optimizes email content when a recipient opens the email, a tactic that has generated a 17% lift in click-through rates compared with the static version (see Figure 3).
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Recipients to execute transactions within an email. LinkedIn, LivingSocial, Netflix, and
Posterous are testing in-message windows to their web environments within Hotmail (see Figure 4). This function, called Active Views, allows recipients to conduct searches and execute transactions such as booking a hotel room without leaving the email. Microsoft anticipates opening the pilot program to other marketers.
Behaviors to dictate message content and timing. The bulk of marketers still broadcast
uniform email campaigns to an untargeted list, thereby treating all recipients the same. Service provider Sailthru can send messages to microsegments at precise times based on an analysis of each recipients inbox activity. Publisher Business Insider, using Sailthrus web analytics, decisioning engine, and automated dynamic content assembly, has dramatically increased response rates for its newsletters by showcasing content each subscriber is most likely to read but has not yet consumed on the website.
Device detection to optimize creative presentation and provide deeper insights. Several
providers, including LiveIntent and Sailthru, can identify the email program (e.g., Outlook, Apple Mail, Gmail, etc.) and device (e.g., desktop, iPhone, Android, BlackBerry, etc.) used to read an email and serve creative assets versioned for that experience. Similarly, provider Litmus offers post-send reporting by email program and device, as well as the ability to measure recipients time spent reading a message (see Figure 5). Using reporting from Litmus, a large pizza chain identified iPhone users within its customer base and sent them a highly relevant sneak peek invitation to download the chains new iPhone app.
Ad management to improve monetization and efficiency. Vendor LiveIntent is extending
the practices of online display ad management to email (see Figure 6). Partnering with media companies including Maxim, MSNBC, and Newsweek/Daily Beast, LiveIntent has launched an ad exchange and trading desk to monetize undersold email inventory. The exchange features ad units commonly used in online display advertising, in addition to the ability to buy dayparts, set frequency caps, and optimize based on real-time performance. According to Jason White, EVP of marketing at automotive pricing destination TrueCar, the email ad exchange can provide advanced targeting at a scale previously difficult to achieve in the channel.
Video and email to finally date after years of flirting. Marketers and inbox providers have
recently found ways around inbox video restrictions. Sports leagues such as the NFL and NBA have regularly included in their emails short video clips in the form of animated GIFs, which does not require the services of a specialized vendor; marketers can implement them using Adobe Photoshop and a media server.6 Even more straightforward: If a marketer includes a link to a YouTube player, Hulu player, or Flickr photo album within a message sent to a Hotmail recipient using Active Views, the player or album will render in the message and allow the recipient to consume the rich media content in the email.
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Integration to facilitate more coordinated interactive marketing efforts. ESPs such as
ExactTarget and Responsys have developed interactive marketing suites that enable data management; campaign scheduling and coordination; and reporting across email, social, mobile, and websites. Working with the Adobe Online Marketing Suite and ExactTarget, retailer Finish Line has significantly increased conversion rates of remarketing campaigns by using web behaviors to trigger emails with customized product recommendations.
August 19, 2011

Figure 2 current versus Emerging capabilities in Email Marketing

Sample vendors/providers Movable Ink Adobe Online Marketing Suite Microsoft Hotmail Active Views Sailthru
Current capability
Message content
Message Static, dened at time Real-time, tied to live content and functions on content of campaign web pages or other environments production or at Copy, URLs, and images optimized each time campaign deployment message opened Urgency drivers such as deal countdown clocks and number of remaining items on sale Search, commerce, and social posting functions that enable multistep experiences without leaving the inbox Full versions or content blocks assembled based on geolocation identied upon open Format Render HTML or text optimization based on recipients email client
Serve optimal message versions at time of open Sailthru based on recipients device LiveIntent Movable Ink In-message Not generally Embedded video and animated GIFs more Adobe Photoshop video accepted by most commonplace with less technical complexity Gmail: YouTube email clients, Microsoft animated GIFs used by Hotmail: YouTube, some marketers Hulu Micro-segments deployed based on optimal time-of-day Sailthru
Behavior-based Campaigns sent to deployment designated distribution list at scheduled time Multichannel integration, execution, and reporting Integration with web analytics, campaign management platforms, and other related systems
Improved integration and coordination with social, search, display, and mobile Campaign scheduling and reporting available across channels through unied dashboard Email link click data used to inform display ads, search marketing, and online experience
ExactTarget Responsys Bronto Yesmail
Display ad Ads usually hardmanagement coded, some integration with ad serving providers
Improved monetization opportunities LiveIntent Ads served and optimized upon open Datran Media Better alignment with media buying practices such as dayparts and frequency caps Web-based ad units extended to inbox (i.e., takeovers) Litmus Return Path
Reporting Standard delivery and Deeper behavioral trends that inform more response metrics eective messaging (bounces, opens, Measure session time for email: time spent clicks, conversions) reading Reporting dimensions available by specic device (PC, Mac, Android, iPhone, etc.) and by email program (Outlook, Gmail, etc.)
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Source: Forrester Research, Inc.
August 19, 2011

Figure 3 redeemio With vendor Movable Ink Optimizes content upon Open
Oers are prioritized based on real-time performance and geolocation.
Source: Redeemio
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Figure 4 livingSocial Is Piloting Hotmails Active views to Present real-time content
Source: Microsoft website

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Figure 5 litmus Provides behavioral reporting based On Email clients And devices
Source: Litmus
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Figure 6 liveIntent Enables Email Publishers to Insert Ad units like takeovers
Source: LiveIntent
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r E c O M M E n d At I O n S
CRAFT A TESTINg PLAN BASED ON PROgRAM NEEDS AND RISk TOLERANCE

Interactive marketers should test innovation candidates that match their program needs and complement their existing competencies. While some innovations noted here are driven by smaller, younger providers, we are optimistic that these emerging approaches will gain traction among interactive marketers due to their focus on improving program performance, enhancing the customer experience and lowering implementation requirements. As you develop a strategy for considering and executing email innovations:
Master the big wins with your vendor partners first. As it is, many interactive marketers
still do not take advantage of the current sophistication offered by vendors. Prioritize big wins already proven in the marketplace like regular A/b tests, automated campaigns based on profile information or customer behaviors, dynamic content to improve relevance, valuebased segmentation, and acquisition touchpoint improvements to grow lists. then layer in new innovations to test.
Filter innovation candidates based on your needs and competencies. Prioritize based
on which advancements would deliver the most value as well as your ability to execute and evaluate the outcome. Publishers and media buyers should investigate email ad inventory management innovations from companies like liveIntent and datran Media. due to their familiarity with direct response, retail and travel marketers are best equipped to test realtime content and behavior-based deployment from vendors like Adobe, Movable Ink, and Sailthru. And interactive marketers seeking to understand recipients email engagement by device could uncover new insights with more thorough behavioral reporting from providers like litmus.
Determine email innovation partner strategy based on risk tolerance. Early stage
innovators have demonstrated promising initial success but in the short term are better suited for lower-risk pilots. Work with your core email partners to evaluate innovation prospects and then test small-scale executions such as a real-time content campaign to a segment of your customer file. determine if the innovation vendor can scale in terms of client service, infrastructure, and delivery before signing up for large rollouts.
Follow the Five Ps framework to assess innovations. To help navigate which email
innovations make sense to pursue, we recommend that interactive marketers use Forresters Five Ps framework for testing emerging media and technologies: adoption position, POSt (people, objectives, strategies and technologies), project plan, pilot, and performance evaluation.7
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W H At I t M E A n S
INNOvATIONS WILL PuSh EMAIL TO EvOLvE . . . FINALLy

the next generation of advances in email marketing promises to improve recipient engagement, simplify execution, deepen reporting, apply successful practices from other channels, and facilitate integration. Most importantly, these advancements can help to forcefully nudge interactive marketers to become more customer-obsessed in the age of the customer.8 As emerging advancements go mainstream, we expect these trends to alter the landscape for email marketers and their vendors:
Marketers will regard email as live and truly interactive. the technological restraints
holding back email marketers will slacken, and fresh approaches to the channel will grow. richer and more interactive experiences will become more commonplace in email, especially as HtMl5 and other next-generation technologies are adopted. the ability to transact within the inbox will stimulate new ways for interactive marketers to engage customers, collect data, and drive performance. Expect email managers to lean on their ebusiness and development teams to integrate features like in-message search, commerce, social media integration, and real-time shipping notifications.
Progressive marketers will demand innovation from providers. In the battle for customers
attention, proactive marketers will push their vendors to develop email advancements that build more effective connections with recipients. A new era in the previously commoditized email service provider category will unfold as innovations that drive response, build value, and improve customer Intelligence will create separation among vendors. Expect the more established ESPs to absorb the smaller, younger vendors driving many of the innovations and roll the capabilities into their existing platforms in a bid to differentiate.
More rigorous ad management practices will improve email profitability. Publishers

and media buyers will applaud as time-tested methodologies that built the online display industry will finally migrate to email such as ads served at the time of engagement, more compelling ad units, and audience buying with scale. the benefits: more efficient management of inventory, sophisticated targeting for stronger performance, and better alignment with other digital channels.
Email advancements will serve as steppingstones to CORE.
detecting a recipients device will facilitate customization of marketing experiences and address the many ways recipients consume information. More comprehensive reporting of email behaviors will better inform customer Intelligence and optimize marketing strategies. Multichannel platforms that include email will help coordination within marketing organizations and enable interactive marketers to respond to changing market conditions more nimbly.
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SuPPLEMENTAL MATERIAL Companies Interviewed For This Document Adobe Email Predict Litmus LiveIntent Maxim Microsoft ENDNOTES
1
Movable Ink MSNBC Redeemio Responsys Sailthru TrueCar
Ninety-eight percent of B2C marketers and 85% of B2B marketers use or plan to use email as a marketing channel. Source: December 2010 US Interactive Marketing Online Executive Panel Survey. Ninety-five percent of social media users reported that they use email at least once per month, compared with 85% of non-social media users. For smartphone users, 95% indicated they use email at least once per month, compared with 89% of respondents who do not have smartphones. Source: North American Technographics Benchmark Survey, Q2 2010 (US, Canada). Merkle reported similar findings: Social media users are significantly more likely to check their email four or more times a day compared with non-social media users who are online, and two-thirds of mobile device users check their email accounts at least once per day. The study also indicated that even though consumers are spending less time on personal email, time spent on commercial email has increased between 2007 and 2010. Source: View from the Digital Inbox 2011, Merkle, February 23, 2011 (http://www.merkleinc.com/ vfdbwhitepaper/). ComScore found that personal email was the top activity for mobile users, demonstrating 30.7% growth from March 2010 to March 2011. Source: The State of the U.S. Mobile Advertising Industry and What Lies Ahead, comScore, March 2011, (http://www.comscore.com/Press_Events/Presentations_ Whitepapers/2011/The_State_of_the_US_Mobile_Advertising_Industry).
Commercial email returned $43.62 for every dollar spent. Source: Power of Direct Marketing, Direct Marketing Association, October 19, 2009 (https://imis.the-dma.org//bookstore/ProductSingle.cfm?p=0D44 0979|13129F63F480B12CBC5B448193E960F1). Email surpassed direct mail in terms of percent of the overall marketing budget (18% versus 17%). Source: Digital Marketing Practices and Trends, Direct Marketing Association, July 19, 2010 (http://www.the-dma. org/cgi/disppressrelease?article=1429+++++). Also, email was named most often as a program respondents planned to increased spend, while direct mail was named most often as a program planned to decrease spend. Source: 2011 Marketing Trends Survey, StrongMail, December 9, 2010 (http://www.strongmail.com/pdf/SM_Trends2011.pdf).
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One consequence of the new capabilities and technical differences across the major web-based inbox providers: Email marketers should consider segmenting customers by inbox domain to account for varying user experiences. Adobe Photoshop version CS5.5 can convert video files to animated GIFs, which can be hosted by a media server and inserted into email content. For full details about the Five Ps framework for testing emerging technologies, see the February 22, 2011, How To Test Emerging Technologies report. Forrester proposes that only the companies obsessed with their customers can succeed in a landscape where historically important competitive advantages have been neutralized due to customer empowerment. See the June 6, 2011, Competitive Strategy In The Age Of The Customer report. CORE represents the interactive marketers directives for adapting to the empowered customer and technology disruptions of the next digital decade. They are: customize marketing experiences, optimize decisions and processes, respond to changing marketing conditions, and empower staff and customers to advocate for you. See the April 4, 2011, The Future Of Interactive Marketing report.
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August 19, 2011