Campaign management software is dead. The interesting question is: What will replace it?
However, first let's examine the corpse. Over the past twelve months, at least seven vendors of campaign management software have lost their independence, including one-time industry leaders Xchange Applications, Protagona and NuEdge Systems. This leaves tiny Decision Software, Inc. (TopDog) as the sole remaining pure campaign management vendor. Other remaining independents include Unica, E.piphany, Aprimo and AIMS Software, but each of these has other product lines in addition to campaign management. The lesson is clear: There isn't enough demand to sustain a business that only sells campaign management software.
This shouldn't really surprise anyone. The total installed base of active campaign management vendors has hovered around 500 for years. Individual vendors come and go, although none ever seems to exceed 100 clients. However, the real market is frustratingly stable and small. Why did anyone ever think otherwise? The great tech boom of the 1990s certainly contributed to a general belief in perpetually expanding markets. The widely accepted claim that "customer intimacy" would be essential for future business success led to the conclusion that all companies would need campaign management systems as part of their customer management infrastructure. With Internet marketers basing many of their practices on traditional direct response techniques, growing demand for campaign management software the heart of traditional direct marketing seemed assured.
Yet it didn't happen. In hindsight, it's clear that traditional direct marketing, which involves batch-processed, outbound campaigns to large groups of customers, isn't terribly relevant to efforts to react immediately and appropriately to each customer's behavior. A more appropriate model is the traditional telemarketing call center script, which can be packaged like a campaign but is built around an offer selection, not customer segmentation a key difference. Nor, in fact, did many companies truly implement the vision of cross-channel, cross-product customer-centric marketing that was supposed to require this new infrastructure. Even Internet marketing, which does involve outbound mass e-mail campaigns, turned out to be just different enough from direct mail that traditional campaign management software was not appropriate. In fact, most campaign management vendors used third-party e-mail software instead of extending their own products.
Therefore, the campaign management software vendors are left only with their original set of clients: primarily financial services marketers, along with a few large companies in telecommunications, retail, travel and utilities. Because most of these firms purchased their first campaign manager in the mid-1990s, the industry now serves mostly a replacement market of 100 to 200 sales per year. Software companies predicated on the assumption of a much larger market simply cannot survive.
However, that's not the end of the story. Although just a handful of companies truly need a sophisticated, standalone campaign manager, many more could use something similar but less complex. Thus, campaign management becomes a natural line extension for vendors of other types of software. The most obvious candidates are vendors of call center and sales automation software and of the integrated enterprise software systems that incorporate these functions. It is no surprise then that Siebel, PeopleSoft, Chordiant, Pivotal and Amdocs have all purchased campaign management vendors in recent years. Another set of acquirers start from a base in analytical systems. While most analytical software vendors are too small to buy anyone else, industry gorillas SAS Institute and NCR have indeed purchased campaign management systems. Finally, there is a grab bag of vendors who service marketers in one way or another. These vendors include Experian and ARGI (service bureaus), DoubleClick (Internet ad management systems) and Vignette (content management systems). The desire of so many vendors to add campaign management capabilities has ensured that nearly every independent campaign management system has found a buyer. This is good news for the people who purchased those products, giving at least some hope of continued support.
Of course, not every software company feels the need to purchase an external campaign manager. Giants including Oracle, SAP and Microsoft have built their own customer management systems without benefit of acquisition, and these include some campaign management functions (generally relatively limited). Retail management software vendor Blue Martini has added extensive campaign features in recent years. Even Exstream, which generates personalized documents, has surprisingly sophisticated campaign capability built into its offering.
The point is that while campaign management vendors may be vanishing, campaign management functions are more widely available than ever. For most buyers, this is a good thing; they can choose among modules offered by several of their current suppliers, gaining both the benefits of competition and relative financial stability. As vendors tailor their campaign management products to their core offerings, the differences among the campaign management products will likely increase a reversal of the typical convergence of products in a mature market. This greater diversity gives customers more options, but also requires closer analysis to ensure they pick a product that truly meets their needs. Therefore, the challenge of selecting the right campaign management product is greater than ever.
The players may have changed, but the game is far from over.
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