Why 40x Email Marketing ROI Won’t Last

Andy Mowat
December 27, 2022

Email has the highest ROI of any marketing channel today

When you ask a CMO which marketing channel provides the best ROI (return-on-investment), they invariably say “email.” There’s some pretty simple math behind that confident reply. Once you build up an audience for your email list, the cost to send 100 or 1,000,000 emails is the same.

"On average, email marketing has the highest overall ROI in comparison to other marketing techniques.  It’s a whopping 4,000%. That’s a $40 ROI for every $1 spent on email."
Neil Patel, New York Times Bestselling Author

Email is valuable because it is the only channel without a marginal cost

With most marketing channels, the price goes up as you scale leads and compete for buyer attention. Just compare the costs that pile up:
- Digital ads are based on cost per view, click, or conversion
- Direct mail requires product and postage costs
- Review sites are pay-for-referral
- Content marketing costs scale with each new blog / whitepaper
- PR done right requires investment
- Events require investment in people and sponsorships

Ad inventory is limited, causing scarcity. Anyone with a prospect’s email address can send an email, so once you have written an email and acquired your addresses, you can send as many as you want at no additional cost.

Additionally, the cost of sending an email stays the same regardless of how much competition there is to reach a given prospect; there’s room for everyone in the email inbox.  

The real cost of email marketing is your prospect’s time

With email, the only factor that limits how many emails you send is your “opt out rate.” Most marketers take notice when prospects start opting out of an email list.  But the reality is that individual prospects were probably annoyed by your marketing long before they decided to opt-out or unsubscribe.  

Because marketers don’t encounter marginal cost for email, there is little incentive to pause or remove prospects who aren’t engaged.  This results in painfully cluttered inboxes; according to a McKinsey study, the average corporate worker receives 121 emails per day and spends more than a quarter of their work time reading and replying to email.

Marketers sympathize with email overload because, ironically, they are themselves a prime target for email campaigns:
- There are 8,000+ martech vendors trying to sell to them
- Marketing ad budgets are the biggest variable line item at most companies

A new inbox management tool is changing the economics of email

Almost 20 years ago, Bill Gates said he wasn’t worried about email spam because someone would figure out how to “add a postage stamp to email.”  

Gated has developed an innovative email management tool that uses a free filter to challenge unknown senders to make a charitable donation in order to reach a user’s inbox. The donation varies based on each user and creates a true marginal cost for email, which forces senders to invest in targeting the right users and customizing content. This means that senders now have increased incentive to stop sending emails that people don’t open or interact with.  

With Gated, the days of irrelevant email are over – get Gated for your inbox now!

Originally published: December 19, 2020