Are E-mail Lists Overpriced?

Feb 26, 2008 2:17 AM  By

It’s an outrage that e-mail lists cost more than traditional direct mail files. Haven’t these owners and managers heard that e-mail response is going down?

The contemporary pricing model for e-mail rentals can be traced back to Net Creations and other firms that commercialized double opt-in e-mail lists in the 1990s. After the so-called dot-com collapse, pricing for generic e-mail lists followed suit.

But branded b-to-b e-mail lists retained their value, whereas so-called private-label single opt-in b-to-c files became a commodity, and were priced for pennies on the dollar, as they remain today.

E-mail lists are often priced at a multiple of their direct mail cousins, particularly in b-to-b. Those rates may have been justified in the 1990s when prospecting via e-mail was more effective than postal mail. Of course, fax blasts were also popular at the time—and for the same reason.

Today’s marketers are reallocating their budgets in favor of online media, particularly e-mail. But if you do the math, direct mail for b-to-b can actually be less expensive than e-mail.

Are you surprised? Regretfully, some folks are not aware that direct mail still works and is profitable. In fact, response rates for both channels can be optimized using the two synergistically. Unfortunately, some advertisers mistakenly favor e-mail campaigns over postal, based upon contemporary folklore and assumptions that were valid 10 years ago, but may not be today.

Experienced mailers who use both e-mail and postal lists know that today’s response rates for prospect e-mail are much lower, yet e-mail list prices have not followed suit. If they don’t go down, using e-mail for prospecting may become obsolete.

Given today’s sagging response rates for e-mail and direct mail, it is time for list owners and managers to take notice and reduce what they are charging for e-mail lists; otherwise they may drive their customers to other proven media such as package inserts and blow-in programs.

One thing’s for sure: e-mail is not getting through to recipients as it did a decade ago. Think about it: We have leaky spam filters, black lists, white lists, authentication protocols and other barriers to your HTML or text message reaching prospects. E-mail is a great tool for maintaining relationships with your customers. Prospect e-mail lists do not work as well, and should be priced accordingly.

David Kanter is the President and CEO of Ventura, CA-based AccuList.