uk

Despite a difficult global economic climate, the email marketing solutions industry is prospering.

As most other markets continue to struggle, the sluggish economy has, if anything, increased the focus on retention marketing and in turn email marketing.

Research produced this year by digital marketing industry analyst E-Consultancy found that marketers are increasingly turning to email as a crucial weapon for companies who are trying to focus on effective marketing during the recession. More than three quarters of respondents (78 per cent) rate email as excellent or good for ROI, higher than for any other digital marketing channel and up 12 per cent since 2008. Forrester Research has estimated total spend on email marketing in the U.K. at 379 million euros in 2009 with a 2012 market spend expected to top 454 million euros by 2012.

Marketers are increasingly recognising that email can be a cost-effective way to reach consumers in a more personal, targeted manner than other direct marketing tactics such as mailing hard-copy flyers and catalogues. The growth of email marketing is paving the way for online marketing tactics with email's share of corporate marketing budgets increasing from an average of 19 per cent in 2007 to 23 per cent in 2008.

While on the one hand this is good news for those of us working in this market, on the other hand as spending continues to grow, so too does the number of entrants and competitors vying for a portion of the market. E-Consultancy estimates that there are more than 220 email marketing firms operating in the U.K. with no single company emerging as the clear industry leader.

So why enter a growing but highly crowded market now?

Clear trends are emerging that are likely to drive market separation and consolidation among vendors. There is a growing divide between email service providers investing in new product development to offer more functionality for improved relevance and targeting in email marketing campaigns and those that merely focus on volume and cost per email. According to E-Consultancy, the top trends in U.K. marketing are increasing automation and targeting of email marketing messages. 

Expanding the reach of email marketing through the addition of complementary multi-channel messaging will also likely emerge as a significant trend in the U.K. as marketers seek to further target customers.

U.K. marketers are also swapping their installed, on-premises email marketing software with on-demand, or software-as-a-service platforms accessible via the internet. Nearly half (47 per cent) of marketers in the U.K. now access their email marketing platform online, representing a massive increase in adoption over installed software solutions in the last two years. 

Further differentiation in the market appears to be occurring from products capable of integration, automation and analytics. Systems capable of powering and tracking targeted campaigns based on consumer behaviour or other user-identified functions allow marketers to save time and increase the relevancy of messages sent.

Launching late in a crowded market does not come without challenges. However, in a constantly evolving industry like marketing, early entry into the market does not guarantee anything. Instead, developing an understanding of the market and implementing lessons learned into product development and business strategy may prove more successful. Late entry also allows time for the market to develop, enabling a greater understanding of how a product range can best meet consumer needs.

In a 2003 study, Hidding and Williams analysed 19 ecommerce product categories to determine if a first mover advantage existed for technology firms. The researchers found that in 16 of the 19 categories, no first mover advantage existed. The study also found that later entrants in the technology industry benefited from 'free rider' effects, meaning later entrants mimicked the best practices of pioneers and were able to increase productivity by entering the market with a clarity that does not exist at the pioneering stage of the market. 

This is an exciting time for the industry. The next few years will prove whether it has adopted the correct strategy for expansion into the U.K. market and if it has created the right product to meet the needs of the U.K. consumer. But then everyone knows that fashionably late is always the best way to arrive to the party.

Peter McCormick is co-founder and general manager of ExactTarget.