CAPTIVA ISLAND, Fla. -- A top executive at email service provider WhatCounts said investors remain bullish on the email marketing space, while predicting that consolidation will accelerate over the next year or so.
“As an investor, we think we’re 10 years into a 30-year bell curve,” said Allen Nance, president of the Atlanta-based company. “We’re not 26 years into a 30-year bell curve, so we just see a huge future out in front of it.”
Last year, WhatCounts acquired Baltimore-based email service provider Blue Sky Factory for an undisclosed sum. Nance, however, said the company has invested more than $30 million in the email space. “You will see consolidation that will lead to fewer (email service) providers,” he said. “That will happen over the next 12 months.”
Some investors may harbor a perception that email marketing has peaked as an industry, but ExactTarget Vice President of Marketing Jeff Rohrs joined Nance in disputing that belief on a panel at the MediaPost Email Insider Summit on Thursday.
“Part of the reason is that social media has had the microphone for the last few years in marketing circles,” Rohrs said. “It is the bright shiny object. It is the sexiest thing … and you had a lot of gurus move into the space who built up the ego of social media around the promise of what it (would do) in the future.
"A lot of these folks did not have a basis in early interactive marketing and didn’t know the nuts and bolts of profitability -- and that email was driving a lot of the revenue," he adds.
ExactTarget recently went public. WhatCounts is backed by Riverside Co., a private-equity firm. It is true that high-profile venture capitalists such as a Kleiner Perkins may steer clear of email because it wants to be in on the ground floor, but plenty of interest remains, Nance said.
“Every investor that I talk to knows it’s still early in the process -- not the beginning, but still very early. Everyone thinks that it’s a great market to invest in because the returns are so high, not for the investors but for the people who are using it,” Nance said. “That’s a good business to be in, when the returns are high for the users."
Rohrs said email has strength: “The dark secret of social media is it needs email to survive,” he said. “It needs a secondary channel for communication.
Barry Abel, a senior vice president at Message Systems, said Facebook sends out 6 billion messages a day and is the most prolific email sender on the planet.
“Everything within Facebook starts and ends with email,” he said.