ClickSquared System Combines Marketing Database, Campaign Management and Multi-Channel Message Delivery

Summary: ClickSquared is marketing services agency that, unlike most of its peers, has built its own marketing automation system. The main advantage is tight integration of database build, campaign management and message delivery. The vendor has just officially launched its system, which should meet the needs of most mid-tier consumer marketers.

In a post last week, I casually described ClickSquared as a vendor delivering multi-channel messages for external campaign management systems. This was not wholly accurate. Although integrated multi-channel delivery is indeed a key differentiator for ClickSquared, the firm also offers its own campaign management system, called “Click 3G”. In fact, Click 3G was officially launched last week, although the company has been migrating clients to the platform since Fall 2008.

The more important clarification is that ClickSquared is a marketing services agency, offering database management, campaign development, creative, execution and analysis. The company got its start in 1999 as a direct mail house specializing in overnight execution of trigger marketing programs. Since then it has added email and other services through acquisitions and internal expansion. It now offers a relationships relationships ranging from full-service to self-service, with a particular focus on full-service solutions for mid-tier businesses and on special programs for very large enterprises. It sends emails for about 85% of its 150 clients and maintains marketing databases for about half of them.

In other words, ClickSquared competes with firms like Epsilon, Merkle and Acxiom for enterprise clients, and with a host of smaller firms for mid-tier clients. It also competes to some degree with email providers like Responsys, ExactTarget and InfoGroup YesMail, which are themselves expanding into other channels. (Apologies to all for over-simplification. Properly identifying the overlapping spheres of industry competitors would take a post of its own.)

One feature that stands out about ClickSquared is its choice to build its own campaign management system. This contrasts with the vast majority of marketing services agencies, which rely on industry-standard products such as Unica and Alterian. The fundamental argument for using industry-standard software is that continuously updating a home-grown system costs too much for most marketing services vendors, who can’t spread the expense across as many clients as a dedicated software company. Nor is software development a core competency of many marketing services agencies. Ultimately, this line of reasoning concludes, marketing services agencies compete on database management, analytics, marketing strategy and client service, so software is a poor investment for their necessarily limited resources.

To put matters in historical perspective, most big marketing services agencies did create their own campaign management systems when the category first developed in the 1990’s. But once satisfactory third-party products became widely available, the big firms largely dropped their in-house products. So it’s intriguing that ClickSquared (and a few other firms including Entiera , which I reviewed last July) have again chosen to build their own.

It’s much too soon to consider this a trend, but perhaps the cost/value relationship has shifted back in favor of in-house systems. The logic would be something like this: the prices of commercial systems haven't change, while the cost of building in-house systems has fallen because the requirements are well understood and developers can take advantage of third-party components and agile development methods. Thus, in-house development is relatively more attractive.

But in talking with ClickSquared (and Entiera, for that matter), I hear slightly a different story. It’s true that they avoid hefty license fees by using their own software. But main savings seems to come from integrating several capabilities, including customer data integration, message delivery and reporting, in addition to campaign management itself. This reduces both the total software cost and the labor needed to combine the separate systems. For example, ClickSquared says it can deliver a new marketing database in one to three months, compared with six months or more using third party systems.

Of course, an in-house system must still meet business needs for the savings to be worthwhile. Part of the reason that ClickSquared targets Click 3G at mid-tier companies is that their needs are somewhat less complex than enterprise marketers. That said, the system offers a respectable set of capabilities.

- Customer data can be loaded via API posts or self-service file uploads. The system provides automated data cleansing and customer matching capabilities. It can also gather data with an advanced email survey tool that supports for dynamic questions (i.e., questions change based on previous responses) and complex question types such as rankings and allocations. Marketing content can be uploaded and edited within the system and then shared across campaigns.

- Analytics are largely handled outside the system. These is no built-in predictive modeling, although scores can be imported and used as variables into segment definitions and business rules. The system does provide its own Web analytics module, or it can import data from Omniture or Coremetrics. ClickSquared captures online response using standard link tracking and can generate heat map reports showing how often different links were clicked within an email or Web form. Users can execute custom attribution rules during their database build.

- Campaigns are based on business rules. These can be executed in batch or triggered by events posted to the system API in real time. The rules can consider file segmentation, offer selection, channel preferences and limits on contact frequency when selecting messages. Click 3G also supports “distributed marketing” campaigns that allow users such as branch offices to execute predefined programs by setting a limited number of parameters. Campaign outputs can include dynamically-customized content for direct mail, email, and mobile (SMS) messages, as well as messages sent to CRM systems via an API.

- Message delivery for email is handled directly by ClickSquared, which helps to manage ISP relationships, ensures compliance with anti-spam regulations, and can spread large blasts over time. The system provides similar services for wireless (SMS) messages, although (like most marketing service vendors) it works with a third party to integrate with carriers. For direct mail, ClickSquared can handle preprocessing such as NCOA and then deliver a file of printer-ready personalized PDFs. Although campaign manager-to-email integration is more common today than when ClickSquared began, its multi-channel integration is still an advantage.

- The system also provides several “Web 2.0” options. Most notable is “clickShare”, which lets users register and then upload, share and comment on materials in an online forum. Other applications support referrals, mapping mash-ups and product ratings. Activities in these applications are fed into the marketing database, where they can be used for segmentation and triggers.

Click 3G lacks some refinements of the main commercial campaign management products, such as embedded predictive modeling and detailed project management. The vendor argues that its mid-tier clients don’t necessarily need such features, or at least need them less than tightly integrated database building and message delivery. Click 3G’s largest installations are currently in 15 to 20 million customer range, firmly within mid-tier territory.

Pricing for ClickSquared is based on the combination of professional and technical services used by each client. For Click 3G, factors include database size, channels used, message volume and system modules. A self-service client with 50,000 customers and 100,000 emails per month would pay $1,500 per month for the system. A client with two million customers and a proportionate mix of email, direct mail, text messages, surveys and social content would pay $15,000 per month. Clients commit to a contract of one year or longer.

Read More

Can Database Marketers Learn Digital Tricks?

Summary: Database marketing and digital marketing are more different than it seems. It's hard for experts in one to adjust to the other.

Yesterday’s post touched briefly on what I see as a fundamental transition between database marketing and digital marketing, and in particular on the changes that marketers and their supporting vendors must make to navigate the change successfully. This is an important topic, so I thought I’d return for a closer look.

It’s self-evident that digital marketing (mostly on the Internet, but also mobile, in-game, and eventually interactive TV) is a major change from both traditional mass media and more recent database marketing (mail, email, telemarketing, CRM). What’s less obvious is that the skills and attitudes that have served database marketers well for the past twenty or more years – an entire career for many – don’t transfer to the digital world. It’s true that database and digital marketing are both technology-enabled and thus seem as if they should draw on similar talents. But the similarities are superficial while the differences are profound.

Let’s cut to the core of the matter: the first rule of database marketing is that whoever has the biggest database, wins. Database marketers strive to gather ever-more information about their customers and (to a lesser extent, because less data is available) about their prospects. Their Holy Grail is the ever-receding “360 degree view of the customer,” a phrase I’ve always disliked because (a) it treats the customer as an object and (b) no one can possibly know everything about their customers. Today, at least to my mind, it also conjures up a full-body scan X-ray, an image I hope enough people find so offensive that it will finally put the phrase to rest.

Sorry for the rant. My point is that database marketers’ ideal is a perfectly detailed customer database, which would allow them to target precisely the “right offer to the right customer at the right time.” This attitude leads to highly structured, finely segmented campaigns and carefully-plotted, rules-driven interaction flows which make the best possible use of whatever data is actually available.

Digital marketers have no such illusions about the completeness of the data they could ever hope to assemble. I’m not saying many of them wouldn’t like to identify each person they interact with, just that this is obviously impossible in most situations. Thus, digital marketers start from a premise that they’ll be interacting with people cloaked by varying degrees of anonymity, and look for ways to make the best use of the limited information available. In one case this might a search term they used to reach a Web site; in another it might be a history of movies they and others have rented; in yet another it might be their current physical location. Most innovations in digital marketing involve improving the value extracted from such limited data, rather than attempting to link the data to an identity that can then be enhanced with large volumes of personal information from other sources.

(Caveat: yes, there are some major efforts aimed precisely at providing digital marketers with individual identities. But these run up against both the fundamental difficulty of identifying people in most digital media. Even more important, their value is limited because immediate past data about behavior and context is usually more powerful at predicting immediate future behavior than static personal information from external sources.)

A corollary to the limited and contextual nature of most digital customer data is that marketing programs don’t have enough information to make reliable predictions about the most appropriate treatments. Thus, multi-step marketing campaigns or highly structured interaction dialogs are less useful than simply giving people a variety of choices and letting them guide the process for themselves. Again, this is a matter of degree: deciding which choices to present itself requires predictions about which items the customers will prefer. But presenting multiple choices is quite different from trying to guess in advance which one is best.

In other words, we’re talking about a loss of control over the marketing process. This is still more obvious at the start of the marketing cycle, when companies are first attracting customers into a relationship. Database marketers spend lots of effort acquiring and enhancing prospect lists so they can decide whom to approach and which offers to send them. By contrast, most digital marketing contacts are initiated by the prospects themselves in response to an advertisement or social media message. Certainly digital marketers can select their advertising audiences, but this resembles traditional media buying more than an outbound direct marketing campaign. Even (or, perhaps, especially) with social media interactions, the marketer has very little control over what is communicated to whom.

Indeed, even though database marketers do plenty of acquisition, I think it’s fair to say that they find it relatively frustrating because the available data is generally so limited. Most would probably prefer to work on customer management – cross sell, upsell and retention – where richer data is available. By contrast, digital marketers have happily embraced the notion of “inbound marketing”, which is precisely the art of attracting new people to their products. To speculate still further, the reason that business marketers are adopting marketing automation much more enthusiastically than they ever adopted traditional database marketing may be that business marketing automation is largely being used in acquisition-friendly digital media, and business marketers are more acquisition-oriented (i.e., focused on lead generation) than their consumer marketing brethren.

Control is also a major differentiator when it comes to marketing measurement. Perhaps the proudest claim of database marketers is that all their efforts are highly and precisely measurable. Reality is a bit more messy, but it’s true that database marketing does support proper champion/challenger testing for companies willing to make the investment. Digital marketing also supports such testing. But many digital efforts involve display advertising where at least some of the value comes from exposures that do not prompt immediate, measurable activity. This is another area where digital marketing more closely resembles traditional mass media advertising than anything else. In fact, digital marketers increasingly base their measurements on consumer panels and surveys, almost precisely duplicating the conventional mass media approach. Again, the fundamental point is a difference in attitude: database marketers treat precise measurement as their ideal, even though they realize it isn’t fully attainable. Digital marketing doesn’t permit that illusion, so its practitioners can more easily accept less exact approaches.

By now I’ve probably annoyed many of my friends in both the database and digital marketing industries. Let me make clear that I’m not arguing that database marketing is obsolete or somehow inferior to digital marketing. They do different things and will coexist, just as mass media survived when database marketing appeared. In fact, good marketers will learn to integrate them effectively, letting each do what it does best. Actually, I’d argue that rule- and data-driven Website personalization has more in common with classic database marketing than with most digital marketing methods. In that case, integration between the two types of marketing happens within the Web site itself.

Nor am I arguing that database and digital marketing have nothing in common. Both are, obviously, dependent on technology and both are measurable in their own ways. Both work with customer databases – in fact, as digital marketers get better at capturing and integrating customer data, they will find themselves increasingly reliant on database marketing techniques. And, of course, both ultimately perform the basic marketing tasks of understanding their customers and using that knowledge effectively.

Rather, I’m trying to show that different skills and assumptions are needed for success in the two areas, and to suggest that this makes it difficult for people and organizations to transition from one to the other. This, in my opinion, is why the direct marketing agencies, marketing service providers and marketing software vendors who dominate the database marketing industry have not transferred their leadership to the digital marketing channels. The only new medium they easily adopted was email, but that was essentially database marketing to begin with.

This doesn’t mean that database marketing vendors are inevitably doomed or trapped in a shrinking specialty. But it does mean that those firms must recognize the fundamental differences between their old industry and the new one. They cannot make the easy but false assumption that digital marketing is a natural extension of database marketing techniques. Only the marketers and vendors who aggressively embrace digital marketing in its own terms will be able to lead the new industry.

Read More