Email Marketing 3 - Question: When is an Email Service Provider not an Email Service Provider?

Answer:

When it's an Email Service Provider

[What is an Email Service Provider? On its simplest level an ESP broadcasts bulk email messages to a database of subscribers on behalf of a brand directly or via a marketing agency. Typically used because they have features an in-house system may not and because (in theory) they will offer better delivery rates. And there are lots of them, hundreds in fact.]

Until a few months ago I ran the European offices of an ESP (Bluestreak*) and so have a very good understanding of how ESPs work, the challenges they face and more importantly, what this means for customers. So for anyone looking to select an ESP this post is for you.

[*Bluestreak recently sold its ad-serving technology, and with it the name Bluestreak. For more information on the ESP operation you can visit their new website @

http://www.ionmx.net/

- watch this space].

I would begin by saying that there are 2 main types of ESP; an 'agency ESP' and a 'technology ESP'.

Technology ESP:

Focuses on providing good technology for database management, email broadcast and reporting. Often gives ASP-type access to its tools for self-service use, but may also offer a fuller service and broadcast the emails on behalf of the client. Does not do creative or marketing strategy, but should know email marketing best practice rules and legal matters. Typically charges on a CPM (cost per thousand) model, plus any manual broadcast fees.

Agency ESP:

Provides access to technology that is similar in functionality to the technology ESPs, and certainly capable of servicing 90% of companies, but focuses its business on providing marketing strategy, creative etc to its clients. Sometimes charges a small CPM, but often makes its revenue from account management fees, marketing programs, project management etc.

These are very different types of businesses with differing skillsets and should be servicing different types of client, but the lines are too often greyed out and ESPs of both types are trying to offer the full package. It's an understandable situation. ESPs operate in a commoditized marketplace where margins have been squeezed year after year and seen CPMs fall from £20.00 in 2003 right down to about £2.00 in 2007.

(Note that the CPM an ESP quotes you may be higher or lower than £2.00 as it is dependent on many factors including volume, services required etc etc, but if you are quoted much more than this amount it is time to start asking a few questions).

They have to evolve and adapt to the environment. Building new features is unlikely to generate extra revenue as most clients can get what they need from most ESPs already, and so they look to develop new billable services.

Investent in ESPs is low on the whole, with just a few getting fresh backing or a good acquisition price, and so they are forced to hire behind the curve. This means that although the flashy brochure or PPT might talk about a "holistic-integrated-strategic" offering, they may be reliant on a single individual to have the required skills.

As a tech ESP you need to have good project managers in place who can translate the requirements of the client into a series of technical steps and processes and ensure consistent execution, but as an agency ESP the client facing account managers must be experienced in evaluating a clients situation and producing a strategy of how to get them to their target.

Do you see the problem? As a client of an ESP the people you would rely on need to be different dependant on what your needs are. Unfortunately we have a real problem throughout new media which is a lack of diverse experience; this is an industry where account managers/directors are commonly mid-20's and have simply not had enough time to collect all the needed skills to be good project managers and good strategic planners. This is just one reason of several that means most 'full-service' ESPs struggle at really being what they claim.

But it is not my intention to write an ESP business plan in this post, my chance to do that is behind me! Instead I have written a series of pointers below of what to look for and how to choose the right ESP for you.

1. First you must know the answer to the question of what type of ESP do you need and how much control are you prepared to give them? If I was a marketing person for a major brand I personally would choose a tech ESP for their expertise in the key areas of deliverability, database management and repoting and leave the strategic thinking in-house or in the hands of my marketing agency. After all, email is simply another form of marketing execution and it must complement your other touch points.

But that is just my choice based on my experiences.

2. Whatever your choice, go for an expert at it. If you want a tech ESP then make sure that is their focus and they have good engineers and a solid technology investment plan. If you feel an agency ESP is your better option then ask to meet the account teams and quiz them on their backgrounds, get comfortable that they can understand your business requirements and have the skills to offer good advice.

3. Push for hard data on deliverability for other clients in your industry. Where possible, ensure they are monitoring deliverability down to the inbox vs junk folder level, although this type of monitoring is available seperately from companies such as Return Path (

http://returnpath.com/

).

4. "We have excellent relationships with the ISPs" is a common quote. Really? Check which ones, how many people manage those relationships and how have those relationships benefitted clients of ESP X in the past.

5. A very good ex-client once told me that he doesn't put a lot of emphasis on the account manager themselves, because even an outstanding AM will not provide good service if the rest of the business behind them is not structured to support them. Wise words, and they come from one of the most experienced clients when it comes to reviewing ESPs. So ask to see process documents, escalation steps, business continuity planning, data back-up (and restoration) plans, staff training schedules, research papers etc.

6. Be cautious of free email delivery offered by agency ESPs. Nothing is free and you will be paying for it in other ways.

"If you deal with the lowest bidder it is well to add something for the risk you run. And if you do that, you will have enough to pay for something better." - John Ruskin

If you have any questions about this post or working with ESPs then feel free to

contact me direct

. There are too many types of ESP for me to recommend one in a post like this, but if you contact me with your requirements I would be happy to do so.

:~Dax~:

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