Are mailing lists worth the risk?

It’s a predicament that countless business owners have found themselves in. You’ve created a killer offer that’s sure to improve the bottom line, and now all you have to do is market it to the masses.

And given that email marketing is one of the cheapest forms of marketing out there, it’s an increasingly popular option for promoting an offer. But is buying an email mailing list a quick and effective way to build your database of potential customers?

It’s easy to see the appeal – buying a mailing list is easy and cost-effective. For as little as a few hundred dollars, you can pick up a list that gives you thousands of email addresses of potential new customers.

But there is a caveat. Annoy those potential customers – or fall foul of Australia’s strict spam laws – and your mailing list could cost you your reputation and thousands of dollars in fines.

Robert Steers, creative director of Sydney marketing agency Creative Development, has a number of clients who rely on email and web-based marketing to build their business. He says that generally speaking, buying a mailing list can work for a business if you have the right product, the right offer and you can get hold of a list for the right target market.

“If you do decide to buy a list, which can work well for some people, remember that the best marketing is targeted, timely and personalised.”

He also says to make sure your offer is relevant to your list, that the list is purchased from a reputable source that follows double opt-in guidelines and that people can unsubscribe from your list with the click of a button.

“Track how many people are opening and responding to the email, so you can measure the response rate of your list and offer. As a guide, you should be getting at least 96% delivery, 15% opening and 3% click rate. If you don’t, then I would suggest that the email list may be worthless, or your offer was poorly put together,” Steers says.

The upside

Buying a mailing list worked perfectly for a well known Australian fashion retailer. While the company did not wish to be named, its marketing manager spoke freely about the benefits of buying a mailing list.

“We purchased our first mailing list four years ago and couldn’t believe the results we were getting. The number of enquiries via our website tripled, foot traffic into our stores increased and, ultimately, sales increased. The trick is to buy a targeted list,” she says. 

Melbourne’s Media M Group is a list broking company that is approached by SMEs every day looking for a list of email addresses for its next marketing campaign. The company’s Kerryn Marlow says businesses need to make sure they’re using a spam-compliant list.

 “It’s perfectly legal if everyone on the list has opted in, so you need to make sure you get that guarantee from whoever you’re buying the list from. These list sellers will never give their data away and will send the email on your behalf, which is a far better way to do things.

So what does it cost to get your hands on your own list? Prices vary considerably.

The List Bank has been operating in Australia for 12 years and has more than 400 lists on offer. According to its website, it offers free, impartial advice on list selection and segmentation to help clients get the best results from their campaigns. It offers a composite package made up of over 30 of its best lists available for 11 cents a name ($110 per 1,000).

But Steers says lists can cost far more. “The better email lists with better demographics and double opt-in confirmation can have minimum spends of $1,000 for 5,000 addresses, plus a $200 set up charge. There are cheaper, trashier lists but I would seriously question their value.”

But a far more targeted list can seriously eat into your marketing budget, according to Bernie Johnson of Sydney website design agency Adrenalin Media.

“If you’re buying a qualified list of targeted contacts and you have an extremely compelling offer, buying a list could be worthwhile, but I’ve seen that cost up to $40,000 for 100,000 targeted email addresses.”

The risk factor

But bear in mind that there is always a small element of risk when buying a list, no matter what the price.

Craig Reardon, founder of web marketing company The E Team says businesses need to exercise caution when considering buying a mailing list.

“I wonder how legitimate the opt-ins are on a mailing list. People are very cautious about giving away their email addresses these days. I’d be grilling the person selling me the list to make sure the names on the list actually want to be there.”

Steers agrees. “Anything that can be deemed unsolicited contact can cause problems for anyone’s business. Even if you don’t cross a legal line, your IP address, server and domain can be registered as spam and you may struggle to send any more email marketing in the future.”

He recommends that a business asks for a sample of the list before committing to a purchase.

“Any list broker should be able to give you some idea of what you’re buying. Any list that you buy should also have a full break down of how the list was made, where the users came from and where and how they gave their approval to receive email messages. Most brokers offer some sort of guarantee that the emails at least won’t bounce. If you reach a certain number of returns, they should give you your money back.”

Media M Group’s Marlow says there is a lot of misinformation among the business community about buying mailing lists, with a particularly low awareness of the Spam Act.

“Many businesses don’t realise, but sending an unsolicited email with a commercial message is actually illegal. The real worry is that when I explain this to a lot of companies they tell me they’re willing to take the risk.”

Lisa Renneisen is the marketing manager at Vision 6, which can help a business create and measure an email marketing campaign. She recommends that companies steer clear of buying a mailing list.

“At the end of the day if people haven’t opted in to receive your email of their own accord, I wouldn’t advise a business contacts them. If you start getting emails from a company you’ve never heard of then you’re instantly turned off by that company and you’re hurting your email open rates.”

Harvesting your own list, whereby a company trawls through listings like the Yellow pages building their own list, is also a bad idea, she says.

“It’s a far better option to ask people to throw a business card into a fish bowl on the corner of your counter to go into a monthly draw if you’re looking to collect email addresses.”

The business owner

Linda Quinton of Adelaide-based retail and online store Natures Cradle sends out thousands of emails a month, but has never purchased a mailing list.

“We’ve chosen not to purchase a list, but rather build our own list by collecting customer details and contacting them on a regular basis.”

Of the 3,000-odd emails she sends each time, about 1,000 are reading the email, about 100 will click through and roughly five recipients opt-out.

“As a business owner I also receive lots of emails and I can tell when they’ve got my address through a list because the email isn’t personalised and often not particularly relevant. I never respond to those emails.”

Reardon reminds people to make sure they consider what it would be like to be on the receiving end of their email.

“Always remember that it can damage your brand if you’re sending emails to someone that doesn’t want to be receiving them.”

TIPS FOR BUYING MAILING LISTS:

• Make sure you buy from a reputable supplier
• Ask lots of questions about how the list was put together
• Make sure the list is spam compliant
• Use a third party to send the email marketing campaign on your behalf
• Always include an opt-out clause
• Track your open and click-through rates
• Make sure your understand your obligations under the Spam Act