Every business trend originates because a collection of companies has successfully developed a solution to a core business issue.  For most of these trends, there is an “a-ha” moment, after which they lose their “trendiness” and become more established practices.  Subsequently, each company is evaluated on its merits.  The email ecosystem is no different. Future trends in our industry shouldn’t surprise as we adapt to more salient strategies and enhanced technologies.  One thing is for certain: marketers and enterprise senders will deliver better value in “real-time” to their customer base in 2011.  I see three specific trends that show where email is headed in 2011.  These trends involve (1) delivering real-time value in a real-time marketing world, (2) ESPs becoming a more valuable resource by judiciously differentiating themselves in specific verticals, and (3) maturing ESPs morphing and/or buying into marketing-automation companies.

Trend A: Delivering Real-Time Value in a Real-Time Marketing World

Marketing automation will no longer be reserved for the B2B channel.  The new de facto buzzword for 2011 in email circles will be real-time marketing.  This concept involves not only delivering more than the archaic mantra of “right message at the right-time,” but also delivering real-time value through the right channel, whether it is the social behemoths of Twitter and Facebook, or email, or mobile.  The liquidity of data for real-time marketing will make predictive analytics obsolete and give way to a new term, which I like to call real-time analytics.  These analytics give insights to each and every status update you post and will cleverly enhance real-time marketing value.  You can see a glimpse of this innovation now with real-time insights on every Facebook page post.

What data will be essential for effective real-time communication?  Current data points on each subscriber will rapidly change and become even more (or less) significant,  given this real-time world, as marketers seek to instantly respond and leverage messaging on social media status updates and check-ins, all in real-time.  With the new emphasis on real-time, reliable benchmarking within the email industry will become further convoluted.  Opens and CTR become less meaningful, since marketers must react to what their subscribers are doing, at this instant.   The question then becomes, how do we deliver real-time value, for those subscribers that granted us permission to connect?  What message will resonate most powerfully now? Which real-time channel will pay the most dividends? Preference centers will become even increasingly important, as marketers become more aware of real-time behavior and must react instantly to check-ins.  How will we deal with the effectiveness of ever changing/evolving data, storing it in real-time, and accessing that data so that it is available for other marketing channels instantaneously?  The trend toward real-time marketing gives us many interesting questions to ponder as we head into 2011.

Trend B: ESPs Establishing Niche Verticals

In order for Email Service Providers to have a competitive advantage in 2011 and beyond and avoid fierce competition among themselves, they will have to transform and develop the unique ability to reinvent themselves.  Mature players in the field, such as Responsys, and E-Dialogue as well as MailChimp, Fishbowl and Constant Contact, have already carved out niche markets.  For example, Responsys serves high-end marketers with a minimum list size of 500K (give or take), while E-Dialogue serves many clients within the sports industry, including MLB.com and Fox Sports as “A” list clients, although they have others in many other industry verticals.  The point is, in 2011, maturing ESPs can separate and gain a competitive advantage by serving and targeting a specific niche market.  For instance, Fishbowl predominantly serves the restaurant industry and represents hundreds of restaurant chains.   Once a certain ESP has established such a niche market, it becomes challenging for other ESPs to trespass, especially when the niche market ESP offers world-class service to its customers.  The sooner ESPs can define who they are, what they do, and who they serve, the better prepared they are stake their claim among the elite.   MailChimp, AWEBER, and Constant Contact, among many others, are home to SMBs.  If you run an ESP, a clear definition of who your target customers are will reap its own (significant) rewards.

Trend C: Marketing Automation

As Steve Woods eloquently describes in this interview, The Second Wave of Marketing Automation, there is no doubt that the hot money is moving toward Marketing Automation–and fast. In the B2B market, marketing automation vendors such as Aprimo, Eloqua, Marketo, Unica, Manticore Technology, and Pardot are reaping the benefits, and are growing far more quickly than traditional ESPs.  And as mentioned before, marketing automation is no longer relegated to the B2B space.  And with the recent spate of funding in this segment, along with IBM’s buyout of Unica last quarter, marketing automation is poised for continued strong growth in 2011.  In fact, the lines are blurring so rapidly between the B2B and B2C segments, that we may soon see the two merge, which would give rise to B2P (Business to Person), to use the term coined by ExactTarget in its “one-to-one” marketing campaign.   The marketing automation software industry continues to segment, as Eloqua and Marketo seem to go after the enterprise market, while Pardot and others are better suited for the SMBs.  As this industry matures, large ESPs will look to acquire this technology and find the right fit.   To reiterate, these companies are also defining themselves early and often.

Clearly, marketing automation has a steady tailwind at its back.  However, most of their growth and potential is due to the headwinds created by ESPs.  I’ve always said that Email Service Providers form the backbone of this industry, and they come in different shapes and sizes.  Some call themselves ESPs, while others prefer the term marketing automation companies.   Whichever name you use, in 2011, you will have to find your niche vertical within this quickly developing industry.  Retailers and senders today are increasingly savvy, and they want expert advice on delivering real-time value in a real-time marketing world.   Whether you are able to deliver email in a timely manner is no longer their only concern.   Additionally, they will demand professional advice on sound automated cadence, all with real-world industry specific referrals.

These trends give us a glimpse of what awaits us in the email industry in 2011.  These are exciting times for our industry, and we must rise up to meet the challenges before us, and step into this brave new world characterized by real-time marketing, niche verticals, and marketing automation.

Fred Tabsharani

Port25 Solutions, Inc.

@tabsharani

Moving forward within our email solar system, we can begin to make out the next frontier on the horizon.  At the center of this brave new world is a term that remains relatively obscure today: Ethonomics, or the study of ethics in the marketplace.  Ethonomics is a conditional term given to the concept of defining and prioritizing values within value systems—systems that describe the management of ethics in a particular marketplace.   Ethonomics prioritizes values within a system so that the price and quality outcomes in a given marketplace become favorable.  When these outcomes are favorable, the marketplace is said to have a congruent value system.

The intent of this post is for the email industry to recognize and discover that we, as senders, are a part of an “incongruent” value system.  As a colleague of ours mentioned, “Ethonomics does exist in our industry, just not everywhere and not across all players.”   A study of ethonomics (as it relates to the email industry) suggests that, in strategic ethical decision-making, a high level of engagement is required to produce efficient, flexible and effective resolve, which ultimately leads to ethical normalcy.  This is an intangible that does not currently exist across our industry.   The current lack of ethical normalcy in the industry implies that management of ethics and economics in email through “non-regulatory” methods holds significant advantages over management of ethics through regulation.

Let’s face it, without Email Service Providers (ESPs), we wouldn’t have much of an industry, correct?  ESPs are the “galaxies” of the email universe; they ultimately develop long-term solutions for most marketers’ digital messaging requirements.  However, as the industry navigates towards maturity, we continue to find ourselves struggling, caught between profitable business practices and virtuous principles meant to further the cause of the common good.

All industries face this problem, not just email. However, we as a group must recognize these growing pains now and find a solution so we can discern consistent ethical boundaries before civil hostilities spiral out of control.  The intersection of ethics and economics lies with the “c” level decision makers in our industry, who sometimes choose short-term gain over a long-term strategy for the greater good.  I believe the email industry has the ability to produce sound non-regulatory principles that will thwart unethical behavior, at least among suspect senders.

The Scarcity and Commoditization of Legitimate Email

For example, one method of survival for a particular constellation of ESPs is to develop an internal policy for eradicating the cluster of marginal clients that tend to send spam.  However, from a financial standpoint, these policies can be difficult to enact due to the large paydays some ESPs might receive from these marginal accounts.  The scarcity of legitimate email makes the eradication of spam a compelling issue.  Currently, legitimate marketers know when they have a class “A” organic list, allowing them to take bids from several leading ESPs, who will drive down the CPM price in order to earn their business.  But imagine, for a moment, a “relaxed” way to regulate CPM prices, so that once bids are in, marketers can focus on complimentary/supplementary services (rather than price) to determine the right ESP for their organization.  To address this idea, I propose a “C” level summit among leading ESPs—a meeting to outline ethical principles and pricing models that would be acceptable to (almost) everyone who sends commercial email.  Yes there are exceptions.

Given emails cost effective nature, this economic crisis has created the perfect opportunity for the email industry to grow and, the barriers to entry in this industry have been significantly lowered with advancements in technology. We’ve seen entrepreneurial spirit skyrocket with the sprouting of several boutique ESPs and/or “marketing automation” companies, each with a dream of becoming the next John Glenn overnight..  But it remains to be seen if these budding entrepreneurs are willing to navigate the email universe patiently and consider ethical sending and pricing policies. If we ever we want to make meaningful progress in the fight to eradicate spam, a code of ethics among legitimate senders and ESPs must prevail.  Once non-regulatory policies among ESPs are reliably transparent, we then can take the next step and determine which marginal clients ESPs/Senders would consider abandoning.

The Commandments of Email

A summit of leading ESPs is the perfect way to thwart cannibalistic pricing models and put the onus on legitimate marketers who will make decisions based on more than just pricing. Call it what you like—ethonomics or ethical based sending practices. The bottom line is that we must encourage our leaders and believe that they will do the right thing for the industry.  In this case, doing “the right thing” means setting a good example by creating a set of email commandments that less experienced ESPs can emulate.   In order for ESPs to peacefully advance, ethical sending and pricing policies should be paramount.

For example, we know that ISPs are doing everything in their power to ensure that legitimate email lands safely in the inbox.   We also know that ESPs continue to collaborate with customers to ensure their lists are not purchased, and to make sure that they are organically grown through various list building strategies.  What we don’t have is transparency among ESPs when one underbids the other to gain market share.  By massively underbidding each other, we begin to project discomfort and a feeling of anxiety among industry colleagues.  Instead, if the “email commandments were in place including reasonable pricing policies, it would be reasonable to think that the marketer chose a particular ESP based on features and services, rather than just price.

If ISPs will continue to develop ways of getting more legitimate mail into the inbox,  senders will be encouraged to begin extracting marginal clients from their base portfolio.  Senders and ESPs then will be more likely to collectively strive for the eradication of spam, rather than choosing to pad their bottom line by sending suspect email.  In a true parallel with our society, we must find ways to quell the temptation of a large payday by abstaining from sending spam-related email.

As our journey for eradicating spam enters then next frontier, we as leading ESPs and Senders must collectively ensure that ethical sending practices and pricing policies are indoctrinated for the greater good of our developing industry.

This post was inspired by George Bilbrey of ReturnPath, Matt Vernhout of ThinData, and Brian Ratzliff of WhatCounts, Inc.

Fred Tabsharani

Por25 Solutions, Inc.

@tabsharani