Do recent changes in the ESP landscape benefit clients? IBM, Epsilon, Yes Marketing

The constant evolution of the landscape represents how key email marketing and ESPs are to the martech world. Email remains king, kingdom, and cathedral. But changes —from where we sit— aren’t always in the best interests of the end users. Let’s look at three of the most recent changes in the enterprise ESP space from the clients’ perspectives.

We make it our business to understand the vendor landscape and who fits where in the ecosystem in helping with Email vendor selections. And with all these changes this has become almost a full-time job in itself!

1. IBM Marketing Cloud sells software assets to Centerbridge

IBM Watson Marketing Campaign AutomationIBM got into the email services provider action with its acquisition of ESP Silverpop in 2014. It combined that acquisition with others it had made and created the IBM Marketing Cloud to go head-to-head with marketing clouds launched by Salesforce, Oracle and Adobe at around the same time.

Competing in the marketing cloud space takes a lot of time, focus and money, and IBM never seemed to have its heart in the game. It doesn’t take much to fall behind, and while the other cloud players continued with strategic acquisitions and investment, IBM sat tight.

The first sign of a change in IBM’s strategy came last December when it unloaded several of its martech assets. WebSphere and Unica were sold to HCL Technologies for $1.8 billion.

In early April of this year, IBM sold its remaining marketing platform and commerce software assets to private equity firm Centerbridge for an undisclosed amount. Centerbridge has indicated that it plans to create a new company from those assets, which includes the email marketing platform formerly known as Silverpop.

What’s in it for email Clients?

Clients on Silverpop when it was purchased by IBM picked up little advantage over the years. The big winner was IBM’s own email marketing team which up until that point had been forced to email from an internal email platform that was clunky to use. They started sending on Silverpop as fast as they could.

IBM’s growing indifference to the marketing cloud strategy led to a lack of platform investment and product strategy. It created a good marketing campaign around “Watson” with a focus on AI, not so much on Watson Campaign (Silverpop). But marketing is marketing, and investment is something entirely different. With the sale to Centerbridge, the outlook for its email marketing clients look to remain about the same.

Customers shouldn’t expect a lot of investment in the platform. If anything there will be a decrease in adjacent email-related professional services. PE firms are looking to quickly maximize the value of these types of acquisitions and increasing the multiples. So expect a focus on improving the technology margins, and cut people because of the lower margins associated with services.

2. Epsilon acquisition by Publicis

publcicis epsilonIt was probably inevitable that Epsilon would get put into play, following Denstu’s acquisition of Merkle and IPG’s takeover of Acxiom’s core database business. Barely two weeks after the IBM announcement, Publicis announced its $4.4 billion acquisition of Epsilon from Alliance Data Systems.

Epsilon is one of the largest players in the marketing services space providing clients with a range of marketing services spanning database marketing, direct mail, email marketing, web development, loyalty programs, analytics, data services, strategic consulting and agency services.

Analysts generally viewed the acquisition as being driven by the increase in the data and analytics services Publicis can provide its clients and the volume of first-party data Epsilon holds on U.S consumers.

What’s in it for email Clients?

Epsilon deserves a lot of credit for its ongoing investment in the Agility Harmony email platform. It’s a powerful tool for enterprise brands. But there are two reasons for its current email clients to be concerned.

First, Publicis has a poor track record in prior integrations of large acquisitions (see: Sapient). If history repeats itself here, there are going to be several years of integration bumps that will be an ongoing distraction for the Epsilon team.

—“Wait, you mean there’s an email business here as well?!”.
The second reason Client might want to be wary of is that the entire email business is likely to be an afterthought in the acquisition and future plans of Publicis. When eBay purchased GSI Commerce in 2011 it also acquired the ESP eDialog which GSI bought in 2008.

The eBay acquisition was driven by its interest in the online commerce services GSI had developed. It didn’t really know what to do with the email business and ended up, after several years of declining business, selling it to Zeta Global in late 2015. I’m not suggesting that Publicis will sell the Epsilon email business down the road, but it likely won’t be a focus of attention either.

3. Yes Marketing announces a strategic partnership with Adobe

Adobe Yes MarketingThe email world had about a month to catch its breath before the next shoe dropped. On May 16th, Yes Marketing—the email marketing arm of Infogroup—announced a new partnership with Adobe that would pair Yes Marketing’s widely admired agency services team with the Adobe email platform.

In essence, this means that Yes is going to retire its own proprietary email platform in favor of Adobe’s Campaign. In all new Yes Marketing opportunities it would be pitching its team and Adobe’s technology.

This approach has been tried before. Around 2012 Acxiom quietly decided that it would retire its Impact platform (or at least stop investing in it) and partner with then ExactTarget (pre-Salesforce acquisition) on future new business opportunities. It also encouraged many of its largest clients to move to the ET platform. Going forward Acxiom would focus on the services side of the business, with a strong team it had built over the years.

What’s in it for email Clients?

I’ll admit to being very surprised by this announcement because we think very highly of the Yes platform. It remains very competitive, unlike the Acxiom Impact platform in 2012 which in truth had fallen behind the competition and required a lot of new investment. Several years of failed attempts to sell the entire Yes Marketing unit of Infogroup likely contributed greatly to this decision.

Judging from the Acxiom experience, this isn’t going to turn out well for anyone – Yes Marketing most of all.

For clients currently on the Yesmail platform, they are now in a situation where (at best) they are going to be using a platform that will no longer see any investment or improvement or (at worst) they will be forced to move to Adobe (or RFP) because Yes retires the platform completely.

Adobe already has many long-standing relationships with services providers including both Merkle and Epsilon. So the “partnership” around new business is likely to be a one-way street, something Acxiom learned the hard way with ET.

And in the case of Acxiom, ET also walked away with several of its largest and best-known clients after they migrated platforms. The end result was the sale of what was left of the Acxiom email team and clients to Zeta in 2016 for a reported $50 million.

It’s a whole new ESP Landscape… again!

Hard to believe that all 3 of these events were announced within a month of one another. They are shaking up the hierarchy of enterprise ESPs and leaving existing customers and future prospects wondering what’s best for their businesses.

Often the customers of the acquired companies can benefit from an acquisition. That was the case when Digital Impact was acquired by Acxiom and Cheetahmail acquired by Experian. Also the customers of the platforms sold to Zeta Global by eBay and Acxiom found themselves better off.

At this point in time, I would find it very hard to articulate a benefit for any of the existing customers of the mentioned Enterprise ESPs.

We will have to wait and see.

The real question is whether their customers are willing to wait and see. If not, we are here to help with your RFP.

Editors note: After publication, our editor reached out to several employees of IBM Marketing, Epsilon, Adobe and Yes Marketing with the request to post any reactions here. The Dutch saying goes “Silence implies consent”, so we are very curious to hear the responses.

About Chris Marriott

President & Founder of Email Connect. A 25-year veteran of digital marketing, including well over a decade in email marketing, Chris is a recognized expert in the process of connecting leading brands with the right marketing technology partners and platforms.
Prior to founding Email Connect as a consultancy focused exclusively on the ESP/CRM vendor selection process, Chris served as a tenured executive at Acxiom, leading and building its Global Digital and Email Agency Services team into one of the industry’s top services providers.
Chris is also the co-host with Paul Shriner of "Email Geeks at Home Drinking Coffee", a weekly podcast devoted to featuring guests from business, sports and the arts who have great and inspiring stories to share--which sometimes includes email marketing!
Additionally, he is a regular columnist on email marketing and the RFP process and is an advisor to several emerging marketing technology companies including AudiencePoint and CertainSource.

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