How to Decide Between a Dedicated or Shared IP for Email Marketing

At last week's eM+C event, All About eMail Live!, several questions arose at a roundtable discussion about the benefits of a shared IP versus a dedicated IP for your email marketing sending. If you’re weighing these two options, it can get a little confusing as one solution is not always better than the other for every business.

Selecting the right solution for you depends on a variety of factors. And the first step to figuring out whether you should opt for a dedicated or shared IP is by understanding what exactly the difference between these two options is. Let's get started with some definitions:

• Shared IP: A shared IP is one that is used by more than one sender, i.e. a pool of companies.
• Dedicated IP: A dedicated IP is one that is used by a single sender. The sender must purchase and set up the dedicated IP with their email marketing vendor.

Now let’s dive into the factors that should go into selecting a dedicated or shared IP.

Cost

This aspect of the decision is fairly straightforward. Shared IPs are usually less expensive than dedicated IPs because your email marketing vendor can spread the cost of a shared IP across more customers. Companies opting for a dedicated IP also typically have to pay for the initial setup fees and/or recurring maintenance costs. But you're probably not making a decision based on cost alone, so let's move on to the next factor that will impact your decision.

Maintenance

With a dedicated IP, you need to need to make sure you’re sending out enough email to maintain a top notch reputation with ISPs. (We’ll talk more about reputation as a factor in your decision next.) If you opt for a dedicated IP and you either don't send much email, or you don’t send email on a consistent basis, then it could be difficult to establish yourself as a trustworthy, spam-free sender. This negatively impacts your deliverability; ISPs and webmail services look for a decent amount of consistent volume before they allow you to reach their users’ inboxes.

In the case of a shared IP, however, this is not a problem -- your email service provider (ESP) can pool the emails of multiple senders, and thus maintain the IP’s reputation so you don’t have to worry about maintaining the proper sending volume.

Reputation

As you may already know, your sender reputation is everything when it comes to deliverability. If you are sending from an email server with a spic-and-span reputation, your emails will make it in front of the eyes of your subscribers. And as we noted previously, your email volume is one factor that goes into the decision to place your emails in a recipient's inbox. The other contributing factors pertain to list cleanliness, which is determined by metrics like hard bounce rate, spamtrap hits, and SPAM complaint rate.

Senders on a shared IP are lumped together from a reputation standpoint. The reputation of the IP you’re using is determined by the email practices of everyone who uses that IP. For that reason, ESPs are often proactive about list cleanliness by establishing import rules, and typically monitor their servers for senders employing poor or black-hat email marketing tactics that could hurt deliverability for everyone.

Now you may be thinking, "If I go with my own dedicated IP, I’ll never have to worry about the consequences of other senders’ bad behavior." That’s true -- but this means you need to be completely honest with yourself about your own email practices. If you’re not completely confident in the cleanliness of your list, it’s possible that you can actually benefit from the good habits of your neighbors on a shared IP. I’m not advocating that you test your ESP’s threshold for bad practices, rather pointing out that you are more accountable for your actions when you use a dedicated IP.

What to Do Once You Decide on Shared vs. Dedicated IP

So let’s say you’ve made a decision. What are the next steps? 

If you’re going to go with a shared IP, make sure you ask your ESP these two questions:

1) What are your rules for importing subscribers? (Here is a list of the questions HubSpot asks of our own customers.) These rules are important for you to know -- not only because your IP neighbors have to abide by them, but also because you have to, too!

2) What are the acceptance rates of your shared IPs? You can follow this up by asking for their Return Path Sender Score, the trusted standard for email deliverability. To give you a sense of what is normal, a recent study from Return Path reported that for servers with a Sender Score of 91+ (i.e. legitimate servers), only 88% of messages actually ended up in the inbox.

If you go the alternate route and decide you're ready for a dedicated IP, talk to your ESP about their offerings and be prepared to warm up any new IP addresses. Warming up an IP address is a critical step to earning a stellar reputation. The idea is that you want to gradually increase the volume of email sent, rather than blasting out a large volume too quickly. As a new IP address, ISPs won't recognize you as a "good sender" right away, and therefore could mistake your new blasts as malicious, impacting your deliverability.

Have you ever been through the process of deciding between a dedicated or shared IP? Share the process you used to evaluate the pros and cons in the comments!