Clientize - Article

August 28, 2001

Online Ads Find E-Newsletters Deliver Target Market
By Deborah Lacy

The economy's slowing sharply, dot-coms are imploding and advertising sales are down, down, down. Well, not exactly. Online ad sales are expected to rise this year, just at a slower pace than in the last couple of years and at a slower pace than is expected in 2002 and beyond. And one form of online advertising seems to be outshining the others.

Ad sales for newsletters that are e-mailed to subscribers and a targeted audience are rising faster than other forms of advertising, say several people in the ad industry. Privately held iEntry Inc., based in Lexington, Ky., expects its revenue to rise nearly 35% this year. The publisher of 40 e-mailed newsletters expects sales of $4.3 million this year, says Chief Executive Richard Ord. That's up from $3.2 million last year. The company's newsletters focus on tech and business topics.

People subscribe for free.

Like almost all e-newsletter publishers, it gets its revenue from ad sales in the newsletters. Some of the ads come in the form of "advertorials" in the newsletters. "The main benefits of e-mail newsletters are that they are personal in nature and go right into the inbox (of the target audience)," Ord said. He says the company expects revenue of $7 million to $8 million in 2002. The company, says Ord, has been profitable since day one. Its newsletters include WebProNews, geared to Webmasters and people with similar jobs, and WirelessProNews, for people in the wireless field. It also has several newsletters targeting entrepreneurs. They include SmallBusinessNews and InsideOffice.

The company offers many sizes of ads, with prices ranging from $250 to $6,000 per issue, Ord says. According to its own research, iEntry says one in three e-mail messages are deleted without being opened. But iEntry's e-mailed newsletters are opened by at least 40% and as many as 70% of recipients, Ord says.

Others agree that e-newsletters get good readership. Ad click-through rates for e-newsletters are higher than for banner ads, the main type of ad found on Web sites, say Folio Magazine and Clientize Inc., an Internet marketing company. The findings are based on a study they did in April. Some Big-Name Advertisers The companies said more than one in three of 200 e-newsletters surveyed reported click-through rates of at least 5%. Almost one in 10 reported rates of 20% or more.

E-newsletters aren't just sent by start-ups attracted to a new field. More than 40% of what Folio and Clientize describe as the 500 largest consumer and business-to-business magazines send out free e-newsletters. The goal of e-newsletter ads can be simply to convert recipients into subscribers of an offline publication. Or they can be a way to generate more traffic for a Web site. Or as seems to be most often the case, the goal can be the typical ad quest: boost sales.

IEntry says its advertisers typically look to the newsletter ads to generate sales leads. Companies that have advertised in its e-newsletters include Oracle Corp., Verisign Inc., Macromedia Inc. and Netopia Inc. Some companies say iEntry's ads work for them. "We saw registration rates increase about 30% when we added the services from iEntry," said Karin Bonnet, a marketing specialist at Macromedia. The software maker used iEntry for three advertising campaigns for product seminars targeted to Web designers and developers. "It was a very effective tool," Bonnet said.

Not that the industry slowdown hasn't affected iEntry. "We've re-evaluated aggressive growth expenditures and began reaching out to larger companies and fewer dot-coms," said Ord. "It has been a radical change, but now we're adjusted to it." Ord says his biggest hurdle is e-mail overload. If people get too much e-mail, they might read less of it.

Market tracker Jupiter Media Metrix Inc. says that by 2006, consumers will average 930 "online impressions" - the number of times a page is viewed - a day. That's more than double today's average. Others say a bigger issue is when your target audience becomes too used to a particular type of ad. People could start to ignore them, making the ads less and less effective.