It's the start of a new year in email marketing. As we get down to business again after the holidays, it's a good time to make some predictions as to what we can expect in the year ahead. But before we get into that, I think an interesting place to start is to look at all that happened in the space in the year just ended. When I think about the competitive landscape for email marketing, I tend to divide the players into four distinct groups: the data-oriented MSP players like Yesmail and Experian; the marketing-cloud platforms like Salesforce and Oracle; the independent players including everyone from Emarsys and Post-up to MessageGears and Selligent; and finally, the email agencies, which includes Merkle, Brightwave, and Trendline Interactive.
The biggest changes in the industry over the last year have occurred within the MSP group of platforms, so that's a good place to start. These changes touched almost every major player in the category and include:
- Acxiom divested itself of its platform -- Impact -- and its email services team. Zeta Global acquired both. This acquisition followed on the heels of Zeta's previous acquisition in 2015 of the email platform and team from eBay Marketing Services (the former e-Dialog).
- Epsilon appears to have doubled-down on its partnership with Adobe to provide services to customers of the Adobe Marketing Cloud, including customers on Adobe Campaign, its email platform. It might be an indication that Epsilon is moving to be more platform-agnostic despite having its own home-grown email products.
- Experian quietly announced in Q4 that it was looking to sell Experian Marketing Services, which includes its email platform and services team. A transaction is likely to happen in the first half of 2017.
The other major player in this category -- Yesmail -- didn't get involved in buying and selling during 2016, though it did launch a new platform called Yesmail 360i, aimed at providing customers with integrated email, SMS, push, social, display, and display retargeting campaign capabilities in real-time. So to sum up all of the changes among this segment of the industry, one more player was removed from the board (Acxiom), one seems to be in transition (Epsilon), another in limbo pending an acquisition (Experian), with the final two (Yesmail and Zeta) in a position to possibly leverage the changing landscape to their advantage. Why to their advantage? Because just like all the other changes in the email marketing landscape including those of the marketing cloud players, the changes are not driven by customer demand, but rather by vendor strategy. And while those strategies may be sound ones, benefits to the buyers of email marketing services are not always immediately apparent.
What are we to make of all these changes among the ESPs that were at one time the dominant players in the space? The explanation could be as simple as the one most often given -- the strategic imperatives that initially led to the acquisition of ESPs by the large database players like Experian, Epsilon and Acxiom changed over time and the value of an in-house email offering declined as a result. Regardless of the why, the net result is that there are fewer services-led enterprise email solutions available to marketers. The four big marketing cloud email solutions are more and more pure technology plays, with support services provided by third parties like Merkle and Trendline. So it's with this environment in mind, that I make some predictions for the upcoming year.
Systems integrators -- long a staple of the B2B world -- will emerge in the B2C email world
For several years now I've been saying that the email platform has become the center of the mar tech infrastructure within the enterprise. As more and more systems integrate with the email (or more accurately, the multichannel) platform, migrating from one vendor to another has become much more complex than in the past. These migrations must be planned and managed in a way that ensures a good outcome, on time and on budget. Combine that situation with the reality that fewer ESPs bring a strong services team to the party, and you begin to see why the need for systems integrators during migrations is likely to increase in the near future. Vendors like Merkle and Epsilon are already stepping into this role, even if they don't yet refer to themselves as systems integrators. But expect other players from the systems integration world to see opportunities as well. After all, they are already partners with the marketing cloud's parent companies in other areas of their business. It's a natural progression for them to get involved in migrations and systems integrations for email and multichannel marketing.
CPM prices will stabilize, ending a long decline
At some point buyers and investors need ROI, and the long decline in CPM pricing for email has squeezed their ability to make a good return on all of the ESP acquisitions of the last several years. In the RFPs we manage we've see the bottoming out of CPM prices very clearly in recent projects. It had to happen eventually because they couldn't go down to zero. And it's good for the industry because vendors can't invest in technology when they aren't making money.
M&A activity will stay hot
Several years ago I was advised to turn my focus to ad tech because that was where the action was going to be. Well that's not how its turned out. Mar tech is cleaning ad tech's clock based on, among other things, the rise of identity-based marketing. And marketing technology remains a booming category both in spend by marketers as well as M&A activity. And I predict 2017 will see another spate of acquisitions by the major players as well as more investment by private equity firms looking for valuable new assets.
The next ExactTarget and Responsys will emerge
After the last round of ESP acquisitions by the MSPs in 2003-2005, the market was open to new, independent ESPs to step up and provide alternatives to going with one of the MSPs for email marketing. The two who had the most success were ExactTarget (eventually acquired by Salesforce) and Responsys (eventually acquired by Oracle). The recent acquisition spree by these marketing-clouds has created the very same conditions in the marketplace that existed back in 2005, and there are a number of contenders battling to emerge from the pack to offer marketers a choice beyond going with one of the MSP or marketing-cloud ESPs. It's too early for me to speculate what that might be, but I think over the course of the year it will become clearer.
The topic of email subscriber acquisition will continue to shed its stigma
Long a taboo subject at polite email marketing gatherings, the topic of subscriber acquisition emerged from the shadows in 2016. Providers of acquisition services like Fluent and CertainSource took a more active role at email conferences, and the topic was actually featured on the agendas of several of the leading conferences like the Email Insider Summit and the Email Innovations Summit. (I know, both could be called EIS in shorthand!) Email marketers have long known that without a robust acquisition program subscriber databases are going to decline over time, but the hesitation of the major ESPs to embrace the practice for fear of leading to delivery issues at the leading ISPs has kept the topic mainly unacknowledged. Bringing it out in the open is a very positive development for the industry, and one that I expect to see continued in 2017.
These remain very exciting times in the world of email and multichannel marketing, and it's a great time to be in the business. This year is sure to bring changes I'm not capable of predicting, but I feel fairly good about the five I've made here. What do you think the biggest changes are going to be? We'll circle back later this year to see how my predictions are turning out!