dimanche 7 février 2010

E-mailing: should an Email marketer choose a software or a full service agency (or ESP)?

Executive Summary

The total cost of a full service agency or ESP specialist in e-mail channel is likely to be much lower than a dedicated software, even in the long term, and to offer more flexible, sharp and profitable email marketing projects.


Email has progressively turned into a major marketing communication channel but too often, companies view it as a short-term way of selling and a mean of maintaining low-cost customer relationship.

It would be misleading to believe that successful emailing campaigns comes down to simply press the "send" button using a hastily prepared message.

Email marketing is a marketing channel that should be considered in the long or medium term and for which a communication strategy must be implemented and followed (as any other marketing channel).

It must be measured, analyzed and optimized to ensure maximum efficiency and profitability. 

Two options are available to the marketing manager as to how to use email: a specialized email software - either the traditional inhouse software mode or the outsourced mode also known as Software as a Service (SaaS) – also called self service mode, or to use an ESP (Email Service Provide) or an agency specializing in e-mail which will, in addition propose deployment and sometimes creative services, also known as “full service” mode. For this fundamental choice, one of the first idea of the advertiser will very likely be to focus on the budget side of things.

Software can be found on the market in all price ranges, from thousands to hundreds of thousands Euros, Pounds or US$ (or at a CPM price around 1 € per 1 000 e-mails), these software licenses seldom includes support and maintenance.

But this up front cost is – from far- not the only one to consider. In fact, the marketer will have to add the human resources costs necessary to operate the software, to generate appropriate content, to manage the databases, and to monitor the deliverability of e-mails, not to mention the resources required to analyze, evaluate and optimize campaigns. These items require specific marketing, email and statistical expertise and the candidates available on the market with these multiple competences are often rare and expensive. 

Moreover, these resources will likely have to be doubled because of leaves: if your deliverability manager goes on annual leave, your deliverability will do the same and the ROI of your email campaigns is gone.

Suddenly, dozens or even hundreds of thousands of Euros (pounds or US$) are to be taken into account along with the initial cost.

A good email marketer has to care about how the solution manages not only inbox deliverability of the campaigns, but white listing, feedback loops with ISPs, unsubscribes, complaints/abuses and in general database churn.

Some studies available on the market (one of them being produced by Epsilon International) are showing that each active and opt-in email address in a database represents and intangible asset representing a capital circa thirty to forty Euros on average.

Any lost address is so much money gone up in the blue.

Not to mention the impact this may have on the advertiser’s e-reputation, which may cause him to see his campaigns marked as spam, blocked or even black listed by ISPs.

Another cost, which for some brands, can easily exceed several million Euros per year and will add to the overall budget.

In fact, each marketer has an email e-reputation, and similarly to the off line world, where brands represent an intangible value in the balance sheet, the e-reputation and the email database also represents an asset that worth money.

Finally, we have to consider the time needed to implement the solution.

In some cases, it is not unusual to see time to market circa 24 to 36 months or even more, between the purchase of the software license and e-mail channel actually operational.

How many companies can afford to wait that long to reap revenues and return on investment? In comparison, the benefits of a full service agency specialist of the e-mail channel are many: complete mastering of the technology, availability of necessary human resources, multiple expertise, scoping capacities, campaign analysis, implementation and optimization, and swift deployment.

The more important criteria remains likely to be cost control, in the full service mode, the budget is defined and agreed by contract, and is also often much lower that the total cost offered an inhouse solution, even if you take depreciation into account.

Technology control

Indeed, each provider specializing in a specific software or solution can exploit the slightest functionalities, especially since it is often specially developed or adapted and can include some unique features you will not found in a commercial software. And because it is shared among all agency’s clients, its cost is more easily depreciated.

The advertiser is guaranteed to have the latest technology at an unbeatable price.

Resources and expertise

Specialized agencies (or ESPs) employs only experts, both technology experts and deliverability experts, and will provide the resources needed to ensure the success of the advertiser’s project, offering a team of professionals that would have been hard to put together inhouse and for a prohibitive cost and time to market. In addition, the agency may also provide expertise for ad hoc needs of the client.


A common misconception is that the e-mail channel is simple. Implementation of email campaigns often require far more resources than expected, whether in computer graphics to create the html messages, uploading messages and lists in the email management tool, or management of personalization. One weakness of inhouse email management is that the very same teams than the ones that implemented the campaigns generally also do quality controls. Only a specialized quality control team ensures the message can be sent safely.

It is sometimes necessary to assemble a team of several people working simultaneously on these different tasks for the campaign to be live in time: only a “full service” agency will gather as many professionals in such a short time – sometimes just a few hours between the brief and the deployment of the message.

Evaluation and Analysis

Today more than ever, no marketer can undertake action without a serious evaluation of the return on investment.

A real time analysis allows adapting the strategy when necessary to generate the best results.

Email today became much more complex than watching only three indicators: open rates, click rates and conversion rates.

Some e-mail channel specialized agencies have developed more relevant indicators, that need to be interpreted by an email marketing specialist.

Does a piece of software enable the advertiser to access the good indicators? To interpret them correctly? Take the necessary decisions and adjust the parameters of its campaigns? Will it allow to give access to the databases traditionally structured into demographic segments to a dataminer so that the marketer can build a statistical classification more suited than an off line segmentation to e-mail and web in general? Does this software allow this classification to be directly actionable?

The traditional RFM segmentations are rarely adapted to e-mail and on line applications that require very often an advanced behavioral classification.

For a credit institution for example: first-time buyers, tenants not yet owners, divorced people, landlords, etc… And the marketer relying solely on a piece of software will he be able to make the best ROI and strategic choices for its campaigns based on automatic data supplied by the software?

All these points, far from being trivial, can be determined by the analysts employed by the specialized agency, in addition to their statistical mastering, they not only have a great marketing knowledge but they also master the characteristics of e-mail channel.

Swift Deployment 

Knowledge and expertise of the specialized agency, combined with an already operational infrastructure, allow marketers to set up complex projects in a few weeks, where an implementation from scratch would take several months (particularly with inhouse software).

This speed allows to access to a very fast income in front of the needed investments involved. And some flexibility in tactical actions can be considered without delay problems.

Cost mastered Like any supplier or provided, a specialized agency is working on a RFP to provide a quote. The advertiser has full visibility onto the project and its cost overall.

It enables the marketer to integrate easily the project investment in his marketing budget without risk of unexpected overflow.


Finally, the total cost of a full service agency or ESP specialist in e-mail channel is therefore likely to be much lower than a dedicated software, even in the long term, and to offer more flexible, sharp and profitable marketing projects.

Didier Gaultier

Note: this article has been published initially in French on Journal du Net at the following URL :

Journal du Net Link

You can reply to the author of this article using the following address:

1 commentaire:

  1. Thanks for this Didier. Interesting thoughts. Appearances can be deceptive ...


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