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eMarketer estimates that e-mail advertising spending will grow from $338 million in 2006 to $616 million in 2011, a six-year increase of 82%—but only half the rate of overall online ad spending. Why so low?
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While I find Facebook and its ilk aggravating — oh my God, will someone please throw a real UI designer at MySpace? — social media networks are obviously as powerful a shift in Web consumption as we’ve seen since its commercial inception in the mid-90s. 

That being said, e-mail is still the ultimate interactive medium -- and the ultimate way for marketers to build loyalty and foster one-to-one communications. While Facebook, Friendster, MySpace, Hi5 and the like may offer a big tent,  it’s a loud, noisy, distracting tent. To me, they feel more like an overcrowded club with the music turned up to 11, no privacy and no protection from weird strangers.

E-mail, meanwhile, offers a wide range of social options (it can offer one-to-many, one-to-one, group discussion and more), the ability to share files and video, flexibility (no inflexible UI to when you’re pulling together your message) and the ability to transmit ideas in a heartbeat. It’s no  coincidence that social media sites e-mail you when someone wants your attention; even they know that few users will check their portal often. The next step is for those companies to acknowledge that they need to push their functionality out to e-mail somehow.

So, how should e-mail transform itself to incorporate social media features? Certainly, Google’s inclusion of an IM function in its Webmail interface is a good idea–as is Yahoo’s effort to add text messaging to its mail service–but I think the process can go much further than that. I’m talking about nothing less than the deconstruction of e-mail as a unit of information and reassembly as a feature-rich utility.

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Radio didn;t killpress, tv didn't kill cinema and video/dvd's didn't kill tv. Some customers will continue to want to receive e-mail messages if that's what suits them. Interesting to note that as e-mail technology has gone backwards since the introduction of spam filters (streaming video was only the new new thing for a couple years before it was iced) that direct mail is growing as marketers revert back to what really works. In many cases where marketers have migrated mail to e-mail to save themselves money, rather than to service customers, many businesses have tanked. Typical are wine clubs run by banks for example - when they moved to digital statements the acquisition rates of members has dived. So now they are using solo direct mail for best results.

Just because you can do somethingonline doesn;t always mean it's the best way - as with all media.

As for the crusty old nerds, I'd take advice to play that old nerds game of golf from the experience old nerd Tiger Woods any day, over some young amateur who just broke into the pro ranks because they use the latest technology.

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Maybe they didn't factor in the relative low cost of email marketing? Display ads and PPC advertising are generally more expensive than email marketing. And the cost of PPC ads have been going up. Even SEO is more expensive, because there are so few SEO experts out there. Everyone and their father thinks they can send out an email and call it marketing.

There's also the fact that email is the oldest online marketing tool. Marketers think they know what their doing with email. They have a system. With new things like SEO and Social Media, and even PPC, marketers are reinventing the wheel, which costs more.
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As somone once said "62.5% of all statistics are probably made up anyway...' I love reading about the demise of email, direct mail, fax, carrier pigeon etc....Sure, at somepoint in the future email will have drifted off into the realms of being used by 'crusty old nerds' who hanker back for the good old days of the early 21st century...' but for now, email is with us and email marketing is still proving a useful tool. However, it is maturing, and finding its rightful place in the whole communication mix.  But what do mean by email marketing?  if it just relates  to using email for the express purpose of selling, then, the figures quoted by emarketer probably underestimate the overall size of the market.  Most of my customers in my 'onlinedm' days in fact used email, not as a 'selling vehicle', but rather as a cost effective way of keeping in touch with opted in (permission based - another jargon term) recipients. 
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