Before the economy took a hard downturn last year, the 70-plus e-mail-marketing vendors in circulation at the time...
were pushing new technological designs, such as streaming audio and video, with the intention of getting more e-mails read, as well as getting more people to act on the e-mails they received. But after months of companies watching what they spend, the trend is changing.
When budgets tightened last year, many marketers cut spending on their e-mail-marketing campaigns and returned to more basic e-mail blasts. Now, a year later, analysts and e-mail-marketing experts are seeing an upward trend of companies investing in technologies that will integrate their systems with data warehouses, and improve and deploy data-analytics technology for creating targeted, personalized e-mails. These companies are focusing on the strategy of sending e-mails, rather than just garnishing them with fancy features. As a result, e-mail-marketing vendors are centering their R&D on improving and adding these capabilities to their existing systems.
Kevin Scott, senior analyst of marketing strategies at AMR Research in Boston, says e-mail marketing is a viable component to an enterprise's marketing strategy. But to truly succeed, companies must monitor campaigns, track responses, target and test. That's exactly what Scott and other analysts say companies are now turning their attention toward after a lack of funding blocked e-mail investments last year. In fact, Scott says he expects the e-mail marketing space to see gains in e-mail-vendor sales of around 7% during the second half of this year as a result of this shift.
Tough times are getting better
As the economy worsened last year, money originally put toward e-mail came to a stop because companies didn't look at it as a strong medium. Decision makers also felt the ROI was soft. Scott says e-mail marketing really didn't get to prove itself in terms of analytics, before the downturn began. "The more established players just started to get going on this and the economy delayed the inevitable," Scott says. "E-mail marketing is one of the first things that was put on the back burner."
Derek Scruggs, principle of Creative-Mail, a marketing-consulting company in Boulder, Colo., agrees. He says e-mail marketing stopped after September 11. "People who worked in marketing literally weren't there, or if they were, they had a lot on their plate because their co-workers were gone," Scruggs says.
Prospecting also fell to the back burner, says Reggie Brady, president of Brady eMarketing Solutions, a marketing consultancy in Norwalk, Conn. Companies continued to use basic e-mail-marketing practices and slowed or halted the deployment of integrated analytics during that period, she says. They used old standard tracking capabilities without the ability to look at reports online. They also limited segmentation practices and pulled back from using advanced technologies, which include aggressive modeling, scoring and analysis that tailor the content and create dynamic personalization.
"We continue to see a one-size-fits-all approach to e-mail marketing," Brady says. "Companies are not doing the analysis they need and they're not using the simple segmentation tools that they need. People have been slow to step up to the plate with that."
New trends on the horizon
On the other hand, Brady believes we'll start to see a trend toward enhancing databases and deploying analytics. "Clients are realizing that they need a database to get the robust behavior information," she says. However, companies will be slow to adopt such rich systems.
"Things are starting to loosen up, but just starting. I'm not sure if we'll see anything even in the fourth quarter of this year," Brady says. "However, I do see signs that things are slowly starting to get better."
Adam Sarner, CRM analyst at Gartner, says last year, companies focused their investment dollars on improving their call centers and field sales. Now, he says, they're taking small steps, and e-mail marketing is gaining ground. Sarner and Scott say the issue is now who to send the e-mail to and what to send in the e-mail. "E-mail marketing is the low-hanging fruit," Sarner says. "Rather than blasting offers, customers are spending money on analytics. They want to send the right message at the right time. That's what we'll see in the next 12 months. There are too many e-mails in people's inboxes right now. Unless they're persuaded and the e-mail has high relevancy, it's treated as junk mail. The days of 'you've got mail' are over and now it's just annoying."
Scott says integrated analytics, which many companies across the board halted deployment of last year, is what companies are looking to enhance in an effort to improve real-time capabilities in their e-mail systems. "As more companies get better in targeting offers, we'll start to see an increased uptake and upturn of e-mail marketing," Scott says.
Streaming audio and video, which also slumped last year, will not see the same success as before the economy worsened, Sarner says. "It's fluff. It's important, but not as important in getting the right message to the right people," he explains. "It's not what you send, but how you send it. People want more relevancy. If I bought a camcorder, the e-mail should upgrade me into a tripod. That would be more effective than an e-mail flashing a camcorder at me, since I already bought one."
Scruggs says the problem with rich media is that it's sold horizontally, rather than applied specifically to different sectors. He says he's never talked to a vendor who has said that rich media is a source of revenue for them. "For the general 'plain Jane' e-mails, it isn't as captivating, and there are not as many people out there who could whip out a streaming video cost effectively."
Stepping up to the plate
Large stand-alone vendors, such as Boldfish, Accucast, Silverpop Systems, Xchange, Unica, Experian, DoubleClick and Digital Impact, as well as hosted vendors, such as YesMail, MindArrow Systems, Bigfoot, L-Soft, ClickAction and Topica, currently are leading the e-mail marketing space, according to sources interviewed for this article.
Brady says e-mail vendors realize they have to build a pipeline to connect to the analytics and data warehouses and are stepping up to the plate to try to develop and deliver such features. Sarner also says vendors are responding to the idea that analytics need to improve. Many e-mail companies, he says, are working to fortify predictive analytics features that improve the collection and reporting of data, generate recommendations and execute targeted e-mails. He says companies are turning away from purchasing large system suites, instead deploying e-mail-marketing point solutions to handle their e-mail needs, because of the cost savings.
Nothing new for a while
Scruggs says he doesn't think we'll see any new ideas in the near future, just better execution, improved strategy and incremental improvements on e-mail personalization. "There's nothing worse than sending out an e-mail that asks you to click, then it takes you to the Web site, which has nothing to do with that e-mail."
Sarner also says anticipates no new e-mail technologies in the coming year, yet the possibility of advanced multi-channel CRM is a step down the road. His advice to clients: buy something that can be integrated so they can start low and build up. "We'll see less of experimental things like coming up with a flash," Sarner says. "We'll see companies getting the process down by answering the question, 'how do we rise above the noise level? How to we give customers access to their profiles?' I don't think there will be a great technology leap, but I see companies getting their feet wet by learning how to send out e-mails correctly."
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