Et Tu, Adobe?

Adobe Cesareans Cross-Channel From The Email Market

Say hello to my little CPM!
Image Source: Ronald Grant Archive

Over the summer, we were all treated to an abundance of headlines proclaiming that Adobe, Oracle, and Salesforce were engaging in a marketing cloud war. Yet the relevant acquisitions — Neolane, Eloqua, and ExactTarget, respectively — only engaged in border skirmishes, since each focused on the distinct, yet adjacent, markets of campaign management, B2B marketing automation, and email marketing. Indeed, each of the strategic acquirers either already had partnership agreements in place or agreed to partner on the heels of the acquisitions.

What a difference a half-year makes. On Tuesday, Adobe fired a salvo in the opening battle. As I explain in "QuickTake: New Pricing From Adobe Campaign Will Disrupt Email Marketing" (subscription required), Adobe’s introduction of a flat-rate, profile-based email pricing takes aim squarely at its messaging partners. As of January 1, 2014, Adobe Campaign (née Neolane Campaign) users can contract with Adobe to send unlimited email through the tool.

Email CPMs have declined annually for many years now. Adobe’s move essentially anticipates the endgame and seeks to transfer email spend into campaign management. But appealing pricing aside, Campaign will need to lean heavily on Adobe’s structural advantages — market penetration, preferred vendor status, and a large sales force — to help drive the shift. Adobe is not known as an email provider, and multiyear email contracts will afford traditional ESPs time to respond, which will likely come from pokes at scalability, email quality, and services. Campaign is, despite strong ease of use, an advanced campaign management application, and it will require capabilities that may exceed those of email shops that depend on a heavy dose of services from their ESPs.

Regardless of the long-term outcome, kudos to Adobe for playing the role of a disruptor. Leaving email money on the table will help marketers move to cross-channel, real-time orchestration, and ultimately customer obsession.

Wind the clock forward a year or two and suppose Adobe is successful at taking a chunk of the email market. Its success then isn’t so much at becoming an ESP, but at shifting what marketers actually value: from today’s focus on messaging to profiles and analytics. Unlimited email initially sounds like a dangerous outcome for already overwhelmed consumers, so marketers will need to use Campaign’s segmentation and analytics capabilities to send more relevant, not just more, email. And while Adobe’s announcement primarily focuses on email, similar pricing is available for other owned media, such as web campaigns and push notifications. Without volume limitations on specific channels, marketers will more rapidly adopt cross-channel strategies. Rather than duking it out over channel-specific budgets, they will ultimately even out volumes as they optimize the media mix across channels.

Any media provider that prices on CPM today needs to pay attention to Adobe. The company is less focused on short-term revenue and more on long-term share of the marketing budget. By redirecting email to cross-channel, it seeks to elevate the technology buying decision from the channel. By providing simple pricing on all owned media channels, it seeks to push the value from the message to the store of customer profiles. And with an acquisition or two in big data infrastructure and analytics, the firm will eventually seek to extend those profiles across all media, paid and earned as well.

So what happens now that Adobe has issued a big Follow Us to the marketing tech industry? A few thoughts for players in different categories:

  • Email Service Providers. Clearly these vendors are most directly in Adobe’s sights. Flat-rate, profile-based pricing will not decimate this category, but it will hollow it out, leaving a declining share to the full-service providers at the top and to hyper-efficient transactional players at the bottom. Expect to see traditional ESPs emphasize or acquire profile management capabilities as they battle Adobe for the fat middle of the market.
  • Behavioral Targeting, Recommendations, And Push Notification Vendors. Similarly, these providers will also eventually feel the pressure to respond to Adobe. Those that have invested in big data (say Cassandra or MongoDB) as well as real-time analytics will become attractive acquisition targets. But it’s a good time to develop a story around CRM data ingestion as well; cookie-based profiles aren’t sufficient.
  • Campaign Management/Marketing CRM Providers. The category’s strengths of contacts-based pricing and analytics would seem to position it well for this next era, but the traditional focus on on-premises and on leaving execution to partners prevents these players from going head-to-head with Adobe. And those that use campaign management to build a moat around proprietary databases or enterprise application stacks face even bigger pricing hurdles to innovation. There’s great technology here, but the next battleground is about end-to-end: profiles, analytics, and media.
  • Paid Media Strategics. Even Google, Yahoo, and Facebook should take seriously a future when Adobe owns a significant store of consumer profiles and has little incentive (or much disincentive) to share them. As today’s marketing automation becomes consumer orchestration across paid and owned channels, direct marketing providers will own an ever-growing store of valuable interaction, preference, and affinity data. Acxiom, Adobe, Experian, and Salesforce could all be barriers to paid media providers’ ambitions.
  • Investors. Venture capitalists, private equity shops, and institutional investors all need to take stock of existing valuation models. As media is subsumed into the platform, they will need to a) reevaluate how marketing activity correlates with spend, and b) understand how today’s vendor landscape will shift toward platform, not portfolio, providers.

Today it’s email, but none of us should dismiss the importance of moving from campaigns and customer databases toward interactions and profile stores. As in any disruption story, the old ways won’t disappear immediately or entirely, but the budgets will shift slowly, then quickly to the new, making it difficult to predict which companies and what capabilities will matter in the end. It’s a very strange time in marketing.


Great insights, Rob. I

Great insights, Rob. I particularly like your emphasis on (1) the importance of the customer profile -- funny how, after everything that's happened in recent years, it still often comes down to the customer data and how hard that is to get right; (2) the coming convergence of the technologies used to manage paid and owned (and maybe also "earned") media.

(Full disclosure, I do work for a company that sells both a data management solution and a campaign management solution, which when combined call the Convergent Marketing Platform -- so your comments fit us like a glove and it's easy to like what you're written. But in addition to that self-serving convenience, I genuinely like the ideas shared here.)

P.S. His name is Robert Paulson.

Thanks Alan. And to your

Thanks Alan. And to your point, data management becomes a critical capability in the years ahead. Once providers move to a profile-based system, it's important to build larger and more extensive profile repositories for their clients. A convergence of marketing to anonymous and known customers in a single system is a good method of driving profile growth.

Not Disruptive

I wouldn't call this move disruptive. B2B Marketing Automation vendors, like Marketo and Oracle Eloqua have had this very same pricing model for years. These vendors replace ESP's like ExactTarget on a regular basis so this type of pricing is nothing new for them and likely not disruptive at all.

Hi Nick, I think you make a

Hi Nick, I think you make a good point, as you say, for the B2B market. Marketo, Eloqua, and others were able to create a specific market for B2B by taking a contacts model approach. Since many B2B marketers aren't high volume emailers, the traditional email providers either left the B2B market or acquired B2B specific providers (E.g., ExactTarget's 2012 acquisition of Pardot). Silverpop is the exception in that the company targeted both B2B and B2C.

What's disruptive about Adobe's move is that they are aiming for the B2C market, which has operated with a CPM model for many years. Marketo recently also introduced a disruptive model, called Dialogue Edition, for B2C email marketers. You can see that I'm using a strict definition of disruption: where the entrants are changing the core pricing model so that value is transferred from the current model to something else. In this case, Adobe and Marketo are attempting to transfer value from email volume to database size, deflating traditional email revenues in the process. So perhaps it's not a new idea, but it's a new dynamic for consumer marketers.