Quarterly Benchmark Study

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Quarterly Email Benchmark Study

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Q1 2013 Quarterly Benchmark Study

Table of Contents

Q1 2013 Executive summary ...3

A spotlight on: e-receipts ...4

Basic e-receipt features ...4

E-receipt performance compared to bulk-email ...5

Basic e-receipts compared to enhanced e-receipts ...5

E-receipts and CAN-SPAM rules ...7

Final considerations ...7

Q1 2013 benchmarks ...8

Year-over-year volume comparison ...8

Volume variance YOY Q1 2013 versus Q1 2012 ...8

Volume variance quarter-to-quarter ...8

Performance analysis ...9

All Industry ...9

All Industry quarter-to-quarter ...9

Business Products and Services ...10

Catalogers ...11

Consumer Products and Services ...11

Media and Entertainment ...12

Multi-Channel Retailers ...12

Publishers...13

Travel ...14

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Q1 2013 Quarterly Benchmark Study

Q1 2013 Executive summary

The following report details the overall email marketing trends for the first quarter of 2013 as well as the key performance indicators (KPIs) that shaped the success of Experian Marketing Services clients’ email programs over the past two years. Email volume rose by 11.6% in Q1 2013 compared to Q1 2012.

• Unique open rates were up year-over-year by 9.7% • Unique click rates matched those seen in Q1 2012 • Revenue per email held steady year-over-year at $0.12 This month in the spotlight on section we look at e-receipts:

• E-receipts provide an opportunity to further engage customers with your brand and extend the relationship.

• Early trends for e-receipts show higher open rates and revenue per email than bulk promotional mailings.

• E-receipts with up-sell and cross-sell features have the highest click and transaction rates.

• When designing e-receipts, it is imperative to follow current CAN-SPAM regulations pertaining to transactional emails.

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Q1 2013 Quarterly Benchmark Study

A spotlight on: e-receipts

In 2012, we noticed the start of a new trend in transaction based emails: the offering of e-receipts. An electronic receipt (e-receipt) is an alternative to the traditional paper receipts that customers have traditionally been given at the point of sale (POS). As consumers become more environmentally conscious, more digitally savvy and more mobile, the e-receipt has gained in popularity. To identify early trends in this growing practice, Experian Marketing Services’ e-receipt study looked at twelve (12) brands that regularly deployed e-receipt emails in 2012.

Basic e-receipt features

A basic e-receipt is simply a digital version of a paper receipt. Transaction details and the brand name are included, as well as contact information for returns and customer questions. Brand name Store details Bar code Purchase details Relevant policies

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Q1 2013 Quarterly Benchmark Study

E-receipt performance compared to bulk-email

• E-receipts have higher unique open rates than bulk mailings, perhaps because they are triggered at the request of the customer

• Unique click rates are lower for e-receipts, as there are likely to be fewer calls-to-action or links to click on e-receipts.

• Higher bounce rates for e-receipts may be due to the differences in quality of addresses provided at point of sale. Email addresses collected at point of sale can often be inaccurate due to manual entry or inaccurate information provided by customers.

• In spite of their lower click rates, e-receipts demonstrate good potential to generate repeat purchases, as transaction rates were slightly higher than those for bulk mailings. This initial study showed revenue per e-mail of $0.13 for e-receipts compared to $0.09 for bulk mailings.

Basic e-receipts compared to enhanced e-receipts

E-receipts can be enhanced to go beyond ‘basic receipts’ by providing up-sell and cross-sell opportunities as part of the e-receipt layout. These enhancements may include: • Website and shop online links

• Colorful layouts and sections for promotional images • Links to related brands

• Links to social media sites 33.7% 16.2% 2.9% 0.6% 0.9% 4.5% 0.07%

E-receipts Bulk e-mail

Unique opens Unique clicks Transactions Bounces

0.06%

E-receipts have higher open rates but lower click rates than bulk emails

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Q1 2013 Quarterly Benchmark Study

Quick tip

Many of the enhanced e-receipts we studied included a navigation bar, which is a great way to increase clicks. When including a navigation bar, however, be careful to not overwhelm the top of the message with marketing messaging, as doing so runs the risk of changing the status of the e-receipt from a “transactional” to a “commercial” message. Commercial messages are subject to the CAN-SPAM law’s identification and opt-out compliance requirements. E-receipts and CAN-SPAM rules

The Experian Marketing Services white paper “Point of sale email – Managing compliance, privacy and deliverability with in-store email acquisition”, from September 2012, has specific recommendations for e-receipts:

“One popular technique among retailers is to ask shoppers if they would like a receipt emailed to them. It is important to note that an agreement to receive an e-receipt should not be necessarily interpreted as consent to be added to a commercial email list unless this intent is adequately communicated to the consumer and they consent. It is always a best practice to reference their consent to marketing emails at the same time as the e-receipt request.

Alternatively, there is an opportunity to request a commercial email opt-in within the e-receipt email. In these circumstances, it is recommended to use a true confirmation link request as opposed to a welcome email with an opt-out link, since the opt-out method may, in some cases, not satisfy CAN-SPAM Act compliance and may lead to deliverability risks with emailing “spam traps”. Final considerations

These results present early trends seen in the performance of e-receipts. • E-receipts provide an opportunity to further engage customers whom are

already interested in your brand by presenting relevant up-sell and cross-sell information and links.

• E-receipts with up-sell and cross-sell features have demonstrated higher click and transaction rates than e-receipts with basic transaction details only. • Examples of up-sell and cross-sell features that worked well in generating

engagement include: colored layouts, images, top navigation bars, social media links, website/shop online links and clearly defined and creative content sections. • When designing e-receipts it is imperative to follow the current CAN-SPAM

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Q1 2013 Quarterly Benchmark Study

Q1 2013 benchmarks

Year-over-year volume comparison

The following benchmarks report on the year-over-year (YOY) trends for the first quarter of 2013 compared to the first quarter of 2012. This quarter, email volume rose by 11.6% compared to Q1 2012.

Volume variance YOY Q1 2013 versus Q1 2012

• Multi-Channel Retailers had the highest gain in volume as seventy percent (70%) of brands increased mailings in Q1 2013.

• While cruise lines and hotels had increases in volume, the results for the travel industry overall were actually mixed as only fifty percent (50%) of brands had volume increases in Q1 2013.

Volume variance quarter-to-quarter

• A first quarter drop in volume is expected after the high volumes during holiday season. -7.8% 2.6% -11.6% 3.8% 20.2% 1.5% 13.6% 11.6% -15% -10% -5% 0% 5% 10% 15% 20% 25% All industry Travel Publishers Multi-channel Retailers Media and Entertainment Consumer Products and Services Catalogers Business Products and Services -1% -20% -15% -10% -5% 0% 5% All industry Travel Publishers Multi-channel Retailers Media and Entertainment Consumer Products and Services Catalogers Business Products and Services -35% -30% -25% 0% -32% -30% -15% -14% -14% -18% -15% -24% -12% -2% -6% 1% -15% -20% Q1 ‘12 to Q4 ’11 Q1 ‘13 to Q4 ’12

Volume variance by industry Q1 to Q1 (2013 vs 2012)

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Q1 2013 Quarterly Benchmark Study

Performance analysis

In order to enhance our understanding of what’s happening by industry, we have created views that look at all metrics and compare Q1 year-over-year for 2013 versus 2012. The following is a legend for each of these views:

All Industry

• In Q1 2013 total and unique open rates were above the Q1 2012 rates, while click rates matched those seen in 2012.

• Total and unique click rates rose by just over eight percent (8%) in Q1 2013 compared to Q4 2012.

• Although overall transaction rates declined in Q1 2013, fifty-one percent (51%) of brands had statistically significant increases in transaction rates this quarter compared to Q1 2012.

• Revenue per email held steady year-over-year at $0.12.

• Looking at the performance of Q1 2013 compared to Q4 2012, we see that open and click rates rose, but transaction rates and revenue per email fell as expected when compared to the holiday season.

All Industry quarter-to-quarter

Variables Q1: 2012 Q1: 2013

Year-over-year variance

Total open rate 22.2% 24.4% Unique open rate 15.5% 17.0% Click-to-open 16.3% 14.7% Total click rate 3.8% 3.9% Unique click rate 2.7% 2.7% Transaction-to-click 5.4% 4.5% Transacation rate 0.11% 0.09% Revenue per email $0.12 $0.12 Average order $159.93 $182.92 Bounce rate 3.0% 1.9% Unsubscribe rate 0.16% 0.14% -30% 9.7% 9.7% -0.8% 14.4% -36.7% -15.8% -9.6% 1.6% 3.0% -15.6% -13.0% -25% -20% -15% -10% -5% 0% 5% 10% 15% 20% Industry Alll Industry -40% -35%

Positive change Minimal change Negative change Q1 All Industry Year-Over-Year Performance Analysis

Quarter-to-quarter variance

Total open rate 23.6% 24.4% Unique open rate 16.3% 17.0% Click-to-open 14.4% 14.7% Total click rate 3.5% 3.9% Unique click rate 2.5% 2.7% Transaction-to-click 5.3% 4.5% Transacation rate 0.11% 0.09% Revenue per email $0.14 $0.12 Average order $180.25 $182.92 Bounce rate 2.3% 1.9% Unsubscribe rate 0.13% 0.14% -15% 3.4% 4.5% -17.1% 1.5% -15.5% 4.7% 2.6% 8.6% 8.0% -15.0% -17.4% -10% -5% 0% 5% 10% Industry Alll Industry -20% Variables Q1: 2012 Q1: 2013 Year-over-year variance

Positive change Minimal change Negative change

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Q1 2013 Quarterly Benchmark Study

Business Products and Services

• While open, click and transaction rates were down year-over-year for Business Products and Services, it should be noted that Q1 2012 had the highest rates of any of the past 5 quarters.

• Comparing Business Products and Services for Q1 2013 to Q4 2012, we see that open and transaction rates are steady, and click rates and revenue per email are higher in Q1 than in Q4.

Total open rate 30.1% 26.2% Unique open rate 17.3% 15.7% Click-to-open 14.2% 12.3% Total click rate 5.0% 3.3% Unique click rate 3.0% 2.2% Transaction-to-click 10.7% 7.8% Transacation rate 0.22% 0.16% Revenue per email $0.43 $0.37 Average order $237.49 $267.04 Bounce rate 3.9% 3.7% Unsubscribe rate 0.20% 0.20% -12.8% -9.2% -14.3% 12.4% -5.5% -1.2% -13.5% -32.7% -24.2% -26.8% -26.6% 0% 5% 10% Industry Alll Industry

-20% -15% -10% -5%

-35% -30% -25% 15%

Q1 Business Products and Servies Year-Over-Year Perforamnce Analysis

Quarter-to-quarter variance

Total open rate 26.4% 26.2% Unique open rate 15.4% 15.7% Click-to-open 12.0% 12.3% Total click rate 3.1% 3.3% Unique click rate 2.0% 2.2% Transaction-to-click 9.1% 7.8% Transacation rate 0.16% 0.16% Revenue per email $0.30 $0.37 Average order $300.24 $267.04 Bounce rate 3.3% 3.7% Unsubscribe rate 0.17% 0.20% -0.7% 1.9% 23.6% -11.1% 11.0% 15.6% 2.8% 8.2% 10.4% -13.6% 2.2% 25% Industry Alll Industry

-5% 10% 15% 20%

-15% -10% -5% -0%

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Q1 2013 Quarterly Benchmark Study

Catalogers

• Open and transaction rates rose for catalogers this quarter. Seventy-seven percent (77%) of brands saw statistically significant increases in unique opens. • While click rates were down year-over-year, they were the highest they have been

since Q1 2012.

Consumer Products and Services

• Consumer Products and Services had a strong quarter, with almost all metrics matching or ahead of Q1 2012.

• Fifty-nine percent (59%) of Consumer Products and Services brands had statistically significant increases in unique clicks in Q1 2013, while fifty-three percent (53%) had statistically significant increases in unique opens.

Year-to-year variance

Total open rate 13.9% 14.5% Unique open rate 11.0% 11.6% Click-to-open 15.4% 13.0% Total click rate 2.5% 2.3% Unique click rate 1.9% 1.6% Transaction-to-click 7.0% 7.8% Transacation rate 0.11% 0.12% Revenue per email $0.09 $0.10 Average order $119.54 $112.76 Bounce rate 1.6% 0.3% Unsubscribe rate 0.25% 0.08% 4.2% 5.3% 4.9% -5.7% -82.8% -67.0% -15.3% -9.5% -17.4% 11.9% 12.5% Industry Alll Industry

-50%

-90% -80% -70% -60% -40% -30% -20% -10% 0% 10%20%

Q1 Catalogers Year-Over-Year Performance Analysis

Total open rate 21.4% 25.9% Unique open rate 15.1% 17.3% Click-to-open 15.6% 13.9% Total click rate 3.5% 3.8% Unique click rate 2.5% 2.8% Transaction-to-click 8.4% 8.1% Transacation rate 0.14% 0.13% Revenue per email $0.10 $0.12 Average order $104.47 $106.31 Bounce rate 4.1% 2.8% Unsubscribe rate 0.22% 0.18% 21.1% 14.6% 14.9% 1.8% -31.4% -17.9% -10.9% 9.9% 12.9% -2.8% -3.2% Industry Alll Industry

5%

-35% -25% -15% -5% 15% 25%

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Q1 2013 Quarterly Benchmark Study

Media and Entertainment

• Electronic game brands had lower year-over-year click rates.

• Over sixty-three percent (63%) of Media and Entertainment brands had statistically significant increases in open rates in Q1 2013.

Multi-Channel Retailers

• Even with an increase in volume, open and click rates rose year-over-year for Multi-Channel Retailers.

• While the overall Q1 2013 transaction rate has decreased compared to Q1 2012, fifty-three percent (53%) of brands actually had statistically significant increases in transaction rates for the quarter.

Total open rate 21.0% 22.4% Unique open rate 15.1% 16.5% Click-to-open 15.6% 14.5% Total click rate 3.4% 3.6% Unique click rate 2.5% 2.3% 4.8% 2.8% 0.1% 0.1% Bounce rate Unsubscribe rate 7.0% 9.6% -7.4% 5.2% -8.5% -43% -27.6% Industry Alll Industry

-45% -40% -35% -30% -25% -20% -15% -10% -5% 0% 5% 10%

Q1 Media and Entertainment Year-Over-Year Performance Analysis

Total open rate 18.9% 21.5% Unique open rate 14.3% 16.3% Click-to-open 17.3% 15.6% Total click rate 3.6% 3.8% Unique click rate 2.7% 2.8% Transaction-to-click 3.3% 2.5% Transacation rate 0.08% 0.06% Revenue per email $0.11 $0.10 Average order $181.20 $190.86 Bounce rate 1.4% 0.9% Unsubscribe rate 0.13% 0.12% 13.5% -9.0% 5.3% -36.8% -5.3% -9.5% 4.9% -23.5% Industry Alll Industry

-20%

-40% -35% -30% -25% -15% -10% -5% 0% 5% 10%15% 5.6%

13.5%

-29.1%

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Q1 2013 Quarterly Benchmark Study

Publishers

• Open rates increased while click rates had only a modest decline in Q1 2013 compared to Q1 2012 for Publishers.

Trend to Watch: Gift Ideas

Including ‘gift ideas’ in email subject lines is most popular during the Christmas season, however we also see an increase in the number of these campaigns sent for Mother’s Day and Father’s Day

• For Father’s Day, campaigns with ‘gift ideas’ in the subject line had eighteen percent (18%) higher unique click rates and forty percent (40%) higher transaction rates than other Father’s Day emails

• During the Christmas season, ‘gift idea’ email campaigns for beauty, flowers, and gift brands had over twenty-four percent (24%) higher transaction rates and revenue per email than other holiday mailings.

Total open rate 24.1% 26.1% Unique open rate 16.5% 18.1% Click-to-open 18.0% 16.1% Total click rate 4.4% 4.3% Unique click rate 3.0% 2.9% 4.8% 2.2% 0.09% 0.1% Bounce rate Unsubscribe rate 8.1% -18.0% -10.7% -4.1% Industry Alll Industry

Positive change Minimal change Negative change -35% -55% -50% -45% -40% -30% -25% -5% 0% 5% 10%15% -4.2% 9.9% -20% -15% -10% -54.0%

Q1 Publishers Year-Over-Year Performance Analysis

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Q1 2013 Quarterly Benchmark Study

Travel

• Airlines and hotels led the way to a strong quarter for Travel. Statistically significant increases were seen by sixty-six percent (66%) of brands for unique opens and fifty-nine percent (59%) of brands for unique clicks.

Metrics Definitions

Total opens: All opens recorded for the mailing including multiple opens by the same subscriber. Total open rates are (total opens/received)

Unique opens: The number of unique subscribers that have opened an HTML-formatted message. Unique open rates are (unique opens/received)

Total clicks: Every click on a tracked link, including multiple clicks by a given subscriber. Total click rates are (total clicks/received)

Unique clicks: The number of unique subscribers who have clicked on any link. Unique click rates are (unique clicks/received)

Click-to-open rates: Unique clicks as a percentage of unique opens (unique clicks/ unique opens)

Transaction rates: Overall percentage of transactions as related to delivered messages [transactions/(sent - bounced)]. This metric only includes data for clients who have implemented Experian Marketing Services’ Track to Purchase functionality Transaction-to-click rates as: Percentage of transactions compared to the number of unique clicks (transactions/unique clicks). This metric only includes data for clients who have implemented Experian Marketing Services’ Track to Purchase functionality

Total open rate 30.9% 34.1% Unique open rate 19.7% 21.2% Click-to-open 16.1% 15.5% Total click rate 4.2% 4.6% Unique click rate 2.9% 3.1% 3.1% 1.5% 0.18% 0.1% Bounce rate Unsubscribe rate 10.5% -28.9% -4.0% Industry Alll Industry

Positive change Minimal change Negative change -35% -55% -50% -45% -40% -30% -25% -5% 0% 5% 10%15% 7.4% -20% -15% -10% -49.9% 10.6% 6.2%

Q1 Travel Year-Over-Year Performance Analysis

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Q1 2013 Quarterly Benchmark Study

Average order value: Average total amount for each transaction. This metric only includes data for clients who have implemented Experian Marketing Services’ Track to Purchase functionality

Revenue per email delivered: Average amount earned for each delivered email [total order/(sent - bounced)]

Bounce rates: The percentage of subscribers that did not receive a mailing because their email addresses hard bounced (bounce/sent)

Unsubscribe rates: This reflects the total number of subscribers lost as a result of users unsubscribing from the mailing [unique unsubscribers/(sent - bounced)]

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