Optimizing Email Marketing Techniques by Parry Malm, CEO, Phrasee

Ahead of the upcoming Martech Festival, we sat down with Parry Malm for an exclusive on his session at the event. Parry talks about the optimization of (email) open models, AI and its relevance to the email marketing and broader marketing context. He shares specific solutions to avoid email marketing clutter, as well his two life mantras: “Be awesome in life and in business” and “Change the world one subject line at time”. Parry is a self-described digital anarchist. He has won awards like ‘New Business of the Year’ and ‘Tech Entrepreneur of the Year’. His featured skill is Interpretive Dance and he likes Megadeth a lot

Ginger Conlon:

Hello and welcome to MarTech Advisor’s Executive Interview Series. I’m Ginger Conlon, a Contributing Editor to MarTech Advisor and joining us today is Parry Malm who is CEO of Phrasee. Parry is speaking at the upcoming Martech Festival presented by Martech Alliance on November 16th in London. So, I want to welcome Parry, glad you’re here with us today.

Parry Malm:

Thanks for having me Ginger, looking forward to it.

Q- Ginger Conlon:

So glad you’re here! We are going to talk a bit about email marketing technology and trends and we’re also going to get a sneak peek into Parry’s Martech Festival session. Parry, before we jump into all of that let’s get a little bit about you, tell us about your background and about Phrasee.

A- Parry Malm:

Sure. So, my name is Parry Malm, I am the CEO and one of the co-founders of Phrasee. Phrasee is software that uses artificial intelligence to write better subject lines than what humans can themselves. To best explain it think of it like this, if you guys get emails from Domino’s or Virgin or B&Q, all sorts of these global brands, then you’ve experiences Phrasee’s technology without actually knowing you experienced it.

Phrasee itself has been going for two and a half years, we’re a little bit over 30 people, we’re based in London in the UK, as you can tell from my accent, and our science office is based in Vancouver in Canada. Basically we’ve sort of gone from strength to strength, we closed a venture capital round about a year ago, we’ve grown I think 597 percent year on year and our goal is to change the world one subject line at a time.

Q- Ginger Conlon:

I love that, that’s great, such a great mission. So, let’s talk about marketing technology and trends and then we’ll talk a bit about your session at the end, give that sneak peak. So, according to the Radicati Group, more than 200 billion emails are sent and received every day, that’s billion with a B, it’s just huge, which means that’s so much clutter to break through with your email marketing. So, what advice do you have for marketers who are trying to stand out and get those opens with their email marketing campaigns?

A- Parry Malm:

That’s a great question and I think we need to break down what the billion number actually means. The vast majority of email that people get are not necessarily promotional emails from brands, a lot of them are part of this CC addiction which we have in our working culture for example where it’s all about the devolution of responsibility so no one ever stands up and does anything themselves without ensuring everybody is CC’d, that creates a huge amount of clutter.

Actual promotional messages themselves, people tend to have opted into them and they can opt out from them very very easily. So, the actual clutter is all self-selected of you. So, the key there is first of all ensuring that you maintain required new names onto your list who recognize your brand name and then secondly, of course I’m going to say this, make sure your subject lines are on point. Now, of course, I’m biased when I say that but just because I’m biased doesn’t mean I’m wrong.

Q- Ginger Conlon:

That is true. So, one of the things that is such a hot topic today is AI, especially in marketing tech, and so many marketing vendors are adding AI or more AI capabilities. Your tool is built all around using AI to improve email subject lines. So, how are you seeing AI evolving in email marketing?

A- Parry Malm:

So, first I’m going to let you in on a dirty secret about AI. AI itself doesn’t actually mean anything, it’s a catch all term for a number of different technologies and most people in MarTech when they refer to AI, they’re referring to machine learning and more and more deeper. Now, what a lot of people do is they’ll have their CTO or CEO come into the room and he or she will say, hey, we need to start doing AI. That’s a stupid thing, that’s a bad question. What you should do if that ever happens to you is go back, what problem are we trying to solve.

Now the reason why we started Phrasee is I had been working in the email game for a long time and people used to always ask me, what’s a good subject line? So, I’d just say, I don’t know, test it out and that seemed like such a bad response but I didn’t know any better, I didn’t know any better solution aside from just doing some brute force testing. Then I got to have a few beers with a guy who I studied computer science with in Canada 20 years ago, so, back when I was like four years old, and he has got a Ph.D. in AI and we just got talking, we were going to a death metal gig as you do and I told him about this problem that I saw in the market and he told me about some of the technologies which were out there and we decided, based upon this problem, that AI was an appropriate solution to this problem.

What a lot of people do is, they’ll say, we have AI, so, let’s go find a problem, we’ve got this solution let’s go find a problem, that’s completely backwards. So, what I like about Phrasee is, we aren’t trying to reinvent or transform your entire marketing infrastructure, what we’re trying to do is have a very effective point solution that happens to use AI to make brands more money and that’s why we’ve been so successful.

Ginger Conlon:

Yeah. You make such a great point as to what is the problem or the opportunity first and then what’s the best tool to solve that and if it happens to have machine learning excellent, but, don’t just jump into it for the sake of jumping in.

Parry Malm:

Yeah. So, Einstein actually, who I guess was a reasonably intelligent person, was asked one time, if he had 60 minutes to solve a problem, how would he spend his 60 minutes, I’m paraphrasing here obviously, but he said, he would spend 55 minutes thinking about the problem and five minutes thinking about the solution. So, when people say we should do AI, that’s a wrong question. What people should do instead is, here are our key business challenges, for example, if you need to get higher engagement, higher opens, clicks and conversions from your email marketing campaign then your subject line could very well be a problem and Phrasee is one of numerous approaches you can take to solve that problem.

Q- Ginger Conlon:

Absolutely, I love that. So, going back, about the popularity of email marketing, it tops the list of tools for customer acquisition and customer attention. So, what are you seeing in terms of your customers and how they’re using email marketing most effectively?

A- Parry Malm:

So, a few years ago the big trend was to move towards this sort of uber one to one personalization or to this sort of uber segmentation down to an audience of one sort of thing and I’ve seen a lot of companies switching away from that and they’re starting to view email as more of a mass marketing channel. The companies who are doing this are actually achieving quite a bit of success for two reasons.

Number one, email is fundamentally a form of advertising and mass advertising in certain circumstances works. Number two, the opportunity cost of investing in these very very expensive infrastructure projects of CRM systems and all these sort of encompassing so called transformative products never really gets measured and if you look at the total cost of ownership and the total cost of, for lack of a better term, unscrewing it once somebody has screwed it in really tightly is really expensive. So, I’ve actually seen a real trend that people, they have their segmentation programs and automated programs as one stream but they’re moving more and more towards these broadcast programs at the top of the funnel to get people into the automated streams.

Q- Ginger Conlon:

That’s really interesting. You mentioned effectiveness and measurement is essential to optimization and ROI and a study from the DMA, in the UK as a matter of fact, found that 60 percent of marketers use conversion rates to measure campaign effectiveness and that’s not surprising considering that the number one goal for using email marketing among those marketers polled is driving revenue. So, what are some of the success measures that you recommend for email marketers?

A- Parry Malm:

Well, this is ultimately a statistical question and if you measure effectiveness on conversion rates, they are extremely rare events, so, you run the risk of random variance driving choices instead of actual statistical medal. So, think about it like this, let’s say you have a list of a million people and you get a 20 percent open rate, you have 200,000 events with which you can form opinions and decisions and rules. Now let’s say 10 percent of those people click through, you now have 20,000 people, so, that’s far fewer to actually make choices on. Say 10 percent of them convert, that’s 2000 people. So, let’s say you have five sample groups within that, it’s going to be on average 400 people per sample group.

To get a level of significance of 400 out of a million people is extremely difficult, you’re going to need lists in the multi millions for it to ever be valid. What we recommend instead is looking at long run relationships between the various levels in the funnel and what we find time and time again is conversions are extremely strongly correlated with clicks and clicks are extremely strongly correlated with opens, opens are very common events, 200,000 out of that million, therefore, you can create models around optimizing opens.

Now, you can’t just optimize towards opens obviously or you can just mislead people, you know, say, we’re delivering you all of these when you haven’t actually purchased something, it’s really spammy and really gross, it creates a bad experience. So, what you’ve got to do is within that sort of open optimization spectrum ensure two things. Number one, ensure your messaging is on brand, make sure that it exudes your brand voice and number two, make sure that it doesn’t mislead consumers to what they are going to get. If you do those two things, optimizing to the open is the dominant strategy because you can learn more, you can test more and trickle down to higher conversions.

Q- Ginger Conlon:

That’s excellent advice, I really love how you broke down the numbers. But I want to take a moment because you said, stay true to brands, so, let’s talk about Phrasee’s own email marketing because as a provider of email marketing tools, I feel like you really need to get it right. So, what are some of your success seekers for your own email newsletter and campaigns?

A- Parry Malm:

Well, thanks. So, Phrasee, we started it to be different from the vast majority of marketing technology and here’s why, anybody who’s watching this is either working for a MarTech company, working for a brand or working for an agency and any one of those categories will get innumerable emails every day from some random marketing technology company with some white paper promising to prove one simple point and you read a 100 of these and you wind up knowing less after reading them than previously because they all say the same thing and they’re all really really boring, they’re not memorable and it just kind of sucks.

So, we started Phrasee to be a marketing technology company that didn’t suck. So, our newsletter specifically has thousands of people signed up to it and people tweet about it which is super crazy because we just basically combine really good curated information, some from us and some from third parties, with a whole bunch of stupid jokes because let’s face it, if they’re getting all of these boring emails and these spam pushes from random Martech companies who don’t really give a crap about the market, they basically just want a cheque signed, you start to become desensitized to it, it’s like the anesthesiologist of the technology hospital if you will, they put you to sleep, we’re not that company.

Our mantra is quite simple, is to be awesome in life and in business, I really like to think that our newsletter exudes this.

Q- Ginger Conlon:

I love that, you have such a great mission, changing the world one subject line at a time and your core to be awesome, it goes together so well, I love that. So, let’s have some fun with email marketing myths, I’m sure that when you’re talking to customers or prospects you come across these all the time. What’s one common myth that you come across and what’s the reality?

A- Parry Malm:

So, the one that gets me time and time again is when you get spreadsheet wonks who want to attribute every single sale down to a single channel. So, the way I usually ask it is like this, when is the last time you got an email from Amazon? Probably yesterday. When is the last time you opened an email from Amazon? Probably a month ago. When is the last time you got an email from Amazon, you opened it and then you clicked on something and went to purchase it? Probably never, that’s a very uncommon customer journey unless you have an email exclusive or some sort of corner case like that.

Email itself, while it does drive some direct response, it gets underreported massively but that’s because digital marketing has been taken over by spreadsheet wonks instead of by actual marketers and what they want is they want to be able to justify every cent from every channel just for the sake of doing it. Now, I’m an old school marketing guy, believe it or not, while I operate in the technology space I believe that you just do a bunch of good stuff and it sort of forms like Voltron to create this all singing all dancing marketing machine and a lot of that sort of actual humanity of marketing gets lost.

So, I think when people try and attribute email marketing down to a pure direct response channel, they’re ignoring a whole bunch of stuff and you know what’s super crazy, people will spend millions of dollars on a television ad and have no real way to track it and yet, if they spend 20,000 bucks on some sort of digital marketing thing, especially email marketing thing, then they get grinded by the FT because we’ve just got this culture of over measurement.

Ginger Conlon:

That is true and it seems to be increasing more and more in terms of having to prove out the value of every dollar that you spend in marketing.

Parry Malm:

Yeah and I found that it’s really changed after the 2008 downturns and the reason being is that it used to be that organizations for a long time were sales led and they were marketing led and something like 62 percent of CEOs pre 2008 had done sales themselves. The great recession hit and things changed. Now the vast majority of CEOs come from a financial background and they tend to be much more risk averse than previously. Whether this is good or bad I can’t comment but the companies who are doing well with digital marketing right now tend to be much more risk prone and they tend to take a holistic view on marketing attribution instead of being driven by and for spreadsheets.

Ginger Conlon:

Yeah, that isn’t a workable solution. So, now it’s time, drumroll, let’s get that sneak peek at your session at Martech Festival on November 16th in London. What can attendees expect to learn?

Parry Malm:

I’m really looking forward to the festival itself and few more of Phrasee’s customers are going to be speaking there, it’s going to be a great event and I think the organizing team, it really has a neat concept here because what you often find with events is they tend to be sort of generalist and about all sorts of things and this one is about marketing technology. Now, being a marketing technology guy, what I’m going to talk about is why you probably shouldn’t buy marketing technology.

The reason being is, you often get sold the dream from these big infrastructure based marketing technology solutions and we just had a customer in this morning who came to meet us and then was on her way to her 8th kickoff meeting for one of these all singing all dancing infrastructure changes, I don’t know how you can have 8 kick off meetings, that’s called the world cup. So, what I’m going to speak about is how the real future, in my belief, for marketing technology is having point solutions and then your job as a marketer is to ensure that all the point solutions interact towards the greater good but you don’t need one of these huge, over promising, that never actually gets implemented solutions. The people who are really going to make a difference are people who try a bunch of stuff, see what works and then double down on the stuff that does well.

Ginger Conlon:

Yeah, that makes a lot of sense. Well, Parry, thank you so much for all the great insight and advice today and I want to thank everyone who joined our video discussion and let everyone know to be sure to check out and subscribe to MarTech Advisor’s YouTube channel for more executive interviews be sure to visit the Martech Alliance website for more information about the Martech Festival and Parry’s session and Parry, thanks again.

Parry Malm:

All right, cool, take it easy Ginger, see you later.

Ginger Conlon:

Bye!

Optimizing Email Marketing Techniques by Parry Malm, CEO, Phrasee