ABCs of ASPs

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When 3Com Corp. commenced its corporatewide re-branding campaign in March, it needed a way to manage the communications between its in-house marketing personnel and 3Com's various agencies.

"We needed a collaborative tool quickly, and we didn't have a companywide tool," said Jim Petersen, director of corporate branding.

3Com turned to a new company, TeamToolz Inc. in San Francisco, an application service provider with a hosted service for marketing departments and their agencies that supports the creation, management, archiving and distribution of marketing content. About 200 people, more than half outside 3Com, now use TeamToolz as part of the 3Com deployment.

TeamToolz, which focuses on companies that use multiple agencies and spend more than $10 million on advertising annually, officially launched in July.

From collaboration to direct marketing to online surveys and competitive research, a growing number of marketing departments are turning to services that they access using nothing more than a Web browser.

Traditional marketing automation vendors have gravitated toward making their licensed software available under an ASP model, which is typically priced on a per-user, per-month basis.

"We give quantifiable cost savings," said Scott Collison, VP-marketing at TeamToolz. He estimates users will see a 10% reduction in mailing and messenger charges, another 20% reduction in travel expenses and a 5% savings in the cost of mistakes and rework.

Cost savings are the oft-mentioned advantage of an ASP. But although ASPs continue to emphasize savings, most ASP executives will admit their customers often come to them to speed their time to market, or to work around the inability to hire the right personnel quickly enough.

Indeed, the majority of ASP users today have selected these providers to handle "extenuating" circumstances, such as a staffing shortage, said Peter Christy, director and senior analyst, Jupiter Communications Inc. in San Francisco. But that will change, he predicts.

"People will come to realize [ASPs] are a practical alternative," he said, adding that it's wrong to "underestimate the general impact of ASPs."

Staying flexible

According to Heather Ashton, a senior analyst at Hurwitz Group Inc., Framingham, Mass., making available a number of deployment options is key for marketing vendors. "By offering the same solution in both a hosted or licensed option, marketers have an alternative to get in the game quickly through hosting, knowing there is an easy migration to in-house deployment if and when it makes sense," she said.

Take Annuncio Software Inc., Mountain View, Calif., which in January debuted its full-service Marketing Service Provider offering for e-marketing campaign automation. The company began offering its software as an ASP service in October 1999. Some 16 of Annuncio's 46 customers are now using the ASP option.

"We anticipate keeping both the licensed and hosted versions," said Jennifer Code, director-account management. "It gives customers a lot of flexibility." In fact, she said, a number of customers have begun using the ASP service while they prepare to install the Annuncio software locally.

One Annuncio customer, Lucent Technologies Messaging Solutions Group, retained direct control over their e-marketing program, but elected to host the software on Annuncio's site. This way, the Lucent unit was able to get its program up and running in just 30 days.

Two years ago, MarketFirst Software Corp. began offering its applications as an ASP. Its 100 customers include Autodesk Inc., Clarify Inc. and GTE Corp., as well as several dot-coms.

Enhanced marketing portal

Seeking to be a destination site for marketers, MarketFirst recently launched an enhanced version of, its portal site for marketing professionals. Along with services, the site offers news, professional education, career advice, best-practices examples and community sites.

Pete Tierney, MarketFirst chairman and CEO, believes that aside from the efficiencies inherent in an ASP configuration, many clients opt to use ASPs because it helps them get to market faster than traditional approaches.

And there's at least one other advantage to using an ASP: keeping the IT organization at arm's length. "The marketing department has the ability to move aggressively with us and not get caught up with the issues they'd confront if it was an acquisition that IT had to be involved in," Tierney said.

Jon Klein, VP-marketing for marketing vendor Promptu Inc., San Jose, Calif., agreed. "A monthly expense instead of coming up with a half-million dollars or more is a preferred way for marketers to buy," he told BtoB recently. In June, Promptu announced an upgraded, online version of its software suite for marketers, which claims around 350,000 licensed users.

Next steps

Many observers agree the next logical stage of ASP services will be to knit these online applications together with the software and data companies run locally.

For instance, a company could synchronize an ASP-based direct e-mail campaign with an in-house sales force automation system, giving reps in the field leads as they arrive.

The infrastructure for this kind of connectivity will be enabled by extensible markup language technology, the meta-data standard that is revolutionizing systems integration.

MarketFirst's Tierney believes XML makes such linkages "pretty trivial," and that eventually ASPs will begin linking their applications to each other via standard XML extensions.

TeamToolz's Collison is another who sees the promise of XML. "We don't offer XML connectivity at this point," he said. "But we're working hard on driving this standard, and our [chief technical officer] is on the adXML group."

The proposed XML standard seeks to create a vocabulary for connecting business rules across applications used in the marketing/advertising industry.

Local benefits remain

However, there remain benefits to keeping marketing software locally. Locally managed software is easier to integrate with other local applications, such as customer databases and customer relationship management systems.

Annuncio, for example, has no intention of turning the lights out on its licenced software product. "It's tougher to integrate things when the databases are not sitting next to each other," said Annuncio's Code. "It's tougher to do real-time and high-end integration with other systems."

By far the most prevalent marketing application delivered today as an ASP service is direct e-mail services.

Access Markets International Partners Inc., which studies the small and midsize company sector--the sweet spot for ASP services--estimates that about 6% of companies with between 100 and 499 employees make use of outsource services for some portion of their sales/marketing direct mail. Some 7% of companies with between 500 and 999 employees make use of these services, according to AMI.

"I definitely see e-mail marketing being an off-loaded function now," said Dan Janal, author of "Dan Janal's Guide to Marketing on the Internet," and a frequent writer and speaker about Internet marketing.

The services offered by these outsourcers range widely, according to Janal. Some firms do more-or-less mechanical functions, such as providing the technical infrastructure for distributing an e-mail campaign to distribution. Others provide all the elements of a campaign, including the creative and the post-campaign analysis.

Automating collateral

The outer fringe of these services are firms that are trying to automate the creation of marketing collateral, such as press releases.

"There have always been companies that will interview you and write a press release. Now we're starting to see ones that have a fill-in-the-blanks questionnaire on their Web site," Janal said.

Ultimately, there is a limit to the tasks that can be automated and how much work companies should hand off to outsiders, including ASPs, according to Jim Kent, editor at Schlumberger Ltd., an international technical services company with headquarters in New York and Paris.

"Our view is, the market is our business. We know how to talk to our customers, and if we have to subcontract that, we have no right to be in the business," Kent said.

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