Is the E-mail Service Bureau Dead?

While news of Epsilon Interactive’s pending acquisition of DoubleClick E-mail last week was seen by many as another deal illustrating a move toward more data-driven e-mail, one prominent e-mail executive claimed it was no more than a marriage of two highly flawed business models.

In announcing the $90 million deal, Epsilon’s parent, Alliance Data Systems Corp., said it would give Epsilon a stronger presence in the retail, travel, publishing and consumer-packaged-goods markets. DoubleClick E-mail’s 400 clients include J. Crew, Patagonia, Unilever and Proctor & Gamble.

However, Chris Baggott, co-founder and chief marketing officer of e-mail software provider ExactTarget, claims the deal is an example of a no-growth industry resorting to e-mail to prop itself up.

“Most of the consolidation [in the e-mail industry] is happening at the data end of the business, which is a flat and dying business trying to prop themselves up by adding new revenue streams,” he said. “And the revenue streams they’re buying are people they think will augment their data business as well as add more professional services to a very narrow segment of the market.”

Baggott claims that as marketers get more database driven, they’ll send fewer e-mails and these e-mails can, for the most part, be automated. Moreover, he said, service bureaus have too much employee overhead to compete with e-mail software vendors.

“Marketing is becoming so much more of an analytical game as opposed to an intuitive game,” said Baggott. “The arithmetic is going to tell me what to do. I don’t need expert marketers to tell me what to do. If Chris clicks on hot tubs every time he visits my Web site, maybe I out to offer him a hot tub. Well, the database can figure that out and make that e-mail go, and go at the right time.”

Not surprisingly, Al DiGuido, president of Epsilon Interactive disagrees.

“That is really old thinking … where software takes over and we don’t need people anymore,” said DiGuido. “E-mail gives you raw data. Not everyone knows what to do based on the raw data they’re getting. The whole idea that [e-mail marketing is] cookie-cutter from getting the data to delivering the message couldn’t be further from the truth.”

For example, software isn’t going to produce relevant creative and copy points, it won’t produce compelling offers, and it won’t analyze what types of subject lines get opened, said DiGuido.

“That’s where the assistance comes in from the service side,” he said. “The organizations we’re dealing with are Fortune 1,000 corporations saying ‘can you help us analyze our data and get some sense as to what to do from a messaging standpoint … or can you analyze the data and give us the trending and tell us what we should do based on the trending?’”

DiGuido added: “This is where the marketplace is going. Data companies and e-mail communications companies are working together because customers want this level of integration.”

Who’s right, Baggot or DiGuido? E-mail your opinion to ken.magill@penton.com. Keep it brief and it may appear in Magilla Marketing next week.