The Case Against Cross-Promotions

Follow me:

Cross-promotional emails seem like an easy win

Cross-promotional emails are often floated as an easy way for companies to "partner". The idea is for each company to email their own users with a promotion for the other company. Its appeal lays in its simplicity and cash price but my feeling is that they're usually an inefficient waste.

The yield from even large email lists is pretty small

When you walk through the numbers and start multiplying fractions by fractions you discover that the upside to a cross-promotional email is smaller than you might think and is at a scale that can be obtained by other means.

Assume the following agreement between me and a partner: Each of us will send a message to 100,000 people on our respective mailing lists that promotes the others' service and includes a call to action to click through to the partner homepage.

Here's how I estimate the benefit of this deal:

  • 100,000 people on the partner's email list receive the email (we'll assume that the list contains no typos and that none of the recipients are already customers of mine)
  • 22,000 people open the email (22% open rate)
  • 770 people click on the link to my website (3.5% click-through rate)

This deal can be expected to yield 770 qualified landings.

There are other and better ways to buy landings

I can assign a dollar amount to that benefit by figuring out how much money it would cost to simply buy 770 landings in an open market such as Google AdWords. The price of a landing obviously varies but let's assume my most efficient keyword (that is, the one with the highest landing-to-conversion rate) costs $15. If we also assume that the people who click my best keyword and the people who come from the partner behave similarly to each other then the 770 qualified landings are worth $11,550 (770 qualified clicks X $15 per click).

Someone might say "Nice! You just got $11,550 worth of landings for free" but, of course, those landings aren't "free" even if there was no cash outlay. Think about:

  • The time it takes for me and my counterparty to work out the details of this deal.
  • The time it takes for someone on my team to come up with the messaging, design, timing, etc for the email.
  • The annoyance we create among our 100,000 users by sending them an unrequested email.
  • The number of "unsubscribes" the unrequested email inspires.
  • The cost (or benefit) to the brand from being associated with and promoting this particular partner.

Clearly this deal is not costless. Even worse, this deal is hard to repeat with other partners since each additional cross-promotion deal becomes more "expensive":

  • You will become known as a company that spams its users which hurts your brand.
  • Your unsubscribe rate might increase.
  • Your open rates might fall.
  • Your colleagues will start to get annoyed by this relatively uninteresting work.
  • Etc.

All of this leads to the following question: Is avoiding a $11,550 cash expense the best of use of company time, energy, and good will? For a cash-poor company that answer may be "yes" but for a company that is reasonably well-capitalized (either through investment or through actually generating revenue) the answer will likely be "no".

Don't look for "easy" partnerships; spend time on enduring ones

Bottom line: You're better off investing time and effort into developing more complex but durable partnerships than looking for "easy" one-offs that generate benefits of a type and at a scale that can easily bought with cash.

Cross-promotions might make sense as part of a broader partnership

A stand-alone cross-promotional "partnership" is almost surely a loser but there are clearly instances where cross-promotions make sense as part of a broader relationship.