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HOW TO: Calculate the cost of an email campaign

Since the advent of email marketing in the mid-1990s, companies have embraced the misconception that email is virtually "free" as a marketing medium. This false impression often leads to over-communication, which, in turn, triggers diminished response rates, spam complaints, and unsubscribes. Even marketers who are sensitive to email recklessness sometimes face internal pressures, such as of year revenue numbers, to send "one last blast to the entire database" with the justification that "it doesn't cost us anything."

So what is the true cost of an email campaign?
To understand true cost, you need to first understand your marketing database a little better. The names within it are not all equally engaged, and your actions affect this level of engagement.

Net New Names
At one end of the spectrum are the names entering your database. As a marketing team, you work hard to populate your database -- attending shows and events, putting on webinars, publishing research, and investing in paid and natural search. As these efforts succeed, new names will enter your marketing database. By understanding the investment it takes to create these marketing programs, and then dividing that total cost by the number of net new names in your database, you can calculate a Cost per Net New Name. For the sake of this discussion, let's assume that cost is $10.