Do you want a quick infusion of email addresses or a homegrown network of devoted consumers? You'll need to either buy or build an email list. Here are the pros and cons of each.
At the start of an email marketing campaign, you have several decisions to make – who the target audience is, how often you'll reach out to that audience and what service (if any) you plan to use, to name a few.
One of the most important aspects of your new email marketing effort, though, will be how you obtain your list of email addresses. Whether you use a list broker service to have your audience generated for you or rely on your brand's popularity to create your own list, it's important to know the pros and cons of both.
Why you need an email list in the first place
There are more than 4 billion email users in the world today. It's impossible to get your message to every one of those users, and even if you could, it wouldn't make much business sense. The best way to maximize your return on investment is to target exactly the consumer base you want your email marketing campaign to reach.
At its core, an email list is a curated file of email addresses that fit a profile. That profile, set by your business, is largely based on demographical data like age, gender, location and income level to pinpoint the customer you want to reach. Without such a targeted approach, your emails could get lost in the shuffle of a person's inbox or, worse, their junk folder.
While buying an email list is quicker than building your own, there are significant downsides to counteract the benefits.
The pros and cons of buying an email list
For most small businesses starting out, it makes a lot of sense to go to a list broker for their first email list. Without an established consumer base to draw upon, it's incredibly time-consuming to create your own list of verified email addresses.
Services like LeadsPlease and ListGIANT circumvent those issues by maintaining numerous email lists that they update regularly to weed out dormant or inaccurate addresses. After you give them a description of the type of consumer you want to reach, they will generate a custom list for a fee. The best services collect these lists as an opt-in service, which means the owners of these email addresses know they will receive promotional material as part of the company's list.
Conversely, there are lists that don't have permission from the email users. These mostly unscrupulous list methods include purchasing email lists from third parties for resale and gathering addresses through any of the endless "contests" advertised on the web. More advanced schemes involve email harvesting efforts that either rely on bots to scour the web for addresses or hire low-wage workers to do the same task manually. In each of these cases, the owners of those email addresses don't know they'll eventually receive promotional emails from your business, which could even violate data privacy laws applicable to your business.
Pros of buying an email list
When you purchase a list directly from a broker, the first thing you do is determine the demographical data points you want your marketing efforts to target. If your business caters to a specific clientele, you can tell the broker to only collect email addresses that match the profile within a certain radius around your business. Pinpointing who should get your message can be a major help in getting your brand out there.
Speedy collection: One of the worst aspects of creating your own email list is how long it takes to compile. By letting another company provide you with a list, the time it takes to get up and running is vastly reduced to minutes instead of weeks or months. By quickly starting your marketing effort, you can start earning money in a shorter time.
Though she ultimately believes constructing your own email list is the more beneficial method, Tory Gray, CEO and digital marketing strategist at The Gray Dot Company, acknowledged that purchasing a list "can help you make money in the short term."
"[Buying a list] can also give you access to a vast audience very quickly," she said. "So, if you want to make money fast, or you have a hot offer you want to show to your target audience, buying a list works well too."
Helps insert your brand into a new market: If you're looking to expand your business into a new area, it could be a long and hard task to get more emails in that new locale. A new address means a new demographic data set to pull from, so purchasing a list for that area could speed up the community's awareness of your business.
Good for generating a B2B email list: If your business caters its services or products to other businesses rather than to the average consumer, buying an email list can help you break through to potential clients.
Cons of buying an email list
Can be marked as spam: Most of the time, the people who receive emails from a purchased list did not opt in to receiving your specific messages. If you've ever received an unwanted letter in the mail or a spam email, you know that immediate feeling of not wanting to open the message at all.
"To me, as a consumer, it feels so invasive to receive unsolicited emails from a company I've never even heard of, let alone given my email address to," she said. "And when you're a small business owner, the first impression your business makes is crucial. Now that first impression is negative rather than neutral, and that can be a huge obstacle to overcome for any small business."
Given that many vendors sell lists with thousands of email addresses, the number of people instantly deleting your message or marking them as spam can skyrocket. As your messages get marked as spam, internet service providers and email providers like Gmail use their algorithms to ultimately mark your email domain as a vector for spam, causing future messages to immediately get filtered for most – if not all – users.
Not always accurate: When we examined various list broker services for review, we regularly found pledges that their lists were highly accurate, with estimates in the 90% range. While that's great, that isn't a 100% guarantee. Vendors can say they update their lists on a regular basis, but the list of active email addresses is in a state of constant flux.
After purchasing thousands of addresses from an email list provider, you want the open and click-through rates to be high. If 10% of the 10,000 email addresses you purchased were inaccurate, old or fake, that's 1,000 unsuccessful emails – without even including messages that were instantly sent to the spam folder or deleted.
Unclear how the list was created: When you build your business's own email list, you know exactly how those addresses were collected. The same can't be said when you purchase a list from a vendor. Though most list broker services claim to build their lists through legal sources, many providers entirely source or partially bolster their lists through illegal means. Improperly sourced email addresses can lead to more failed messages and high bounce rates, among other issues.
Daniel Cooper, managing director at Lolly Co, said finding a broker that has obeyed privacy laws and warned email address holders in advance of its intention to sell collected email addresses is a tall order for small business owners.
"[Unscrupulous list vendors] have either scraped the internet for email addresses or legally built a list, but without informing the subscribers they would sell their email," he said. "Then, when they sell the list of emails to you, it becomes an illegal data transfer of private information, as they did not seek permission from the subscriber at the point of subscription."
Limited number of uses: You may have purchased or rented an email list from a vendor that seems reputable, but you don't actually own the list. In fact, many vendors limit how often you can use an email list within a certain timeframe. Once that limit is up, any further use of the list can result in fees or other penalties to force you to generate and obtain a new list.
Potentially high cost: Nothing is free in business, and list broker services can be expensive. According to our past research on the industry, prices range from $35 for 1,000 consumer emails and $75 for the same number of business emails to $1,000 for 10,000 consumer emails and $1,200 for the same number of business emails. Some services even charge by list entry. When building your own list, you don't have to pay for anything other than incidental costs associated with running a website and maintaining an internet connection.
"Dulles Designs has purchased both email lists and direct mail marketing lists over the years, and we will never do either again," said Emilie Dulles, owner and lead designer at Dulles Designs. "We have bought physical ZIP code lists from the post office targeting exclusive islands and gated communities, which was slightly beneficial, yet very expensive and labor-intensive all in. The email list had been sold and resold so many times and 'over-marketed' to so relentlessly that the unsubscribe rate was ridiculously high and a waste of time and money."
The pros and cons of growing your own list
While purchasing an email list is faster than building your own from scratch, it's just one way that you can grow a consumer base as a small business owner. Whether through social media engagement, a specific call to action on a business website, or special promotions or contests, your business can build a reliable network of consumers who want to see what you send them.
By collecting your own email address list, you can independently verify the emails in your database. You can also be more creative with your messaging, since you no longer need to worry about appealing to a wider audience – these people already like what you offer.
Pros of building your own email list
Better understanding of your consumer base: As a small business owner, you need to know what resonates with your customers. By adding a "sign up for a newsletter" or "check this box to be alerted to future sales" box to your website, you will not only quickly build an email list, but also find out what makes people come back. When you create your own email list and track the links customers use to get to your products, you can zero in on what works and what doesn't with the people who are already interested in what you offer.
Established audience: If you give your consumers the ability to willfully join your email list, you will be more likely to have a high open rate and a low unsubscribe rate for your emails.
"A bought list puts you at a disadvantage," Gray said. "The audience doesn't know you, and many will ignore your emails. Moreover, you didn't build the list yourself, so you don't understand the audience, their needs and wants, their behaviors, among other things."
Email marketing campaigns are largely measured by how recipients interact with your message, so already having a somewhat "captive" audience for your offerings is instantly better than buying a list of unknowns when it comes to engagement.
Cheaper to put together: It costs significantly less to start your own email list than to purchase one. Running your business's website and contracting with an internet service provider are really the only costs that come with doing it yourself.
More likely to be legitimate addresses: Whether you collect email addresses from your customers through a voluntary call to action on your website or through a transaction, you will build a list closer to 100% accuracy than most bought lists. It's only "closer" to completely accurate because some customers will not be forthcoming with their email addresses, thanks to negative experiences in the past. Still, an organically sourced email list can ensure your message has lower failure rates.
Cons of building your own email list
Takes significantly longer: When you purchase a list from a broker or other third-party source, you can have a generated list within minutes. Building your own email list, on the other hand, could take months. While that may not be the most attractive reality, the quality of an organically sourced email list often outweighs the less targeted lists available on the market.
"Simply put, if a person never heard about your business before, you have to make an extra effort to show them that you are not wasting their time," said Radek Kaczynski, CEO of Bouncer. "When you build organically, you are making this effort upfront."
Could be a massive waste of effort: Because building your own list can take a long time, you just have to hope throughout those efforts that the marketing campaign will be a success. With a hyper-targeted email list, it should go off without a hitch, but that doesn't mean every email campaign is a slam dunk. If you spent weeks or even months gathering a list, only for your marketing effort to not work as well as you hoped it would, that could feel like a lot of time for not much reward.
Tips for how to grow your own email lists
As we've said, building your own email list will take time and requires a worthwhile strategy that doesn't instantly turn your consumers off to the idea of sharing their email addresses. Trust is an incredibly important part of this equation. If you commit to serving your consumer base every day, it should be easier for your small business to grow its own email marketing list.
For Dulles, the work of adding to and maintaining a worthwhile email list takes place "each day, week after week, year after year." By keeping an eye on trends and following news as it relates to your business, you can provide a service through your email campaign that informs subscribers not only of your business, but also what's going on in your industry.
"Taking the time to surf the internet, read news articles, and organically build your list using the most current information is the fundamental way to key in granular information," Dulles said. "Attending conferences or acquiring directories of niche markets who typically devour your small business offering is the most plentiful way to start and follow each year."
Keep up with social media.
By following up on social media, which Dulles calls a "treasure trove of active prospect lists to drill down upon," you can more easily find ways to "softly target" prospects with emails or direct mail.
"The secret is to try and strike up a relevant relationship or referral with each prospect, as opposed to just spamming thousands of names in hopes one or two bite or click," Dulles said.
Offer an incentive.
Along with conducting your own research, Zach Passarella, marketing director at Supplement Manufacturing Partner, suggests offering free content in exchange for an email address. For example, his company offers a free e-book that explains how to "organically grow your customer base" if visitors provide a name and email address.
"This type of free offer generates many people to enter their information, as they are interested in the topic, then those emails are very targeted and specific to what we offer, making them a prime candidate to target in marketing emails."
Incorporate limited promotions.
Giveaways and contests are great tools for collecting email addresses. In order to enter, participants provide their email address. You can decide whether one entry per person is allowed or if people can submit multiple entries.
Add a button.
It may seem simplistic, but adding a button to your webpage can be a valuable tool to collect email addresses. Simply add a button on your website that informs visitors that by entering their email address, they are privy to exclusive promotional offers. Or, if you don't want to run limited promotions, consider using a signup to send additional information to readers. For instance, perhaps you send readers blog updates or instructional videos about how they can use your products.
Use a popup.
Similar to adding a button to your website, you may want to add a popup to your website or select webpages that ask visitors for their email address. You've likely encountered popups as you have visited other websites advertising promotions or asking for your email address. Depending on your business and your target customers, evaluate whether adding a popup will genuinely help grow your email list. If it's likely to frustrate and drive away potential leads, stick with an unobtrusive button on your website.
Be mindful of your communication style.
The language you use with your target audience influences your rate of success. According to Experian, emails with a personalized subject line have a higher open rate (26%) compared to non-personalized emails.
In addition, consider how other aspects of communication can influence growing your customer base. Consumer linguistics is an emerging field that analyzes how language works for or against brands. The words you use with your customers, the tone, the style of writing not only impacts your success rate with your email campaign, but it drives your longer-term marketing efforts, i.e., creating loyal customers.
In the beginning stages of building your email list, carefully consider your writing style. Do you want to be formal or informal with customers? Can you be light-hearted or should your tone be authoritative? Your brand has a personality, and as a business owner, you can use this personality to resonate with customers and grow your email list and your bottom line.