Digital Marketing Insights
September 24, 2012 | David Atlas
Here's an article I wrote for eM+C:
Marketers have an interesting relationship with technology. Without a doubt, new tools provide marketers with sophisticated analytical and communications capabilities unparalleled by any previous generation of marketers. Indeed, consumers today are findable, understandable and convertible through media that exist purely as developments atop technology. Yesteryear's network of connected computers becomes today's web of email inboxes, mobile connections and social channels.
Yet marketers aren't IT customers. They want to use tools, but the tools need to be designed in a way that's powerful and accessible. Just like automotive technology, which is usable by vastly more people than are able to understand it, marketers today need to leverage deeply complex technologies without drowning in the details of their operations. They want to drive systems that maximize customer lifetime value without having to become computer programmers.
One of the key enablers of all this automation is the cloud. Cloud technologies — known by the roughly synonymous terms of Software as a Services (SaaS), on-demand software and hosted systems — mean that the software used to accomplish critical digital marketing campaigns isn't purchased by a customer and installed on premise. Cloud-based technologies run "out there." You simply open a broswer, log in with your account credentials and get to work.
Having an email marketing and cross-channel solution that lives in the cloud means never having to install your own software — i.e., getting IT out of the picture. It also means, typically, a much quicker time to be up and running, a much greater level of automation, and vastly lower overhead in terms of the technical resources — and dollars — needed to support them. Cloud-based solutions can be a huge advantage, and there's little doubt why the market has moved so much in that direction.
Not all clouds, however, are the same. While clouds have their definite benefits, one of their limitations, at least in terms of automated marketing solutions, is that the actual resource is commonly shared among many different users. Think of it like the difference between a restaurant and your home kitchen: it's easier to get a meal in a restaurant — so much more is "automated" for you and all you have to do is walk in and order. However, just like the cloud, you lose something important: individual ownership.
One of the advantages of good old-fashioned software that you install in-house is that you have full and unfettered use of that resource. You want a sandwich at three in the morning? The restaurant may be closed, but your kitchen is always there waiting for you. Can't get a table at the popular restaurant down the block? Your own dining room table is there waiting for you.
Technically referred to as "multitenant" solutions, most cloud-based implementations today lump hundreds of brand and direct marketers onto what's effectively a single system. The resource out there in the cloud is shared. Yes, you've gotten IT out of the picture and found a level of automation you didn't have before, but you may discover during peak times that accessing all of that resource is difficult. While you may be willing to wait 45 minutes for a table at a restaurant, having your email marketing campaign delayed by other clients using the system has a real bottom-line cost. Flash commerce, daily-deal sites and others trying to get messages delivered during specific times of day that have proven optimal for conversion can be severely compromised due to the shared nature of most cloud services.
Enter the private cloud. Private clouds effectively give you the best of both worlds: the convenience of a hosted solution and the dedicated resources of an always-on system that's configured just for you. Imagine owning your own restaurant, staffed by professional chefs and the best waiters, but the only one they serve is you — whenever you want, however much you want.
The private cloud means no latency for large email sends. Many customers discover the need to achieve huge sends during small time windows to maximize revenue; with a private cloud, you have full use of the resource, enabling you to send as many messages as you want, as quickly as you want. The kitchen, so to speak, isn't busy serving other customers; everything is there for you alone.
The pricing model for private cloud email services also can be different, enabling both a lower total cost of ownership and the elimination of self-serving incentives that arise through per-message (CPM) charges. With a multitenant or first-generation cloud solution, you typically pay for the capacity you use, as opposed to purchasing a license for the software that you install in-house. This sounds good, until you realize that each and every message you send increases your charges. Want to send more emails during peak seasons? You better budget more. And be prepared to be sold on the virtues of sending more and more by sales reps trying to upsell you on your usage of the public cloud. It's not uncommon for clients of pubic cloud email service providers to systematically send 20 percent more email every year — whether their growth demands it or not.
With a private cloud, you're not paying per item ordered off the menu. Since you're effectively purchasing the system with a software license (albeit one without the IT overhead of installed software), once you own it, you can send as much email, or as little, as you need to maximize the value of your customer relationships.
Private clouds may be the next generation in cloud-based solutions. When it's time for you to evaluate your marketing services vendors, ask around. You may find that when it comes to clouds, its best to own your own and not share.