Inside our evaluation requests, we’re seeing a higher concentration of enterprises requesting to add Email as a Service (Eaas) to complement their current cloud and application product offerings. I was recently asked to join a call with a leading enterprise cloud provider that already uses PowerMTA™ to send email internally, but now wants to add Email as a Service to their service portfolio.
Companies like Zoho, which recently added Zoho Campaigns, and GoDaddy, which added Express Email Marketing®, have integrated Email as a Service (Eaas) to their current suite of applications, which markets directly to a captive audience. Both Zoho and GoDaddy already have PowerMTA installed, so becoming an ESP was the next logical step to enrich their service offering to their clientele. It’s also noteworthy to point out that Amazon has had a “Simple Email Service” offering, (Amazon SES) focusing on transaction emails, for several years. This trend has become increasingly common within our research.
In previous blog posts, I spoke of the reverse situation, in which ESPs would supplement their core email service with supporting services such as in-house design, research, and consulting. While the industry is still white hot, we’ve seen a slow-down in mergers and acquisitions over the last 60 days. Enterprises that are keen to add EaaS can benefit immensely; they can keep their audiences captive while eliminating the need to outsource their email application. If the enterprise can scale appropriately internally, they can generate a lucrative revenue stream with very little effort, or additional investment, because the core infrastructure responsible for delivery is already in place. Providers like Savvis (which was acquired by CenturyLink over a year ago, and which owns one of the largest global network footprints), have much to gain because they own the computing and network assets. Enterprises that can leverage PowerMTA, with those assets and services stand to benefit from this trend.
Through our research, we’re seeing mature enterprises map out a formula for ESP success. As any CEO of a traditional or cloud-based ESP will tell you, there is a learning curve, but the barriers to entry are still low to add EaaS to your enterprise.
In an ideal world, let’s assume that messaging infrastructure is in place for your internal subscribers. Let’s also assume that you’ve chosen a front-end solution such as Interspire, WhatCounts, Active Campaign or any of a dozen other solutions within the Port25 network.
Now you are ready to market your ESP, not only to the world, but more effectively to your existing customer base, which already uses your service for other offerings. As more ESPs come on the market, a deflationary trend will ensue, as we are seeing. This deflationary trend will deeply affect how you potentially market your new service offering.
Scaling in a Deflationary Market
Deflation occurs where there is an excess of aggregate supply (in this case, a large number of ESPs). I don’t think we’ve hit the tipping point just yet, but as more companies make ESP services available to their core audiences, prices will begin to fall.
In order to dramatically increase your user base, Email as a Service needs be free. See MailChimp’s article here about scaling for 2 million users. As you deflate your pricing, you gain rapid traction among your internal clients, and begin to scale with marketers outside of your own ecosystem, which in turn helps your complementary services. The problem occurs when you begin to acquire suspect clients and must decide where to draw the line with an onboarding policy. This decision will affect many things, especially your ability to send on behalf of those clients. As traditional ESP’s know, weeding out illegitimate marketers by using sophisticated vetting and onboarding techniques is crucial to long term deliverability success.
If giving this service away for free isn’t feasible because of business reasons or overhead, as previously mentioned above, companies will need to offer more solutions that provide additional support or value. For example, Savvis is looking at providing their customers with a full end-to-end solution that includes service management with the ReturnPath delivery tools. In Savvis’ case, they would manage PowerMTA™ and use ReturnPath’s Intelligence Suite toolset to proactively monitor reputation and delivery on behalf of their customers. Having a fully managed email solution reduces the operational aspects of email services that require customer involvement, if not completely removing them. This is a valuable offering because it allows customers to focus on their core business. Not to mention, at the enterprise level, the service level agreements that are wrapped around an email as a service provides guarantees which can be passed down the customer value-chain.
This post was inspired by Bob Stolzberg of Savvis. Additionally, this writing was originally supposed to be a Whitepaper, but I’ve decided to turn it into a blog post.