While permission-based e-mail marketing has matured significantly over the last year, industry pundits agree it is still experiencing some growing pains.

Some things haven’t changed. The benefits still include the fact that it’s cheaper – a fraction of the cost of direct mail; it’s measurable; and it’s still being credited with response rates anywhere from 2% to 20% – high above the industry direct mail norm.

Perhaps, the biggest change by far, according to most experts, was the evolution of e-mail away from being an isolated tactic to becoming a component of integrated marketing campaigns, and budgets. Rather than competing with direct mail budgets, e-mail is now working in concert with direct mail.

‘A year ago, companies, clients, agencies had separate online departments – their Internet or e-mail purse and online team. Today, that’s all changed,’ says Roman Bodnarchuk, president or Toronto-based N5R.com. ‘Now, agencies are putting the digital guys with the relationship marketing guys with the direct mail guys. That’s happening with clients too. This integration stuff that we’ve all heard about is actually starting to happen.’

As far as budgets go, clients definitely have money set aside for Web sites, he adds, and most of the Fortune 1000 companies have a budget for e-mail marketing at this point. It may not be representative of the overall industry just yet, but it’s come a long way given that 12 months ago you would have been hard-pressed to find it anywhere in the budget, says Bodnarchuk.

‘It has become a component of every campaign,’ agrees Andrew White, president of Toronto’s Strategy9, part of the In2itive Group of Companies. ‘And when it’s not part of a program initially, we push to include it. Once they get a taste of redemption from e-mail, they are jumping on the bandwagon.’

The process usually begins with clients slowly beginning to collect information and e-mail addresses: they know they should be using e-mail, says White, but it usually takes them between one and six months to start getting comfortable with the idea that an e-mail can be as important and as read as a newspaper ad or direct mail.

‘E-mail finally has a foothold,’ says White. ‘And we’re just finding out how e-mail can boost traditional direct mail – we’ve only been tracking that for a month or two, but so far the results are encouraging.’

Elizabeth Mast, VP marketing and sales for Connectus, Toronto, says using multiple channels including TV, print, online and radio is one of the reasons Canadian Tire’s Hey Big Spender campaigns did so well. The campaign used e-mail as an acquisition vehicle, amassing 300,000 new registrations – one of the most successful acquisition campaigns she has ever seen. The Marketing Store created the campaign, and Connectus provided the e-mail application.

In November, Toronto-based GlobeInteractive launched Globeinvestorgold.com for engaged globeinteractive.com users and people who are interested in their own financial tracking and monitoring. The launch was supported by print, TV, radio, online and direct mail.

According to Sandy Salem, VP marketing, GlobeInteractive, the goal of the integrated campaign was that targets were exposed to some of the ads in different areas. An acquisition e-mail component urged users to sign up for the site for free for 30 days, while a four-part up-sell e-mail campaign subsequently encouraged them to subscribe permanently to the service for $9.95/month or $99 per year.

‘We delivered over 600,000 acquisition e-mails in the first couple months to opt-in users of our Bell GlobeMedia Web properties and some external list names. We had a 3% click-through rate to globeinvestorgold.com, which we were pleased with,’ says Salem, adding that the conversion rates are proprietary.

Even after the 30 days, she says, if recipients had not subscribed, globeinteractive would continue ‘win-back e-mail’ to encourage them to sign up. In that sense, the campaign is still ongoing, she adds.

‘We’ve grown in our expertise on the knowledge of e-mail marketing – what we should say to people and what people respond to,’ says Salem, adding that the company as a whole deploys on average over one million e-mails for all of its properties – a number that has doubled in the last six months.

‘Our success has really been around the targeting, and then providing relevant content to the user. And I think that’s an interest right across the board – but there’s a lot of learning yet to go on.’

One of the major growing pains for permission-based e-mail marketing, however, remains the lack of testing. But the ‘test, test, test’ advice heard so often in the e-mail marketing annals may have finally started to sink in.

‘That’s one of the trends that we’re finally starting to see,’ says Keith Dundas, VP marketing at Calgary-based RareMethod Capital. ‘We’ve been pushing for it a long time. Regular direct mail has built in a requirement for testing because of the fact that it’s so expensive – and incrementally expensive. With diminishing costs per unit, e-mail becomes haphazard – pressures to get results fast negate the testing, and companies end up sending it out raw and seeing how it does,’ he says. ‘Testing is paramount.’

The neat thing about this medium, he adds, is that you can test to increase efficiency and it doesn’t have to be difficult or costly: Try one phrase in e-mail A and another in e-mail B – and see what works; combine your results; and put the best foot forward. One of his clients started last year with one big giant list. They initially split it into two groups by learning a little more about each one using a combination of demographic info and behavioral data. They ended up with nine or 10 segments within a 10-month period.

‘What that basically tells you is that they now know a lot more about the way that people in those individual groups behaved. And they are actually able to send fewer messages than they did before and get higher response because they are only sending things that are relatively certain to be of interest to that group,’ says Dundas.

‘Most traditional direct marketers are constantly testing – and the smart ones are saying, ‘I’m testing lists, so why don’t I test e-mail lists?’ says Stany Bergeron, director of e-mail, for Toronto-based 24/7 Media (Canada). Budgets may have something to do with it, she says, adding that when companies start toying and testing e-mail initially, their budgets are quite small – so they tend to start with what they think is going to work.

‘People are doing less testing in e-mail and here’s why. In the physical direct mail world you can buy lists, but it’ll cost you. On the e-mail side, lists are inexpensive but tiny. So companies are saying, ‘let’s just blast the whole list.’ It’s because the quantity of e-mail addresses just doesn’t exist,’ says N5R.com’s Bodnarchuk.

‘That will change in the next few years. The e-mail lists will become massive and you’ll see a ton more testing.’