A year ago, the story in the e-mail world was consolidation at the hands of database marketing companies. Harte-Hanks’ acquisition of Postfuture, an e-mail marketing technology company; Experian’s acquisition of service provider CheetahMail; Acxiom’s acquisition of Digital Impact; and more recently, Epsilon swooping in to pick up Bigfoot Interactive were the deals that dominated the headlines. The database companies managed to pick up e-mail competencies for a reasonable investment in what had become a highly commoditized business.
Few independents were left standing. Companies such as ExactTarget, Responsys and Silverpop, as well as Constant Contact, Subscriber Mail and Topica, all continue to specialize in e-mail marketing communications on behalf of their clients.
We may see further consolidation in that space in 2006, but the buyers could well come from other corners of the marketing world.
Shar VanBoskirk, senior analyst at Forrester Research, predicted there may be some deals this year with CRM companies picking up e-mail providers or Web analytics companies getting in on the action.
“All of the e-mail companies have partnerships already with the Web analytics companies,” VanBoskirk said. “Who has all the data? It’s the Web analytics companies,” she said. CRM companies are another possibility.
A Forrester report VanBoskirk published in December tracking e-mail marketing service providers found that b-to-b provider RightNow Technologies scored high marks as the best in class in multichannel campaign setup and reporting, and may be a model other companies could follow.
“The next wave of acquisition will be similar to replicating a model like RightNow,” she said, describing the company’s product as an “on-demand CRM tool” with a very capable e-mail module. “They integrate one database throughout their multichannel interface, including e-mail customer service and sales force automation,” she said.
Far from becoming a weakened marketing channel, e-mail is still very much in the game. VanBoskirk said spending on e-mail marketing is still strong. “E-mail is second only to search in companies’ online marketing budgets today, with 80% of marketers using, piloting or planning e-mail marketing programs, and 88% expecting e-mail effectiveness to increase in the next three years.
That’s because the sales numbers speak volumes. The Direct Marketing Association estimates that legitimate commercial e-mail resulted in approximately $39 billion in sales in 2004, including about $9 billion in small-business sales.
VanBoskirk predicted that, in the long term, the number of e-mail marketing vendors will shrink further as vendors find the technology requirements to be an advanced player too expensive and too cutthroat.
Reflecting on the companies that will be left standing, VanBoskirk predicted that “at the advanced level, it will be Epsilon Interactive [formerly Bigfoot Interactive] and Responsys,” adding, “at the basic level, it will be ExactTarget, Lyris Technologies and Harte-Hanks Postfuture.”