Online marketing tools come of age

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Did you hear the one about the VP of marketing who demanded budget and IT support for a $10 million enterprise application that he promised would revolutionize how his company did its marketing?

Neither did we.

The truth is marketers have as much chance of landing a large capital budget software implementation as they do securing a two-week vacation coinciding with a big new- product launch.

Despite the fact that many marketers have as much bottom- and top-line responsibility as their counterparts in sales, finance and manufacturing, they need to be much more creative about getting the software tools they need.

Enter the software-as-a-service, or SaaS, provider. Also called ASPs (application service providers) or on-demand software companies, these vendors deliver their product not as a large, expensive software suite that needs to be bought, installed and maintained but as a Web-based service that marketers can purchase for a few hundred or thousand dollars per month and use as needed.

Marketing ASPs or SaaS vendors aren't new. Most core marketing applications from e-mail campaign management to Web analytics these days are handled via Web-based services. But as the SaaS market has expanded, so has the variety of niche marketing applications available to marketers in a wide array of areas including market intelligence, lead nurturing, event management, vertical industry specialties and more.

In fact, SaaS seems custom-made for marketers and marketing applications, experts say.

"Marketers really don't have the capital budgets, but they always have discretionary budgets, and they are used to spending money with outsourced service providers," said Suresh Vittal, a senior analyst at Forrester Research. So while they can't command millions, marketers can very easily pay an SaaS provider a few thousand dollars per month for a crucial service-delivered application, Vittal said.

Software-as-a-service, meanwhile, has the side benefit of letting a thousand marketing apps bloom.

"With marketing, there's always a new niche application that broader marketing suites don't fill very easily," Vittal said. "The hosted application model is perfect for this with its lower entry costs—for both the vendor and the end user."

One marketer that has felt the benefits of a niche SaaS app first-hand is Charles Watson, VP-marketing at software provider BlueRoads. Watson uses SaaS software from vendor Marketo to handle his keyword ad analysis and lead management tasks. BlueRoads' large, enterprise customers require plenty of handling, typically more than a dozen marketing touches from initial inquiry until a sale is completed, Watson said. The Marketo service offers specialty analytics tools Watson couldn't find in more generic software.

Paying as you go "is 10 times easier to consume for marketers than a big upfront cost," Watson said. "I don't even feel the costs; they have almost no impact on my bottom line."

Waton's vendor Marketo focuses specifically on b-to-b lead management, using SaaS to deliver a niche application serving a niche market segment—a double whammy.

"A lot of database marketing and e-mail marketing applications come from the b-to-c world. B-to-b is different. There's almost always a longer, considered purchase cycle. It's a very different-use case that we want to serve in a strategic way," said Marketo CEO Phil Fernandez.

Marketers like SaaS, Fernandez said, because they end up buying software from other marketers that really get their requirements rather than dealing with a 12-to-18-month, IT-driven, procurement and software deployment cycle. "It's much easier for a marketing department to pay $5,000 per month on a piece of software they really think they need and say, `We'll cut it off if it's not profitable.' "

Indeed, many New Age marketing applications simply wouldn't be possible without an SaaS delivery model.

SaaS vendor Biz360, for instance, uses a services model to cull through millions of media sources to deliver market intelligence services to marcom departments at large companies, including Aetna, Sun Microsystems and Xerox Corp.

"The needs of our clients are much more sophisticated and complicated than a simple packaged software solution could deliver," said Biz360 CMO Tony Priore. "We're providing immediate, continuous and up-to-date intelligence on market news and information. Without a software-as-a-service model, we would not be able to process and manage this huge amount of information on a timely basis."

Another niche that SaaS enables are applications targeted specifically at vertical markets. While enterprise software vendors such as Oracle and Siebel have long touted vertical applications, such apps have been notoriously costly to deploy and limited in regard to customization.

To counteract such problems, SaaS vendor Verticals onDemand is building highly customized CRM applications targeting specific industry verticals, beginning with the specialty drugs sector. Matt Wallach, VP-sales and marketing at Verticals onDemand, formerly led the pharmaceuticals vertical at enterprise software vendor Siebel Systems, but said tweaking Siebel's mega-apps was always "too expensive."

"With SaaS, vendors don't have the same infrastructure costs," Wallach said. "The economics of building and deploying apps for niche markets are fundamentally changed."

Not only is Verticals onDemand delivering its own applications via SaaS, but it has built its products on top of's SaaS platform, leveraging the software-as-a-service model to the max while building in custom features for such niche markets as specialty drugs and medical device manufacturing, Wallach said.

As for the future, niche SaaS apps may end up getting pulled into larger marketing resource management suites. But if that is the case, such apps could lose the flexibility and customization that makes them so appealing to marketers in the first place.

Instead, said Forrester's Vittal, SaaS vendors would do well to make it easy for marketers to integrate SaaS apps with a company's internal systems as well as with other SaaS vendors—such as Verticals onDemand has done with

"Marketing needs change so quickly," Vittal said. "That's why big enterprise client/server applications often fail—they can't integrate with other systems, and they are too inflexible to keep up with the pace of change."

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