Editor’s note: Len Shneyder is the director of Industry Relations at Message Systems; he has more than a decade of experience in the email marketing, deliverability and digital marketing space.
Funding events over the last five quarters have shown investors to be bullish on companies engaged in email. From analytics to infrastructure, advertising to services, and everything in between, the email ecosphere has been infused with $364.5 million in funding. The recent growth of these freshly funded companies underscores how important solid, reliable and measurable email is to startups and enterprises.
Starting from the top and working our way down, we can see that from the successful exits of stalwarts such asResponsys and Exact Target, to giant rounds of funding for Campaign Monitor, email is a priority that comes with a rather large price tag.
Marketing Clouds Overhead
From the Salesforce Marketing Cloud (Exact Target) to the Oracle Marketing Cloud (Responsys, Eloqua) to Adobe’s Marketing Cloud (Adobe, NeoLane) to IBM’s Experience One [also a marketing cloud] (Coremetrics, Unica, DemandTec,Xtify, Silverpop) the desire for enterprise grade, digital messaging technology is evident. These acquisitions represent billions of dollars of investment, so it shouldn’t come as a surprise then that investors are contemplating another round of acquisitions to grow these marketing frameworks sometime in the near future.
Your Mobile Apps and Social Networks Rely on Email
Based on measurements of app popularity in 2014 from Statista and comScore, email (embodied by the Gmail app), is among the top 10 most popular apps on mobile devices. The only other point-to-point communication app making the top 10 is Facebook, the 12,000-pound gorilla, coming in at No. 1, effectively positioning email as No. 2. As an aside, Facebook relies heavily on transactional email to keep users informed and coming back to the site, and is likely the single-biggest source of legitimate email traffic on the Internet.
Another example is LinkedIn, which leverages email in every part of their business to ensure return visits. They’ve really pioneered the use of email to help engage and popularize the user-generated content on their site.
Triggered email tethers LinkedIn’s 364-plus million users to the site by connecting with them via titillating communication – if someone looks at their profile, if job opportunities matching their current role materialize, or any number of automated and triggered criteria that result in an email.
Email Service Providers Still Matter
A large portion of the aforementioned $364.5 million in funding went to Campaign Monitor ($250 million), Autopilot ($10 million) and Iterable ($1.2 million) — different flavors of email service providers and marketing automation startups that provide assistance to companies through campaign management and email deployment.
Since email’s ROI is estimated to be between $40 and $45 for every $1 of investment, companies are willing to spend money for highly specialized email services. The range of services provided by these and other ESPs varies wildly.
From professional and strategic marketing, to attribution modeling, to multi-channel campaign tools, as well as more self-serve front ends that allow organizations to easily automate nurture drips and campaign workflows, email delivery and the ability to connect it to other parts of the business remains a specialization that numerous companies are more than happy to outsource.
The Shift to the Cloud
By definition email is a cloud technology—the reality is that somewhere on the ground someone is running an SMTP-based server with unruly and often times unmanageable queues. Open source solutions attempting to solve the problem of sending massive, galactic scale volumes of emails, have always existed.
However, the nuances of email-at-scale deployments demand highly specialized knowledge of the varying types of receiving domains and their unique requirements. Companies such as Message Systems ($27 million) and Sendgrid ($20 million) have built email infrastructure in the cloud with API front ends for the DIY generation of companies looking to take advantage of economies of scale and are actively involved in leveraging and expanding cloud technologies.
Analytics and the Wide Range of Email Services Matters
Email is a cross-platform, cross-device and ultimately cross-channel medium. Half of all email opens are happening on mobile devices, according to Litmus. This illustrates the fact that email isn’t just about email; it’s about the device and lifespan of multiple opens and content opportunities.
Companies such as Return Path ($35 million) provide senders with powerful tracking and measurement tools to help avert problems and determine campaign efficacy suggesting that email delivery, measurement and actionable data analytics are a necessary trifecta of capabilities that are driving investment.
Email Copilot ($1.3 million) has focused on the deliverability problem — with nearly 1 in 5 emails never reaching their intended recipients — by analyzing the totality of email across opens, bounces and other metrics to help avoid problems downstream and providing real-time intelligence to senders. LiveIntent ($20 million) has a platform for in-email advertising, creating more dynamic experiences in the inbox and allowing content within emails to be refreshed similarly to in-app mobile experiences.
Venture capital investment in email is only one part of the story: the market for email is considerably bigger. If you add up the exit events for companies that are now part of massive marketing clouds with the totality of ancillary, professional and consulting services, you begin to comprehend the massive scale of the MarCom/Martech world.
What we can deduce from these large transactions is that email, analytics, enhanced inbox performance, improved user experience, the growing potential of an ad exchange within email and a shift to cloud based email PaaS/IaaS is on the minds of investors of all stripes. The fact of the matter is that email is not dead; it is not the only means of communication for businesses.
However, it’s part of a rich and dynamic mix of media and conversation modalities with one striking difference. Email’s ROI has been measured and unmatched for a number of years and will maintain its importance as a leading communication tool with continued investments, growth, expansion and evolution. Don’t count email out – it’s here to stay.