Marketing 2.0: The New Reality


Share on LinkedIn

In today’s world, intelligent, relevant marketing is typically achieved by using the campaign management and analytical tools provided by independent marketing automation vendors. These on-premise software applications sit on top of marketing databases and provide the segmentation and audience selection tools that marketers need to design and execute their marketing strategies. They’re invaluable for assuring that appropriate timely messages are delivered across a variety of customer communication channels.

Yet over the past year, we’ve seen most of the leading vendors lose their independence. Portrait Software’s acquisition by Pitney-Bowes in June 2010 was quickly followed by Unica’s acquisition by IBM, Aprimo’s acquisition by Teradata, GSI Commerce’s acquisition by eBay, SAS’s purchase of AssetLink and most recently SmartFocus’ acquisition by EmailVision. This land grab is both a testament to the viability and value these on-site vendors have provided.

While each acquisition was accompanied by statements of continued investment, innovation and expanded capabilities, what remains to be seen is how these acquisitions will actually play out in the marketplace. Will Unica’s products continue to be database agnostic? Or will they now be ‘tuned’ to IBM databases? Will Aprimo begin to work better with the Teradata data warehouse? Is Portrait soon going to be focused exclusively on direct mail?

However this might develop, questions will still arise around, who will now step forward with a focused offering for the mid-tier buyer? Is there an alternative to these complex, expensive enterprise-class solutions?

Unlike many other software categories, the leading marketing application vendors have not embraced Software as a Service (SaaS). Instead, they frequently re-direct the buyer to the handful of Marketing Service Providers (MSPs) that will host the database and software on the buyer’s behalf — in most cases accompanied by an account team to perform the day-to-day marketing activities.

While this is an attractive option for marketers that want to outsource their marketing activities, MSPs are generally not a viable option for hands-on marketers that are seeking a SaaS solution. And of course more and more marketers are insisting on being hands-on — mastering the tools and data they’re using. Many can actually bank on the margins this improved intimacy creates, especially over the long run. After all, in many cases, being hands-on is simply a proxy for greater intimacy with their customers.

Recognizing this, a few of the enterprise vendors have begun to offer a hosted solution. They’ll implement the software in a third-party datacenter and instead of a perpetual license offer a subscription-fee over a fixed term —typically three years. At first glance, it appears to be SaaS, but in reality it’s just IT outsourcing. The software and hardware are dedicated to that buyer. Time for a software upgrade? Schedule time in the vendor’s upgrade queue. Need more capacity? Schedule a hardware upgrade. Want to add a new software module? Now you’ve got another implementation project.

SaaS is commonplace for sales force automation (SFA). It’s the dominant model in Human Resource Management Systems (HRMS). Will it also become the leading model for cross-channel marketing automation?

Welcome to Marketing 2.0: the stage where a new class of Software as a Service (also known as Cloud-based) marketing automation vendors is now emerging. These vendors offer the mid-tier buyer toolsets that meet and often exceed the capabilities of the enterprise players. Not only do these vendors offer sophisticated campaign management, analytics, content-management and data visualization tools; they also offer high performance highly scalable marketing databases. Some also offer tightly integrated cross-channel delivery capabilities, including email, print, SMS, social, search, display, web and call center.

The advantages are significant: instead of a substantial capital outlay for software, databases and computing infrastructure the marketer pays a monthly subscription fee. Instead of a 6-18 month implementation project and a (very) expensive cadre of IT consultants, the marketer is up and running in as little as 60 days. There is no need to hire a database architect to tune the databases, no need for a software administrator, no more upgrade projects and no more capacity planning. The savings in overhead alone can often pay for the first several campaigns and the annual savings continue making the total cost of ownership significantly less.

The heritage of these new players is also significant — they come from the on-line marketing space where cloud solutions dominate. Paid search, demand side platform (display), e-mail marketing and web analytic vendors actually started in the cloud. These applications were conceived and thus designed expressly as SaaS and these vendors understand how to leverage the cloud to provide scalability. The solutions are designed to be easy to buy, easy to use and fast to deploy with upgrade paths that are seamless bordering on invisible.

As new marketing channels developed, these applications evolved to fully incorporate the features and capabilities from the ‘off-line’ database marketing world. One-size-fits all email blasts evolved to highly personalized relevant messages, with customized content for each customer. Customer-web interactions are now collected and analyzed for segmentation purposes. Email lists have been replaced with multi-dimensional customer data-marts and query tools with on-the-fly data cubes and sophisticated data visualization. Basic search click-tracking has morphed to encompass cross-channel attribution models. Batch campaigns have been replaced by laser-focused, real-time offers for inbound web visitors accompanied by rapid re-marketing and re-targeting. Basic reporting has been supplanted by in-database analytics that optimize PPC bids, drive segmentation schemes, predict next best product offers and identify brand promoters.

It is certainly an exciting time to be a marketer. Marketing 2.0, it seems, is here. But not everyone has recognized this new reality.

One explanation may be the pace of change in the marketing world. When the term ‘cross-channel marketing’ was coined, the primary direct marketing channels were limited to direct mail and telephone. Then along came the internet. Fast forward just a few years and we’ve seen an explosion of additional channels — with buyer-influence increasing as fast (or faster) than the development of the channels themselves. Now mobile, social, paid search, display, device- and location-specific techniques are the staple diet. As a result, a definitional problem has evolved within the discipline and even within the analyst community. That’s because the marketing channels with the greatest growth in spending — display, paid search and email — are channels not typically supported by the traditional leaders’ on-premise enterprise marketing suites.

Evidence of the dizzying pace and scope of this change can even be seen in the analyst community. Earlier this month, at a presentation on integrating marketing processes at a conference hosted by one of the leading technology analyst firms, the analyst contrasted the various marketing technology choices: use a suite from a single on-premise software vendor, engage with an MSP, assemble and integrate a best of breed solution or use a cloud solution. For the cloud option, she highlighted the same strengths as previously discussed: low costs, short implementations and tight integration. Potential weaknesses included how SaaS vendors may be limited in functionality. (Fair enough — not everyone can do everything!) A sweeping declaration followed: SaaS vendors ‘lack competitive advantage features.’ Not some lack features, not some may lack features — apparently they all lack “competitive advantage” features. This is surprising, to say the least.

This perspective is hard to fathom, given the competitive advantages we’ve briefly laid out here. Even the analyst’s own list of “low costs, short implementation and tight integration” is nothing to sniff at competitive-advantage wise. In fact, no one who has suffered the opposite of these would doubt that they’re disadvantages.

Nonetheless, what seems to be most glaringly missing in this analysis are the central components of advantage identified in this article: solutions conceived and designed for the cloud, and for business-users to use themselves — animating an ongoing dialog and intimacy with their customers borne of first-hand knowledge. Experience demonstrates that this set of advantages can indeed generate enormous competitive advantage.

Overall, it could be suggested that the dominant force behind all of this tumult — even the analyst’s vertigo — is the accelerating pace of change itself. Perhaps the greatest advantage that can be gained by marketers today is development of an operational environment and the adoption of marketing tools that fully acknowledge and anticipates that change.

In a nutshell, this is what the cloud, and SaaS, is all about.

Dan Smith
Dan manages Practices Communications at Epsilon, and was previously the CMO at both Outsell Corp & ClickSquared. Prior to joining ClickSquared, Dan was the VP of channel development at Unica where he managed Unica's MSP partnerships throughout the Americas. Before its acquisition by Unica, Dan was the CMO at MarketSoft.


  1. Dan, great in depth thinking and article. You really have illustrated the dizzying pace of change in this space. Personally I think the short implementation time, ease of adoption, ability to access data anywhere, anytime, and just the so much lower risk level of a SaaS or cloud based marketing platform makes it where this space is going.


Please use comments to add value to the discussion. Maximum one link to an educational blog post or article. We will NOT PUBLISH brief comments like "good post," comments that mainly promote links, or comments with links to companies, products, or services.

Please enter your comment!
Please enter your name here