The Role of ESPs Are Changing: Here’s Why

March 3, 2020
Phil Thacker
Phil Thacker

March 3, 2020

Once upon a time, email marketing platforms (also known as email service providers, or ESPs) were the core platform in any digital marketer’s toolkit. Today, this toolkit is evolving rapidly, resulting in an increased favour of new and disruptive technologies, and an ever-greater focus on data itself. While technologies are constantly evolving, the role of ESPs are shifting—and here’s why.

The Rise of ESPs

First appearing in the 1990s, ESP software made it possible for businesses to send email campaigns en-mass—getting passed spam filters with ease, and doing so with features that went far beyond your standard Excel mail-merge. These features included personalisation, dynamically generated content, and so forth.

In the 2000s, the emergence of two features cemented the ESPs place as the centre of digital marketing: orchestration­, or the ability to define journeys for users that included multiple touch points, and a divergence from email as the sole channel served to other channels like SMS, push, and display. ESPs quickly became the home for orchestrating marketing strategies across all digital channels and as a result, the central place for marketing activity.

In 2013, developments in digital marketing took a drastic turn. Marketing technology had continued to experience explosive and sustained growth, ultimately attracting the interest of the big technology software vendors such as Salesforce, Adobe, and Oracle. A flurry of acquisitions took place, with each vendor setting up their own ‘Marketing Cloud’—a suite of marketing products with the ESP at the centre of their offerings.

Data At The Forefront

Throughout these developments data had continued to become increasingly important in realising marketers’ ambitions. The traditional role of data in marketing revolved around the customer profile—information like dates of birth or gender. Profile data could be used when defining marketing audiences, like wishing customers a happy birthday on the correct day, or when managing the content of campaigns, such as a fashion retailer showing gender specific clothing. ESPs, typically employing relational data models based on traditional database technology, were well suited to handling this type of data; infrequently updated, simple, and small scale.

Traditional database technology, however, was much less equipped to handle the explosion of data that web 2.0 technologies like JavaScript tags and REST APIs introduced. These technologies made it possible to track actions and behaviours across digital channels and to move and action upon this information in real-time. Accessing this information, and doing so immediately, was and still remains incredibly valuable.

Faced with problems of scale and contention, ESPs and their legacy data models were by-and-large not in a position to incorporate these technologies into their platforms. Instead, the large Marketing Clouds took the strategic decision to shift or acquire this functionality into other platforms within their cloud, supporting ESPs instead via native integrations of varying quality and usefulness. And so began the shift of data-level functionality away from ESPs, culminating in the rapid development and growing popularity of Customer Data Platforms (CDPs).

The Power of CDPs

CDPs are worthy of their own article, but to summarize, they are dedicated platforms for handling, manipulating and acting upon customer-associated data at scale. They are the in-vogue marketing platform of today, with 76% of businesses looking at acquiring a CDP into the marketing infrastructure within the next 12 months. All of the major marketing clouds are actively developing CDPs to be made available in their ecosystems. Likewise, many independent marketing platforms with functionality that overlap with CDPs are rebranding to take advantage of this trend.

The core concept here is that CDPs aim to be at the centre of customer-associated data. With data informing so heavily on digital marketing activity, it’s entirely logical that the marketer’s focus moves accordingly. Core ESP concepts like personalisation, orchestration, and channel management have the potential to be more effectively executed by a CDP.

Some of the most impressive CDPs today are investing heavily in replicating and improving upon these ESP capabilities within their own platforms. This strategy makes the ESP more akin to a ‘dumb pipe,’ as CDPs utilize the ESP’s highly developed and specialized infrastructure to send marketing messages. When ESPs are considered in this context much of their expanded capabilities become redundant and better served elsewhere.

Next Steps for ESPs

So, where does this leave ESPs? Speaking first generally, we predict their usage to shift over time, from the core tenant of the digital marketing toolkit to a supporting role in actioning campaign activity within a wider ecosystem. At particular risk are the market leading ESPs whose feature sets most heavily overlap with the new breed of CDPs at a high price point. Organisations are more likely to prioritise cost and reliability of their ESP infrastructure. This could potentially provide competitive benefits to the smaller, more narrowly focussed ESPs that incorporate integration capability and reliability offered by newer cloud technologies at a lower price point.

More specifically, it is worth reconsidering ESPs in two groups: those that exist within the marketing clouds of the larger vendors, and independent platforms. For the independents, we expect their platforms to continue to develop with a greater focus on data capability combined with efforts to rebrand their offerings away from the traditional definition of an ESP. For marketing clouds, their go-to-market strategy will increasingly involve selling multiple platforms within their cloud as a single offering, ultimately deemphasising the ESP. The key to the success of these strategies will be the ability of the marketing clouds to be cost-competitive when proposing solutions with multiple licenses and the ability for independents to maintain the functional competitiveness of their offerings against the larger marketing clouds.

The functions that ESPs provide are still a vital component in a successful digital marketing strategy and will undoubtedly remain a part of the digital marketers toolkit, however, with marketing technology continuing to evolve at a rapid pace and strategic marketing capabilities moving to more effective competing platforms, the future of ESPs looks set to be in more of a supporting role.

To learn more about the evolution of ESPs and CDPs, and how it applies to your business strategy, we invite you to reach out to a team member at Shaw/Scott via our simple online contact form. Don't forget to follow Shaw/Scott Europe on LinkedIn.

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Tags: Digital Marketing, Digital Strategy, Email Marketing, Email Strategy, EMEA, CPD, ESP

Solution Architect, Shaw/Scott (EMEA) | Phil has 10+ years of technical consulting experience. After receiving a degree in computer science, Phil started his career at IBM as an Analyst before moving to CSC as a consultant. He joined Oracle as a senior principal consultant in 2012, where he led many large, complex implementation projects and has supported many leading brands in an Expert consulting role. Phil joined Shaw/Scott in January 2019 with a focus on designing and implementing the best possible technical solutions for new and existing clients.

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