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Targeted Email: From Spam to Choice Part 4: Page 2

By Bruce McCracken     Feedback
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The Choices
A comparison of the three approaches; buying an application and doing it in-house, using an ASP, and using an outsourcing provider are illustrated below in a chart from the same report. (The chart refers to an outsourcing service provider as a marketing services provider.)

MSP, ASP, or license?
Internal Competencies Marketing Service
Application Service
Licensed Software
Sales and Service Model Complete provider from creative services to execution to analysis Applications rented from ISV or third party
Some consulting of creative templates may be provided
Customer buys software license
Responsible for maintenance
Marketing Resources No creative team on staff
Already outsources most marketing functions
Small number dedicated to application maintenance
Has some experience in other direct marketing functions
Large dedicated teams focused on research, creative, and analysis
Seasoned professionals from all functions of marketing
IT Resources Small staff mainly focused on maintenance and internal support Small number dedicated to application maintenance
Minimal experience in systems integration
Strong knowledge in deployment, customization, and maintenance
Portion of staff dedicated to CRM applications and integration
Timing of Deployment Need something running within a month
Limited or no time to train employees
Deployment needs to be under three months
Additional time for training is available
Project time scope three months or longer
Scope of Deployment Small team involved with e-mail marketing project A few divisions and field teams using applications
Integration used to feed results from analytical systems
Enterprise use across multiple divisions
Other departments outside marketing involved with project
Integration not only with CRM applications, but other enterprise systems
  E-mail marketing not seen as a differentiator
Security of marketing info and customer data not a top priority
E-mail marketing viewed as strategic need in the future
More involvement in creative and analytic processes
Security concerns focus on ownership of data not sharing
All marketing functions seen as business critical now and in the future
Large teams dedicated to creative services, market research, or marketing effectiveness
Security is a top issue for marketing plans, product information and customer data
Source: AMR Research, 2001

The report also indicates that in a survey of marketing professionals, 42 percent of the respondents reported using both a licensed application and outsourced services. An example of one reason for the mix would be marketing that requires advanced creative design and segmentation may be done by the outsource service provider, while simpler mailings like general newsletters require less sophistication, segmentation and/or technical expertise.

Another major factor is the volume and extent of the e-mail marketing initiatives. The report also noted that survey respondents with licensed applications reported spending an average of $21,500 per month versus $7,500 per month by those using outsource providers. Scott says, "Companies purchasing licensed products can expect to spend between $100,000 to $200,000 up front, while outsourcing start up fees will be around $10,000 to $20,000." Another consideration will involve how the project is carried on the books. Using an outsource provider or ASP allows the expenditure to be listed as an expense, while the application and related hardware are listed as assets.

The outsourcing and ASP options also provide predictable fixed budgeting and accountability in performance. The services that they provide are core competencies. They are responsible for keeping up with technology and have expertise and experience with deployments leading to a faster and smoother ramp up.

Scott suggests that companies with reduced creative abilities should think twice about purchasing an application. "If you don't have a strong competency in marketing and you buy an application, it will cost you less, but you will probably send out a bad e-mail that won't get any response."

Daniels feels that a more creative mixed approach may be the best way to go for some. "In e-mail marketing, the trend is to continue to outsource in part due to the services components offered. There is still somewhat of a logical divider between the folks doing traditional marketing and the online marketing. The folks that are more sophisticated in both use a hybrid model. Outside of that, the outsource model is quite viable and attractive due the barriers of building the technology internally and expertise."

Daniels cites trends noted by Jupiter Research. "We see a trend over time of bringing the list segmentations in-house as folks get more sophisticated. For the execution of the e-mail marketing campaign, we see that trend going more and more outside of the organization."

Scott notes, "Companies may not have the staff and may be better off leveraging an outsourcing service provider to handle the whole process, as they don't have the expertise. Smaller companies that do not have the resources and expertise can leverage the expertise and buying power of the service provider. Outsourcing allows the staff to focus on more strategic initiatives than managing e-mail listings."

Daniels points out additional considerations for outsourcing unique to e-mailing. "One of the bigger issues that we are seeing to outsource is the issue of spam and e-mails ending up in the bulk folder. Beyond the creative services, outsourcers are more adept at helping marketers to understand the triggers and filters that are going push messages into the bulk folder. Initially, they have relationships with the ISPs to be the champion on behalf of that marketer."

On the other hand, Scott suggests, "If you have the infrastructure and take on the personnel, your costs are higher but not as high in the long run as using an outsource provider. It doesn't make sense to use an outsource provider unless you are going to leverage their campaign design and creation. You should focus on doing it yourself if you can due to integration issues."

Daniels adds, "The decision to fully deploy a campaign management solution in-house is very dependent on the organizational structure and core competencies of the marketing staff. In many cases, improving marketing results requires a higher level of data analysis sophistication. Where the lists are fairly basic for the intent of the marketing campaign, and fairly rudimentary such as newsletters, it is easier for marketing to do that internally because they are not looking at vast amounts of segmentation."

This article was originally published on February 19, 2003
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