State Of The Email Industry

My mind tends to go all over the place when I reflect on the email business.   What’s happening with the ESP (email service provider) landscape?  How are marketers shifting how they use and measure email?  What is the consumer impact on email trends?  Where will the budget come from to justify all the innovation being developed?

This industry is a $3 billion-plus industry, growing at a rate of just over 10%+ per year -- not huge compared to some of the growth projections of mobile and social advertising, expected to exceed $20-$30B.  But they are all interrelated.  Do you believe we’d see the growth in mobile, if not for email? 

I was hard pressed to think of any ESPs that were around prior to 1995-1997. I remember the days when the founders of email companies were dry cleaners, insurance sales men and college kids.   

A few things we know about the industry:

  • The vendor landscape has changed dramatically and is near consolidation.  While the ESP reports produced by analysts may suggest hundreds of vendors, the reality is, every vendor of scale has been acquired by a larger entity as a portfolio strategy, or will be soon.   I don’t believe there will be an ESP of any size/scale left in the market.   
  • Email is still littered with errors. When spend requirements exceed abilities, there are not enough guardrails to prevent errors.  It used to be, you hit send at the wrong time and there was no turning back.  We can minimize that problem these days, but the fact is, marketers will make mistakes and the bigger the reach, the bigger the exposure and misuse.
  • Marketing email is still a tiny portion of the email traffic on the Internet.   While a big brand is important to ISPs, it is still a minor portion overall, and we suffer from the practices of the majority.
  • Email CPM has commoditized, and attempt to monetize extensions into social, mobile and multichannel aren’t offsetting the CPM commoditization.   Some of this commoditization is by the big players as they strive to meet the “street’s” growth expectations. But there’s no denying buyers are more savvy today in many respects.  
  • In the mid-2000s, most ESPs figured out that they did not create their platforms for the deluge of data and storage requirements.   All the cool things like triggers, lifecycle and reporting were becoming real challenges to do in scale.   This is why most still support several platforms and versions today.  Do you know what version you are on? 



An analyst recently confirmed what I’ve  been saying for years:  In the age of infinite product selection and choices, where the average ESP RFP now has over 200 questions, the number one reason why marketers switch ESPs is dissatisfaction with service.   That trend has not changed.   That doesn’t mean, the consumer itch to buy something “new” doesn’t get the blood pumping.  But as performance expectations rise and justification for budget stresses a performing channel like email, it is not uncommon for marketers to expect more than they pay for.

If I were starting a business from scratch and had to apply three principles to this business, I wouldn’t include triggers, multichannel, SaaS, Omni channel, big data, real time or the term measurement., they’d be:

  • Everything has to enable fast
  • Optimize Imperfection (know where to apply guardrails)
  • Visualize first

While email is a process-driven channel, these core principles drive innovation and value exchanges between providers and marketers. Most important, they are broad enough to force very focused change.

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