Unless you have been living under a rock for the last year, you might have noticed that iContact and Vertical Response do a lot of banner advertising. For most of 2009, iContact was the main one stepping with the advertising spending but in the last few months Vertical Response has stepped their ad spend considerably and I probably see them more now than anyone. We have an ad war folks.
Here are some of my thoughts:
- The email marketing business breaks into two levels — low and high — primarily based on price and sophistication. It used to be low, mid, and high but as the market has been maturing, like Shar VanBoskirk of Forrester correctly explained to me several years ago, the market would polarize around between just low-end and high-end vendors — just like every other market. I refuted it at the time but, in the end, I have to admit she was right. Folks, like in the mid market, either go down or up. We have been going up.
- The king of the low-end is Constant Contact. They are publicly traded and are a fair bit bigger than both Vertical Response (VR) and iContact (iC) put together. They are doing well. I like them because they been consistent with their message around focusing on small businesses. Their fast followers, VR and IC, compete for the #2 and #3 spots but from my perspective have been less consistent on their messaging around small businesses. They have small businesses because they are cheap and simple not the other way around.
- iContact was very aggressive for most of 2009 with their banner advertising and really streamlined their acquisition model, including turning their website into really just one landing page aimed around one thing — getting a free trial. I think that the model is akin to a whale swimming through the ocean trying to suck up as many small brine as possible. Smart to take advantage of the lower CPM rates in a crummy economic year. Also, they hired their CMO from Lending Tree — a firm that clearly does a lot of consumer-esque advertising and has deep an understanding of conversions. All that is good.
- Vertical Response, I believe, was a bit more asleep for the last couple years and let iContact challenge their #2 position. I’m not sure what their plan was but it was not nearly as aggressive on the advertising side, as far as I could tell. Perhaps they relied on their strong SEO position on Google. Somewhere during the year, I noticed iContact bump up above them at one time so perhaps that woke them up. I think that has since reversed results. Of course, Google might personalize all search results by person these days, which make that little scientific analysis not so valuable.
- Now, I see Vertical Response ads everywhere. They re-did their website / landing pages to more conversion friendly, which has to have bumped up their customer numbers. Also, I have to imagine that their pervasive advertising has upped the customer acquisition costs for both companies.
- Constant Contact manages (probably smartly) to stay out of the fray and focuses on their mission of serving small businesses. I see their advertising and sponsorships as much more targeted. You won’t see them sponsor high-end email marketing conferences, but their fast followers will — dumb, dumb, dumb. Speaks to an ill focused marketing strategy. Strategies around “we’ll be everything to everybody” usually means that you’re being a lot less effective than you think you are.
- Constant Contact has launched a few more products. The survey product was a no-brainer, although I do think that they would have done better stepping up some cash and buying someone with more of a presence. I wonder how much traction that really has had. I do that the event management / charging makes a lot of sense and really solves a headache for many small businesses and non-profits. I do like Constant Contacts’ strategy of focusing on small business franchises. If you start at the top, you can avoid some of the blood bath / commodity ad wars that everyone else on the low-end seems to engaged in.
- A rising tide floats all boat so everyone’s growing. That’s great and I’m sure that all these players are benefiting from the adoption of email marketing by small businesses regardless on their strategy. I do think if some of these providers want to eventually go public or be acquired, it will help tremendously to have a better differentiation and strategy story than they have now.
Since I do see their ads everywhere, included my beloved TMZ, I do have a few creative advertisement requests:
- For iContact — can you scrap the series with the scruffy college kid for regular iContact and the business man with glasses for iContact enterprise (another post some day on the “enterprise” label). I like the plain ones with simple messaging about roi. The create, send, track, … ones are nice too. The award logo like it was done with WordArt and puts in question the validity of that award. A little makeover would help.
- For Vertical Response — Your CEO Janine seems like a really cool person, but all the ads with her picture seem a little odd. I like your “low price” & “best service” ads more. Of course, the truth really lies in the conversion rates, which I don’t know. Your landing page / website looks nice too and presents you very professionally, especially with the swooshing background graphic.
Wow. That’s more than what I planned to write on the topic. I have been in the email marketing space for a while now and it’s fascinating to see the fever pitch of advertising for small business email marketing these days. It’ll be interesting to see where it goes.