eMedia Strategist: An Open and Closed Case Against Open Rates

Several publishers have recently told me about advertisers of theirs who do not believe they should pay for sponsorship of an e-mail newsletter based on the circulation of that newsletter. Instead, they feel they should only pay for people who actually open the newsletter and see their creative. They only want to pay for their ad based on the newsletter’s “opens.”While some publishers charge on a cost-per-thousand (CPM) basis, most publishers charge a flat rate for e-mail sponsorship, with a guarantee that they will deliver the message to a minimum number of readers. For example, a publisher may charge $2,000 and guarantee a minimum delivery circulation of 100,000. Let’s also assume this publisher has an average open rate of 30 percent.Advertisers might argue that if only 30 percent of the people who get your newsletter actually open and read it, then the rate they pay ought to be based on that many people (e.g., 30,000 instead of 100,000). After all, when advertising on a Web site they typically only pay when an ad is actually delivered to a person looking at a page. Why should e-mail be any different than the Web? We know how many people open our e-mail newsletters, and we know how many people see their creative, right?Not so fast …It is true that any decent e-mail system can report how many people actually open an e-mail newsletter. These systems provide both the number of opens and the open rate expressed as a percentage (usually opens divided by delivered). But open rates have long been known to be unreliable. It’s one of those oddities of the Web where things seem very concrete and quantifiable because it’s expressed as a hard number. But take a look under the hood and you’ll see there are a lot of unknowns and unreliable data behind that number.To understand why, you first have to know how e-mail systems record when someone opens an e-mail. Each e-mail has a small, transparent image embedded in it that is actually tagged to that specific e-mail and to the specific person to whom you sent the message. When the recipient opens the e-mail, the e-mail loads the tracking image from your e-mail system and, voila, an open is recorded.But that’s where the simplicity stops and a host of issues surface that render the open rate an unreliable metric:• Text-only (non-HTML) e-mails do not register open rates as they cannot carry the tracking image. Thus it is impossible to know your open rate on a text-only e-mail newsletter.• The preview pane on some e-mail clients can register false opens. A person may click on the e-mail, and while it appears in the preview pane, the images load and, even though the recipient may not read the e-mail, our e-mail system counts it as an open since the tracking image loaded.• Many software and Web-based e-mail clients do not display images by default. In this case, a person may open and read the entire newsletter, but we’ll never know since the tracking image did not load.• More and more people are reading e-mails on mobile devices like the Blackberry, iPhone and other e-mail-capable cell phones. Such devices usually do not load images, only text. A person may open and read the entire newsletter, but again, we’ll never know since the tracking image does not load.• Your open rate can vary significantly depending on your e-mail system. In some systems, if a recipient clicks a link, the e-mail system automatically assumes an open even if a tracking image wasn’t specifically loaded. Other systems do not do this. And some e-mail systems calculate open rate by the number of opens divided by the number of e-mails delivered, while others use number of opens divided by the number of e-mails sent.So what should we do with open rates and, perhaps more importantly, how should we respond to advertisers looking to pay only for opens?First, use open rates only as a trend indicator, not as an actual number. After a few mailings, you will establish a baseline open rate that you can use to see if your trend is improving, declining or staying steady. Second, encourage your advertisers to submit a text ad (see the example below) or require them to submit a couple lines of supplemental text along with their image ad. Make sure that the text ad or supplemental text is put into your newsletter as true HTML text. These are not blocked by e-mail clients and can still be read on mobile devices. Your advertiser still gets exposure and value even in situations where images may be blocked. By the way, I have often seen these kind of text ads have a greater response than image ads. Third, continue to charge based on delivered e-mails (circulation), not opens, but be sure to keep your list clean so that you are truly giving your clients good value for their money. If you built your list as opt-in or double opt-in and continually remove bad e-mails from your list, you’re probably in good shape and already delivering good value to your advertisers. But if you started your list as opt-out and haven’t yet taken measures to clean out people who have been unresponsive (e.g., people who haven’t opened, clicked, or taken any other action on your list in the past year or so), then you have a lot of dead weight in your circulation and advertisers have a legitimate reason to not want to pay for your entire list.Finally, pass along this article to your sales team and clients to show why open rates are not an accurate way to quantify how many people actually read an e-mail. Eric Shanfelt is executive vice president of eMedia for Aspire Media. He previously served as senior vice president of eMedia for Penton Media, and spent a year as an industry consultant helping more than a dozen b-to-b and consumer media companies grow their online media business. Shanfelt has an extensive e-media background spanning 17 years and specializes in practical revenue-generating strategies for publishers.

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eMedia Strategist: An Open and Closed Case Against Open Rates

Eric Shanfelt

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Eric Shanfelt