Two years ago, most marketers used an in-house software package to manage their online campaigns.
Now, effective campaign management requires involved use of cookie data, ad server logs and customer databases, and is folded into customer relationship management programs. The complex task increasingly is outsourced to application service providers (ASPs).
The use of so many databases is transforming campaign management software into middleware, says Allen Bonde, director of advisory services for Extraprise Inc., Boston, an e-services consulting company.
"It's getting embedded," he says. "The value comes from the pieces it's integrated with; in a vacuum, it doesn't make sense."
This has changed the point of contact for campaign management software vendors, Bonde says. To reach clients, they either have to work with service providers or become service providers.
The transition has software companies scrambling, says Lynne Harvey, senior analyst at Patricia Seybold Group Inc., a market research firm in Boston.
"Campaign management tools are not cheap," she says. "Analytic applications aren't cheap. You can spend $250,000 to $500,000 on one application."
As a result, even large companies are turning to application service providers. "ASPs provide a subscription-based model that's a lot cheaper," Harvey says.
Boston-based Xchange Inc., which earlier this month changed its name from Exchange Applications Inc., reasoned that the Xchange name would better reflect the software provider's yearlong evolution from a single-product marketing applications company to a multiproduct, enhanced customer relationship management (eCRM) provider.
"We've been using data mining technology a long time" to manage ad and page deliveries in real time, says David McFarlane, COO for Xchange.
Joe DeLora, a senior manager for Bell Atlantic Corp., New York, says his company uses Xchange's Dialog e-mail software in-house. But for other marketing functions, such as banner ads, the company pays Xchange to act as an application service provider, ASP that handles the entire campaign management process, "giving us greater flexibility," DeLora says.
Agencies change focus
The shift toward campaign management services has affected advertising agencies as well. To provide campaign management to Web clients, agencies are also becoming technical service companies.
TPC Inc., Burlington, Mass., for example, grew out of a Boston ad agency, Holland Mark Edmund Ingalls, before being spun off on its own three years ago, says TPC President Brad Neuenhaus.
TPC offers campaign management based on the e-Business Interaction Suite from Delano Technology Corp., Richmond Hill, Ontario. Delano VP-marketing Rob LaLonde emphasizes his company's ability to connect with enterprise resource planning systems or eCRM systems.
"Campaign management can't stand alone," he says. "Our platform gives you the ability to leverage your data."
But the resulting system is too expensive for most clients, who are now more likely to buy the service from a company such as TPC rather than directly from a software vendor, Neuenhaus says.
Mike Galgan, chief strategy officer for Avenue A, a Seattle-based interactive ad agency, says the need for trained operators who understand the complexity of campaign management explains its transformation from product to service.
"It either has to be so complicated that no one understands it and it'll be used wrong, or it will fall short of giving you the full picture," he says. "It's a technology-enabled service."
Once sophisticated campaign management is in place, it completely transforms an ad agency, Galgan says. "The creative heart of the agency must follow the technology head," he says. "You can have the best software in the world, and it's no good without a great pilot."
The ability to use campaign management tools to turn data into knowledge will be the key agency skill in coming years, says Jim Nail, senior analyst at Forrester Research Inc., a Cambridge, Mass.-based market research firm.
"If you think the world goes fast now, just wait," Nail says. "The skills will shift from knowing the technical idiosyncrasies to asking questions you can flip into the refinement of your campaign to goose results."