A study by the Aberdeen Group reports that the value of e-mail marketing tripled last year, and the industry will soon have annual revenues of one billion dollars. The study says growth will slow to 33.7 percent by 2003.

by Christopher Saunders of the Internet Advertising Report (IAR) [June 26, 2001]

E-mail marketing has seen explosive growth during the past year—and doesn't show any signs of abating, according to analysts at Aberdeen Group.

Indeed, in a new study, the consultancy predicts that e-mail marketing will continue booming through 2003. According to the group, e-mail marketing grew 270 percent in revenues from 1999 to 2000, growing from an estimated $91.8 million to $342.22 million—and rapid growth will continue through 2003, when the industry tops $1 billion.

"A relatively young industry that gained significant momentum in 2000, e-mail marketing is a breakthrough online medium that has changed the way marketers interact with their audiences," wrote Kent Allen, the group's research director for e-business and head author of the report. "E-mail has fast become a central component in any communications strategy that incorporates print advertising, direct mail, Web site commerce, online advertising, telemarketing and broadcast advertising."

However, Aberdeen is predicting the growth rate to slow over that time—to 74.3 percent in 2001, 57.9 percent in 2002, and 33.7 percent in 2003—partially as a result of competition among stand-alone e-mail product providers and full-service CRM and enterprise-wide product vendors, like the professional services firm.

According to Aberdeen, buying patterns suggest that CRM applications will become more sought-after than pure customer-acquisition applications—a development which will have sizable repercussions among market leaders in e-mail marketing that don't yet offer a database-integrated, CRM-specific solution.

The e-mail firms will grow
Among the various segments of e-mail marketing firms—full-service outsourced ASPs, hosted ASPs, licensed in-house software providers, and opt-in networks—hosted ASP firms will see the greatest continued boom, still growing more than 100 percent through 2002, according to Aberdeen. (Bigfoot Interactive/Expression Engines, DoubleClick's FloNetwork, and ClickAction offer such solutions.)

Opt-in e-mail networks' growth, however, will peter out to increase by about 33 percent during the next three years, while Aberdeen expects full-service outsourced and licensed software growth to drop precipitously beginning in 2002.

There are other potential pitfalls, as well, aside from competition from CRM players. While the e-mail marketing industry will continue to experience a boom, individual players' offerings are becoming increasingly similar—through consolidation and tweaking of their products to emulate successful competitors.

"Product capabilities are becoming increasingly homogenized," Allen wrote. "To remain competitive in this market, especially with CRM suppliers that provide deep levels of integration between their e-mail marketing products and their core CRM suites, [standalone software providers] need to continue to raise the technical bar."

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