Buying or Renting Email Lists, which is Better?

So you’re eager to use email marketing because of its obvious benefits, but you DON’T have an email list…

If that describes you, don’t feel bad, for you are far from alone. In fact, we hear from people with this problem every week.

Regrettably, the world of email marketing lists can be a very confusing place. On the one side, you have the legitimate, super-pristine — but usually somewhat expensive — opt-in email list brokers. And the key word here is “legitimate,” for these brokers offer genuine opt-in email addresses.

Moreover, they typically rent these email address on a pay-per-use basis; they seldom, if ever, “sell” the email addresses. That means that you’re not sending out the email yourself. Instead, you’ll send your email’s HTML file (and possibly the related images) to the list broker, and they’ll handle the mailing for you.

These rentals can be pricey, though. For consumer email lists, prices run about $100 to $150 CPM (that’s “cost per mille,” which is fancy-talk for “cost per thousand”). So, that’s 10 to 15 cents apiece for a one-time rental of the email address. And if you have very specific “selects,” then the price can go up quickly.

It’s cheaper than postage, for sure, but quite possibly not very cost-effective, either. More on that in a moment…

Business-to-business lists will run even higher, usually starting at $250 CPM and running as high as $1,000 CPM for a very well targeted list. And yes, $1,000 CPM means that you’re paying a DOLLAR for each email address, and remember, that’s for a ONE-TIME use.

Pricey!

At the other end of the spectrum, you have what I call the real “fly-by-nighters.” These are the people who purport to have 100 million or 200 million “opt in” email addresses, and they’ll send out crazy amounts of email for you (like 10 million emails) for a ridiculously small amount of money (like $500).

This is just crazy talk!

These companies must simply work on the assumption that they will always find new customers willing to gamble, because I can’t see how they ever get any repeat business. In the handful of cases where I know for a fact what happened when someone used this kind of service, I’ll tell you how many responses were received:

ZERO.

I guess these vendors just rely on people saying to themselves, “Wow, 10 MILLION emails going out for my business for only FIVE HUNDRED BUCKS! I mean, that’s only a NICKEL to send out a THOUSAND emails! How could this NOT work?”

And sure, when you compare a nickel for a thousand emails to, say, a hundred bucks  for a thousand emails (which is TWO THOUSAND TIMES the cost), it’s easy to further calculate that even if the response rate is only 1/2000^th as good, you’re still coming out ahead.

But ZERO is still ZERO.

So, the next time a vendor offers you 10 million emails for $500, think very hard about whether you’re really willing to flush five hundred bucks down the toilet. Because that is precisely what you’ll be doing…

And that leads me to the wild, untamed world of “buying” email addresses.

If your goal is to own and market to a legitimate opt-in email list (that is, the kind of email list that has a shot at garnering response), then buying an email list is not for you. The reason for that is simple…you really can’t “buy” someone’s permission. They have to give it to you.

Moreover, permission is only half the battle when it comes to email marketing. Relevance is, in my opinion, just as much a factor in email marketing success, because if you’re not relevant to the recipient, who cares about permission?

If I sign up for an email newsletter to ABC Company because I love their widgets, I’m going to be more than a little confused when ABC Company starts to send me emails about the dongle manufacturer they just acquired.

I like widgets, not dongles — remember, ABC?

In fact — and this applies more to the business-to-business world than the consumer world — I’d even go so far as to say that relevance is even more important than permission.

I’ve seen a handful of business-to-business companies use non-permission email lists with tremendous success, because the content of the emails was of great interest to the majority of people on the list.

Were there unsubscribes? Sure. But were there also email replies saying, “Die, spammer, die!” Nope — not a one! In fact, I’ve seen open and click through rates for these efforts that would make some true opt-in email marketers more than a little jealous.

That’s not to say that I endorse this as a business practice. I don’t. BUT, it does show that relevance may trump permission when it comes to email marketing. And it’s pretty darn hard to buy a list outright and be anything close to relevant to all of the recipients.

So, getting back to the reasons why you should never “buy” a list…

When you “buy” a list, you’re actually taking ownership of the file. In theory, that sounds great because you are free to do with the list whatever you wish. In particular, you can send as many emails to the list as you like without paying any more money (deployment costs aside).

The problem with buying such a list, though, is that the quality is most likely nothing short of horrible. A good percentage of the email addresses are likely to be stale and undeliverable. Moreover, it’s highly probable that the list was compiled without permission from the people actually on the list.

There are numerous ways to compile such lists. You can simply harvest them off the Web and aggregate them into a file. You could set up a bunch of various Web sites with different free offers that require an email address to participate. Think about that method, though. Do you really think that anyone would sign up for anything like that if they understood that their email address was going to be sold countless times?

Now, take it the next step further. What happens when that person starts to get bombarded with promotional email that is simply not wanted? Either he will tune out any message that is from someone he doesn’t know, or he will simply abandon the email address and start a new email account elsewhere.

Either way, the result is the same: Your email is not going to be well received, assuming it’s received at all.

And of course, once you have purchased such a list, your battle is not yet even half over, because you still have to find a way to send the emails out.

Perhaps you intend to send them using your own email server, but are you sure that you’re equipped to process the volume of email that you’re intending?

If the list is small (say, under 100,000 records), maybe you could do this. Maybe not. But you have to be aware of the fact that sending a high quantity of promotional email out using your own email server could very well put your ability to send regular business email at risk.

If your IP address ends up on one or more of the many blacklists out there, you could have a real problem getting your regular business email delivered. That’s not a risk I would suggest taking.

In addition, you will need to have a process to handle all of the hard bounces, soft bounces, out-of-office replies, verification messages, and unsubscribe requests. There’s a lot more to handling your email marketing than just hitting the “send” button.

And even if you do manage to get your emails deployed, odds are very good that your email will generate enough “this is spam” complaints to block your current and future emails at places such as AOL, Gmail, MSN/Hotmail, and Yahoo! If you have a consumer focus, the majority of the email addresses on your list are going to come from these service providers.

You can also pretty much forget about making deliveries to Comcast and other Internet service providers, as when they see someone trying to deliver thousands of emails to their customers at one time, they will terminate and reject the entire mailing.

This is all starting to sound like a bad idea, isn’t it? You’ll spend all that time and money, and when all is said and done, very few of your emails will actually be delivered, let alone opened and acted upon.

What about “whitelisting,” you might say?

Absolutely, you could go through the whitelisting process with AOL, Gmail, MSN/Hotmail, Yahoo, Comcast, etc., but it won’t matter if your email generates an inordinate number of bounces and spam complaints. And once the complaints start to roll in (and trust me, they will), your whitelist status will be terminated.

It’s really a shame, too, because I know that these lists are always priced so attractively that you think there’s no way you can lose!

I’ve seen one vendor who claims to have 300 million fully opted-in email addresses available (segmentable by just about every category you can think of), and their price to buy this data is only $400 for 1 million email addresses – and only $1,000 for 15 million!

Moreover, this vendor claims that they can send out up to 15 million emails for you for only $20, or they’ll even GIVE you the software necessary to do it yourself.

In other words, for just over $1,000, this vendor purports to be able to send out 15 million fully opted-in, segmented emails. That’s less than 7 cents per thousand emails – and you’ll ownthe list afterwards.

Well, let me tell you…

One day I saw a representative of this company offering 5,000 email addresses for free (he’s on LinkedIn), so I figured, “OK, let’s get a peek behind the curtain here, just to see what kind of email addresses they have.”

I got my user ID and password, and started looking around their Web site. I figured since we have done a lot of email marketing work for publishers, I’d use publishing-related SIC codes to narrow my search. Then I narrowed things down a little more using nearby states, adding new states until I got close to the 5,000 email mark.

So, using SIC codes 2721 and 2741, as well as the states AL, FL, GA, MS, NC and TN, I had a list of 4,917 records to download. I was very interested to see what kind of data I’d get — but the results were dismal, to say the least.

First off, of the 4,917 email addresses that I received, 1,483 of them were for “Arthur Frommer’s Budget Travel.” Is anyone else having a hard time believing that nearly 1,500 people from ONE company genuinely opted in to this list?

And let me tell you, mixed in with those email addresses were a huge number of foreign email addresses. I’m no geography major, but I don’t think Russia is in any part of the southeastern United States.

It became very clear to me that this list was harvested, which basically means that the email addresses were found on the Web. These are NOT opt-in email addresses.

Adding fuel to the fire is the fact that there were MANY email addresses in the list that started with admin@, advertise@, customerservice@, and webmaster@. These “role-based” email addresses may be valid, but they are certainly not opted in. In fact, there were 284 email addresses that started with “info@,” which is a clear giveaway that this is not an opt-in list.

One of the email addresses was actually “xxxx@xxxx.xx” (and that’s no typo).

Thankfully, I knew better than to even try to send email to this list. Others have not been so fortunate, though.

Here’s a comment posted to Ripoff Report from an unhappy customer of this exact company:

“The lists were not cleaned and opt in like he said the (sic) would be and were full of spam traps and complainers. I lost my mail servers and because it was down for 4 days I lost revenue. I even lost my website because of complaints to my host.”

Apparently this bad experience cost the customer the tidy sum of $1,999. Ouch!

So, the lesson to be learned here is, “DO NOT BUY EMAIL LISTS. EVER.”

And if you must rent, run your numbers carefully, and start with a credible email list broker!