In his insightful little book Email Marketing Excellence, Kevin Hillstrom writes about the impact of Email Marketing on other marketing channels.
If you do an email holdout test and look at the impact on search, you might find some surprising results.
In the example below, email marketing produces $2.50 per customer in revenue. If you do a holdout test of customers who receive email, it only delivers $0.25 in revenue per customer.
About 90% of the revenue disappears.
Of course, this isn’t too surprising. If you don’t send email to people, they are going to spend much less via the email channel.
The only way for them to spend via an email is to go back to emails they received in the past or perhaps through an email that was forwarded to them by someone else.
Now let’s look at the impact of a holdout test on Search Marketing (which in this case includes natural search and pay-per-click).
Normally, the Search channel in this example produces $2.00 in revenue per customer.
The holdout segment only spends $1.50 per customer, a 25% drop in spending.
What does this mean? At this company, 25% of customer revenue through the Search Marketing channel should be attributed to the Email channel.
What’s happening here?
The customer receives an email and promptly goes out and starts searching on Google to do comparison shopping.
In the case of a software company who sends email, it might cause the buyer to go out and use Google for further education about the topic.
In that case, you want to make sure that the buyer finds the answers to the questions they have. And preferably on your website.
Hillstrom explains the lesson to take:
Email marketing causes searches to happen. Email generates demand, search captures demand. The search budget must be set at a appropriate level, in order to optimize email performance.