Question

Topic: E-Marketing

What To Charge For An Opt-in Email Campaign?

Posted by Anonymous on 2/23/2009 at 10:35 PM ET 500 Points
My company has been doing opt-in email for clients for a number of years, but as part of much larger projects where the few hundred or few thousand emails were not a significant expense so they were just part of our fixed pricing for our client's marketing. We have what I gather are great open rates - 22 to 34% on lists that have been active for years, so we know how to write content that will be read.

Now we are looking at an opportunity to opt-in many, many thousands of people and do some large scale projects as email only. We will generate the opt-ins, create the content, design, send the emails through a service (Emma) and feed the numbers back to the client. We think we have a method for getting them some very high open rates.

But we have no idea what the market rate for such a service should be. Bear in mind this is not "buy them a list, send out an email." We will generate the opt-in through a method we have developed that I believe is unique and I know is absolutely legit. The list we will generate will be unusually well suited to the client. i.e. for a hospital the list will have 100% insured opt-ins in their home town market.

That may be difficult to value and I have no problem with that if it is. Just some direction on what we should charge for a regular service where did we buy a list and make a nice design with good copy and valid tracking would probably solve my problem, at least for now.
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  • Posted by Inbox_Interactive on 2/23/2009 at 11:08 PM Accepted
    I really don't understand how you built your list, but the CPMs that you can charge are going to vary based on many things.

    Some consumer lists rent for $50 to $100 per thousand, while I've seen some business lists rent for as much as $1,000 CPM. (It was a really targeted list...) A more common business list rental rate might be in the $250 to $350 range, though. It really all depends.

    You might use Google Adwords to determine the value of a click to someone in a client's industry, then reverse engineer what the value of an open ought to be, then go backwards still and develop a CPM.

    When all is said and done, though, the market's going to tell you what it's worth.

    Are you 100% sure that you're allowed to use Emma for this purpose?
  • Posted by Inbox_Interactive on 2/24/2009 at 11:03 AM Member
    There's no set way to price your service. Some look at the value to the client and try to price off that. Others look at their costs, time, and try to extract a value for their time and a profit beyond that. Only you know what makes sense for you.

    I've seen people throw the creative in for free when they rent a list. Others charge for the creative, and even then the creative costs can be as little as a few hundred dollars or $5,000-plus.

    If I were you I'd pick up the phone, call a prospect, and tell them what you have, then see what pricing scheme makes the most sense to them. Ultimately, it's only their opinion that counts.

    You could just do this on a flat monthly cost or even a per-open or per-click cost if you want to go performance based.

    I wish I could be more helpful -- we've been in the email marketing business for 10 years -- but I don't think there's a 100% correct answer to your question. If you want to pick up the conversation by email, I'm happy to share additional thoughts with you.
  • Posted on 2/24/2009 at 11:44 AM Accepted
    The ability to generate a good, opt-in list and generate leads is far more valuable than the creative and the content.

    The list is the primary driver of response.

    As an example, Comcast just paid $125 million for Daily Candy. Why? Because it was an opt-in/marketing tool to reach millions of subscribers who WANTED to be contacted every single day.
  • Posted by Inbox_Interactive on 2/24/2009 at 11:49 AM Member
    While I agree that a good list is the most important aspect of a campaign, I think it would be unwise to discount completely the importance of good creative.

    Good creative is that magic combination of words, layout, design, and images that maximizes response.

    While stellar creative can make a bad list perofrm, bad creative will not maximize the value of a stellar list.

    There's a reason that some copywriters earn $20,000 to $40,000 per month. Words matter.

  • Posted by Inbox_Interactive on 2/24/2009 at 11:50 AM Member
    Previous post: Meant to say that stellar creative can NOT make a bad list peform...D'OH!
  • Posted by Pepper Blue on 2/24/2009 at 12:05 PM Accepted
    Hi Bill,

    I went through the same process when I started my business - I did not know what to charge that would be fair and attractive to both myself and prospects/customers.

    Competitive pricing was all over the place, so that was of little value, and to complicate this the scope of competitive services was not even apples to apples - probably the same thing you are experiencing.

    I called one of the best-known email marketing experts in the U.S. and his advice, which I took, was simply to find a cost that I was comfortable with i.e. that my gut told me was fair to the individual client and fair to me, and go for it.

    He said that very soon I would know whether this cost was too high, too low or just right, and that I could adjust accordingly for future clients - that for the first few months it could be flexible as I looked for that "perfect price point" - and that in 6 months or less I would reach a stable cost structure - which is exactly what happened.

    I am sure you know in your gut what you should be charging for your launch period and it is probably a very fair price - trust your gut. Take this price and try it out with your prospects and see what happens.

    As each client will have a different size list, different frequencies of delivery, different depth and breadth of content etc., this will also effect what you charge each individual, but again over time you will get a very good feel for what this will be.

    I hope this helps and good luck!

  • Posted on 2/24/2009 at 5:36 PM Member
    Ooops, I didn't mean to imply that words don't matter, just that the list is the first leg of the three- legged stool (so to speak), the others being the creative and the offer. My concern was that Bill was discounting the role of the list in his marketing efforts.

    As Inbox said, the best creative won't make a bad list work! Or, to put it another way, you could have the greatest copy and design in the world, but it won't help you sell denture cream to a list of teenagers.


  • Posted on 2/26/2009 at 8:20 AM Accepted
    The price of any product is determined by a willing buyer and willing seller.

    but

    The value of any product is determined by the cost to develop/acquire.

    ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

    The sale price of any product can be set buy:
    what the market will bear
    what it costs to acquire and deliver plus a % for profit
    what others will charge
    what it is 'worth to the seller' which is not bent on anything but gut action of the seller.

    If you look at a tool - you can buy some at a pawn shop that costs more than new, you can buy the same thing cheap at a flee market, or you can rent the tool.

    The point is simply this. If you want to look at the value list as an internal tool you may have a higher value to you than a purchased list. It depends what your intent is for the list. Will the use of the list cause a degradation of the list if it is used for non topical off-point items or used too frequently.

    The value of a list is therefore rendered down to:
    Sellers perspective: What did it cost to acquire?
    Buyers perspective: How much revenue will it generate?

    If an average sale generates $100 profit, and a list can generate 1 sales per 1000 emails then the value would be $10/1000 or in that range. if it developed 10 sales the value to a buyer would be higher say $90.

    I would think that the revenue generated would be a good determination. If you can monitor the traffic you can sell it as a guaranteed % of revenue and at a higher rate. I would certainly pay an 5% to 10% return on any sales (depends on volume) from a list if it generated revenue. I could monitor my costs for a list of unknown results.

    So it really comes back to a willing buyer and willing seller. And that value to one buyer/seller would not be the same for the same product with a different buyer/seller.


  • Posted by Inbox_Interactive on 2/26/2009 at 8:25 AM Member
    The problem with the previous approach is that you need insight as to your customer's business model, and you're not going to get access to that before you announce your pricing--if ever.

    Most advertising and marketing opportunities are also not sold on this basis. Television, radio, outdoor, print, direct mail...these pretty much cost the same regardless of who's buying them (save for volume discounts, of course).

  • Posted by matthewmnex on 2/26/2009 at 8:16 PM Accepted
    Dear All,

    I have gone through your posts and honestly speaking, none of the prices talked about here seem very realistic.

    We work in Europe with a large opted in list to which we shoot our own promotions and other peoples promotions.

    We also work with other affiliates to shoot our campaigns on their databases.

    Nowadays, nobody will pay a fixed rate for these services, it is all about performance.

    Different campaigns generate different levels of incomes depending upon what kind of offer it is.

    My general rule of thumb is that we will not shoot a campaign that generates less than Euo 5.00 commission for us per Thousand emails successfully sent. (nobody pays for unsuccessful emails :) ).

    The best best best ever campaign that we have done last year generated Euro 10 per thousand emails sent. (commission for us).

    Unfortunately, many e-commerce offers on big name cosmetics etc. can only generate as little as Euro 2.50 or 3.00. We only send these as an absolute last resort if there are no other good campaigns available in the market.

    These days we are concentrating on CPL campaigns rather than straight e-commerce because in general, we can earn a little more per validated lead than we can for a commission on a sale.

    Some lead generation campaigns offer as little as ).40 per email collected (we don't send them) and others, financial services for instances, will pay as much as Euro 30 per lead generated. (meaning they get a phone number address etc. then call the person to verify the facts first before they pay). In the end however, each of these campaigns can generate the same ecpm because a simple email collection campaign can garner high results whilst a financial services campaign can have a high threshold so few valid leads generated.

    If we give our campaigns to others to shoot to their lists, It is strictly on a performance basis. We agree first the level of commission and desired conversion to lead. (around Euro 9.00 per 'qualified' lead for us) We run a test on 50k or 100K to see if their DB is good or not. If the results are poor, we stop right away. If the results are within the range that we are looking for we continue or we adjust the commission rate accordingly to be sure we make ROI.

    When I take campaigns from Trade Doubler and other affiliate networks, I do the same. I try 50K shot first. if the ecpm is within the range that I want to earn, I continue to the full DB. If not, I refuse the campaign.

    In the end, it is useless to throw around pricing that only inexperienced advertisers would pay. It is all about performance performance performance.

    There is plenty of talk about ROI in search marketing and every one knows what bid rates on google are and how they are going to make their ROI, why should an email campaign be any different?

    It is all a matter of value. I know what I can spend to acquire a customer so that is what i can offer to an email list manager. not more.

    I will be happy to share more if you would like. I am currently sending in the region of 20M mails a month in Europe with a 98% success rate.

    Good luck.

    Matthew
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