Dedicated IP Addresses - Are They For Everyone?

So, you're wondering what's the deal with dedicated IP addresses?

The Reputation of an IP address continues to grow as an important deliverability factor. Return Path has estimated that 77% of delivery issues occur because of the sender's IP address' reputation (Return Path 2006). Alongside of this is the simple concept that if you isolate your IP address so that you are the only sender, you're in control of your reputation and therefore, in control of the deliverability of your mailings.

But, is it really that simple? If so, why isn't everyone doing it?
Let's have a look at the Pro's and the Con's for both dedicated and shared IP addresses:

Dedicated IP addresses

The Pros:

Reputation: You get to have your own dedicated IP address(s), instead of having to share it with hundreds (or thousands) of others, therefore you're in charge of your Reputation and in turn, your deliverability.
Accreditation: Having a dedicated IP address is often a prerequisite to being able to be accredited with some of the whitelisting programs, such as Sender Score and Goodmail. This alone, is often reason enough for some marketers to switch to a dedicated IP address. Along with deliverability, accreditation also often means that images are turned on by default (as with Sender Score's accreditation for Hotmail).
Monitoring: You have the ability to action any problems which arise immediately.

The Cons:

Cost: Most ESP's charge for this additional service - either outright or subtly included in their regular fees.
Accreditation: One of the reasons for having a dedicated IP address is because of deliverability right? So, why stop there? Just because you have it doesn't mean that your deliverability is automatically better. You then also need to utilise the benefits of having one and get accredited with delivery companies such as Return Path, Goodmail and others - all of which, come at a cost.
Monitoring: Some ESP's will do this for you (and the cost will be included in your monthly fee) - others won't and you will have to organize this for yourself - either way, monitoring and the continued actions it then requires, cost both in effort and money.
Spikes: Reputation takes factors such as volume spikes into account; therefore volume needs to be managed carefully as you don't have the ESP smoothing out the spikes of your individual mailings with other client's mailings.
Volume History: With a new IP address comes no history. This means that you need to start small and earn your reputation, as according to George Bilbrey of Return Path, ISP's are now throttling or limiting IP addresses with no volume history to more stringent reputation thresholds. So, you would need to be prepared to build your reputation up - it won't happen overnight.

Shared IP addresses

The Pros:

Volume History: The IP address(s) has volume history - whether momentarily bad or consistently good; having history is good.
Cost: You don't pay anything extra and your shared IP addresses are monitored for you.
Spikes: Most ESP's pool their clients over multiple IP's which ensures that there are no sudden spikes in sending volumes, which can harm the IP's reputation.
Accreditation: There are Accreditation companies who will whitelist you on a shared server such as Habeas and Suretymail.

The Cons:

Shared reputation: This is the obvious downfall, as you are sharing your reputation (which is hard earned by using Best Practice) with many others, just as they are sharing their reputations with you.
Accreditation: Whilst an ESP can be whitelisted in general, there are some ISP's (such as Hotmail via Return Path's Sender Score as well as AOL & Yahoo via Goodmail) who will only allow whitelisting if you're on a dedicated IP address.

Therefore, the question remains: Is a dedicated IP address the solution for every marketer?

The short answer: no. There are many marketers who would, and indeed, who do, benefit daily from having a dedicated IP address - but it is certainly not a 'must' for every company who sends emails to their databases.

So who would benefit from having a dedicated IP address? Basically, any marketer who sends large amounts of promotional or transactional emails on a regular basis. If you only send the occasional or monthly email to your clients, then a dedicated IP address is not the solution for you.

However, don't despair! All is not lost if you find yourself relegated to the shared IP address environment. This doesn't necessarily mean that by sharing an IP address with hundreds or thousands of other marketers you'll never get an email delivered again. Any ESP worth their salt (and I believe this to be true of most) will endeavor to keep all of their IP addresses (yes - including their shared IP addresses) whitelisted, clean & monitored etc, which ensures deliverability is high, which in turn ensures happy clients….

Thus, I believe there is a case for both dedicated and shared IP addresses dependant upon the marketer's situation - it's now up to you and your ESP to decide whether a dedicated or shared IP is the solution for your requirements.

Kath Pay is Marketing Director of Ezemail, an innovative company that provides comprehensive email marketing solutions. For more information on how easily email marketing can be implemented, please contact Kath at kath@ezemail.com.

©Kath Pay 2007