How much money should a promotional email marketing campaign really cost?

Abstract

How much money should a promotional email marketing campaign really cost? Nowadays, the business scenario is characterized by being always changing both due to the global economics and financial crisis, and, simultaneously, consumers are becoming more demanding. If, on one hand, advertisers must find new media solutions, with more impact and, necessarily, cheaper and more efficient, because of the crisis and the consequent revenues decrease, on the other hand, the consumer is more susceptible to advertising. This scenario, followed by an Internet growth, caused huge changes on the pricing negotiations established between advertisers and agencies. In this context, new types of media to promote goods and services emerged with the purpose of helping companies to succeed in a so dynamic environment. Email became thus one of the most relevant ways, used by advertisers, to interact with potential customers, making products/services and promotions known. Therefore, the questions that arise are related to the prices being charged by agencies, with respect to email marketing campaigns. Because of it, this dissertation focuses on understanding how agencies, in Portugal, establish the prices that they charge to advertisers and which factors should influence the price of promotional email marketing campaigns. From a detailed literature review, several research questions are identified. Subsequently, interviews are conduced to various players in the Portuguese advertising industry, including full service agencies, digital marketing agencies and advertisers. Throughout those interviews, it is possible to clearly understand the Portuguese email market, concluding about the impact of certain variables in the prices being charged. Finally, a multivariate analysis is developed in order to understand the real correlation between the variables obtained by the interviews and the prices being applied. From the results, it is possible to conclude that the Portuguese email industry is characterized by high information asymmetries, and the prices being charged are not in equilibrium: ads’ supply tend to be higher than demand. Actually, this industry is characterized by a high threat of new entrants as well as substitute products/services, being the bargaining power of buyers (advertisers) high and the suppliers’ (ESPs – Email Service Providers) bargaining power low. The high intensity of competitive rivalry also explains the phenomenon mentioned before. In fact, agencies in Portugal charge the prices of promotional emails taking into account their own expectations, prices being applied in the past and the industry benchmark. Additionally, the size of the advertiser, the number and type of form fields, and the campaign goal (level of persuasion), empirically, can also explain email marketing campaigns’ price.

Date of Award	18 Jul 2014
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Ana Isabel de Almeida Costa (Supervisor) & Fernando Santos Jorge (Co-Supervisor)