Study: E-mail List Size Best Predictor of Open and Click-Through Rates

List size is one of the strongest predictors of e-mail response rates, according to the 2005 Response Rate Study recently released by Indianapolis-based on-demand e-mail service provider ExactTarget: Open and click-through rates both decrease steadily as list size increases.

“This phenomenon is one of the strongest cases for audience segmentation,” Morgan Stewart, director of strategic services at ExactTarget and author of the study, said in a statement. “The smaller the targeted audience, the better organizations can aim their message directly to their subscribers in their e-mail communications. This is a sure way to increase response to e-mail communications.”

The study also shows that organizations with a business-to-business focus experienced higher open and click-through rates than their business-to-consumer counterparts. Again, though, list size played a factor. Fifty-two percent of the b-to-b e-mail campaigns tracks were sent to lists with fewer than 1,000 subscribers, and less than 6% of the b-to-b campaigns were sent to lists with more than 10,000 subscribers. In comparison, 41% of the b-to-c campaigns were sent to lists of more than 10,000 subscribers.

The downward trend in open rates by list size stabilizes at a 15%-20% average open rate when reaching lists of 400,000-500,000 subscribers. At this point, the audience appears to be of significant size so that adding incremental names to the list does not further depress open rates.

“The larger the list, the more important it is to have compelling creative and offers in order to generate click-through rates in your campaign,” Stewart said. “With larger lists, it is much more difficult to drive significantly higher open rates than normal. This is due to both list fatigue inherent in larger lists and the reality that it is difficult to convey compelling and relevant messages to a large audience through the subject line.”

The study shows that the downward trend in click-through rates is less predictable than that of open rates. While this trend still exists, there is more variability in average click-through rates at higher volumes. Estimation models based solely on e-mail volume are not particularly accurate, indicating that e-mail creative and content play a crucial role.

Among other key findings:

  • Friday was the best day of the week for e-mail opens, while Sunday was the best day for click-throughs. However, month-to-month performance was erratic, indicating seasonal differences.
  • Open rates have dropped steadily over the past two years. In 2005 average open rates dropped an average of 1.8% per quarter. Comparing the average open rates for the fourth quarter of 2005 with the same period in 2004, open rates declined 16.5%, from 42.5% to 35.5%.
  • Average unsubscribe rates decreased in 2005. The unsubscribe rate appears to be stabilizing at approximately 0.25%.

The ExactTarget 2005 Response Rate Study summarizes overall open, click-through, and unsubscribe rates and provides additional analyses based on day of week for sending e-mail while examining list size and target audience. The study includes data collected during the 2005 calendar year from more than 4,000 organizations, 230,000 e-mail campaigns, and 2.7 billion e-mail messages.

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