Commercial email--mail selling products and services--is expected to increase 40-fold by 2005, with marketers spending about $7.3 billion a year to send it, according to a study released today by Internet research company Jupiter Communications.
In 1999, Jupiter estimated commercial email spending at $164 million.
"Businesses are beginning to perceive email marketing as the silver bullet for acquisition and retention strategies; it's fast, cost-effective and provides immediate feedback," Jupiter senior analyst Michele Slack said.
"As a result, the volume of opt-in commercial emails continues to rise at a furious pace."
"Opt-in" email happens when consumers agree to receive commercial email related to their interests through any site. A growing number of online companies sell their opt-in email lists to outside marketing firms and advertisers to bolster profits. But while the number of commercial email grows, so will the size of consumers' trash folders.
"Consumers will not have the resources or tolerance to maintain the high response rates that are driving businesses to email in the first place. Businesses must focus on delivering value from the first email contact because opt-out is just a click away," Slack said.
Sixty-five percent of companies are spending up to 5 percent of their marketing budgets on email marketing, cutting into 13 percent of direct mail revenues by 2005, the researcher found.
Jupiter estimated the 40-fold increase of commercial email based on the average number of marketing messages online consumers receive per year, which was 40 last year. The average number will hit more than 1,600 in 2005.
Businesses can improve response rates to commercial email by targeting their messages, growing in-house customer lists and integrating messages across all media channels, Slack said.