Should Uniqueness Vouch For Marketing Automation Niche Players?

Event Summary

The debate about the future of the marketing automation and management market, as a stand-alone sub segment of the entire customer relationship management (CRM) market, continues, partly owing to mixed signals coming from relevant point solutions providers. On one hand, recent demise and buyout of Xchange by Amdocs (see Xchange Adds To The List Of CRM Point Solutions' Casualties) was the last in the array of less-fortunate point players. At the time prior to Xchange's assets auction, allegedly over 20 companies expressed interest in buying Xchange's assets, and in maintaining its products and supporting its customers, including much better-performing direct competitors Chordiant Software, DoubleClick, SAS and especially Unica Corporation. While the upbeat marketing management software vendor Unica ( was initially marked as a very likely buyer of Xchange, the vendor however slightly surprisingly elected not to make a bid for the Xchange's assets. Rather, Unica has since announced a migration plan from Xchange's solutions to its Affinium platform, given it has already migrated approximately 15% of Xchange's customer base to Affinium, and the vendor touts that regardless of which company has taken ultimate ownership of Xchange's remaining assets, converting to Affinium will be the most attractive solution for Xchange customers.

Incidentally, on May 16, Unica, now a globally-present provider of solutions it refers to as Enterprise Marketing Management (EMM), announced it instead acquired Marketic, one of leading providers of campaign management software in Europe and a subsidiary of Groupe DDB in France, the second largest global communications group. As a result of the acquisition, Unica believes it has secured the leadership position in the French and Southern European markets as well as in some new industries like automotive. In addition, the deal should expand Unica's worldwide customer base to over 300, making it possibly the largest provider of marketing software globally.

Through the acquisition of Marketic, Unica also expects to bolster its strong position in sectors such as financial services, retail and telecommunications, since Marketic's customers include Disneyland Paris, Orange, Crdit Lyonnais, Groupe Cofinoga and Peugeot. In turn, Unica's respected customers include Lands' End, Medco Health Solutions, Bank of Montreal, Nordstrom, ABN AMRO, Cintas, Club Med, SNCF, EDF, Scotiabank, Choice Hotels International and AIG. Further, combined with its strong base of existing customers such as Marks & Spencer Financial Services, ARG Equation, Halifax Bank of Scotland (HBOS) and Vodafone, Unica now claims an installed customer base in 10 European countries. Building on its two-year presence in the UK and now in France, Unica also expects to benefit from Marketic's strong presence in the Benelux countries (i.e., Belgium, Netherlands, Luxembourg) and Spain. From this strong base, Unica plans to further expand across Europe.

Unica pledges to continue to sell Marketic solutions, which include software for campaign management and loyalty marketing. In addition, Marketic's customers should benefit from the added capabilities available in Unica's Affinium Suite, such as predictive analysis, data mining, multi-channel campaign optimization, real-time event triggers and marketing content management. Based on an open, scalable architecture, Unica's Affinium Suite aims at enabling marketers to gather and analyze knowledge from multiple data sources; identify customer wants and needs; plan, execute and manage tailored programs for interactions through multiple touch points; and measure and optimize marketing effectiveness. The Affinium Suite is also fully internationalized with Unicode support and will reportedly be available in a localized version for the French market starting in June 2003.

A few days later, on May 19, Unica announced the addition of two new consulting services -- Affinium Operational Services (AOS) and Affinium Innovation Services (AIS) -- to its Unica Consulting Services portfolio. Introduced at Unica's Global Customer Conference 2003, these two new programs aim at enabling customers to maximize their Affinium investment through innovative strategies, techniques and recommendations, since they will be delivered by experienced and skilled Unica consultants and partners with deep product knowledge and extensive cross-industry marketing experience. For customers currently using Affinium, AOS offers both the services and resources to expand their use of Affinium within their organization. To that end, AOS programs include:

  • Advanced Techniques Workshop to offer expertise, tips and techniques on how to use the advanced customer-focused strategies and features of Affinium for specific business environments and to increase user productivity and marketing return on investment (ROI);
  • Performance Optimization to pinpoint opportunities to enhance performance and scalability to optimize and streamline campaigns;
  • Post-Production Support to provide staffing support, ranging from a few weeks to several months, to cover staffing or skill gaps and ensure the timely and successful completion of key projects.

With AIS, Affinium customers will be supported through each stage of the marketing life cycle. The four key programs include:

  1. Enterprise Marketing Assessment to identify where marketing processes can be optimized for greater efficiency and to help develop specific strategies to meet marketing objectives;
  2. Incorporating Predictive Modeling to use companies' current data to show how to create models, interpret the results, and then act on the information yielding positive, profitable and differentiated outcomes;
  3. Enterprise Marketing Planning to establish an optimal marketing planning process that provides real insight into the business and enhances decision-making; and
  4. E-Marketing Review to provide recommendations and a route map to assist companies in successfully addressing the issues surrounding online and real-time marketing.

In addition to providing the above services directly to customers, the AOS and AIS programs complement Unica's alliance partner program, given the vendor can deliver AOS and AIS to customers in cooperation with alliance partner teams and offers training to alliance partners on delivering these services.

Affinium 5

The above moves follow on recent major product releases' delivery and impressive annual financial results. At the end of 2002, Unica announced the general availability of Affinium 5, only a half year after the release of Affinium 4 , which somewhat resembles the time apart between the recent Matrix Reloaded and Matrix Revolutions movie trilogy parts' releases. The Affinium 5 release aimed at delivering a marketing solution that provides one of the richest and most intuitive functionalities for managing and deriving increased value from the entire marketing process -- from strategic planning and budgeting to predictive analysis and cross-channel relationship optimization to campaign execution, resource management and closed-loop analytic reporting.

Featuring significant enhancements to its campaign management, e-marketing, resource management and optimization capabilities, Affinium aims at facilitating efficient cross-organization collaboration, workflow and the accessibility of marketing technology, while increasing organizational agility and customer-focused marketing aptitude. Additionally, Affinium is modular, so organizations can choose the functionality they need now and add capabilities over time. New functionality includes sophisticated relationship optimization; marketing content management; advanced real-time e-mail marketing capabilities; and new rapid start templates for planning and managing marketing initiatives such as marketing events and cross-channel acquisition campaigns.

With the shipment of Affinium 5 at the start of its new fiscal year, Unica believes to be well positioned to build on the strong momentum it has sustained over the past five years. In 2002, Unica reportedly grew by 27% and achieved record revenue, profitability and cash flow from operations. Unica closed the year with more than 250 customers in the financial services, retail, hospitality, health care, pharmaceutical, insurance, telecommunications, publishing and business-to-business services industries, many of which are Fortune 100 companies. Unica also continued its international expansion into Europe, Middle East, Africa (EMEA) and Asia-Pacific markets and entered into agreements with a number of technology and professional services partners worldwide including Epsilon, Harte-Hanks, Headstrong Japan, IBM Global Services, Premier Technologies and Sophron Partners.

Market Impact

Hats off to Unica for being a shining example of a successful privately-held niche vendor, in spite of difficult economic environment and despite belonging to arguably prosperous market segment. The CRM market as well as its marketing automation sub-segment remains both the land of opportunity albeit with many sinister patches of quicksand traps for those with small footprint breadth in the field. While the biggest and/or the richest packaged suite CRM/ERP providers have been able to hang onto flat new sales, possibly modest declines, or in more rare cases possibly modest growth, only a lucky and/or more probably the most apt few with a true differentiation in a selected number of markets have even bucked the trend and have shown some enviable growth. Unica seems to be defending the pride of the bittersweet marketing automation segment with its protractedly good performance against the odds.

Every business cycle begins with the attraction of the customer through sales and marketing. This hopefully results in an order management and fulfillment process and ends with a customer service, which can involve anything from field installations through to enquiry and complaint management. All of these steps have to be executed well without exception, since otherwise, the customer will end up on a competitor's list of customers. The 64,000-dollar question is how all business processes work together. In the electronic world, the degree of flexibility and efficiency of collaborative processes relating to the customer lifecycle, product lifecycle, and service lifecycle, to name but a few, will be a big determinant of losers and winners. To that end, there seems to be a dichotomy between the marketing automation promise of benefits enterprise-wide and the way it has often been misused. For a discussion of marketing automation, see "Marketing Automation: Coming of Age Slowly".

However, despite cited benefits of the applications, many marketing automation specialists have, for many reasons, been a cry far from a success or, at least, not had an easy time. Most of pure-play providers have been either acquired or bust during the past few years including Xchange, Prime Response, BroadBase, Protagona and MarketFirst, and those that remain independent (such as Aprimo, SAS, NCR Teradata, Blue Martini Software, DoubleClick, and Unica) are apparently creating broader marketing suites to cover all the above-mentioned bases.

One reason thereof is the phenomenon of large packaged ERP and/or CRM suite providers to slow or even stall enterprise applications buying decisions even well before their serious market entry. As a result, the niche vendors have to battle to maintain their market dominance despite strong solutions, while the large vendors are still developing astute solutions and market credibility, and attempting to sell these based primarily on the integration of their limited functionality with the rest of their suites and a promise of deeper and complete functionality some time in the future. This category would include the likes Siebel Systems, Chordiant Software, Pivotal, E.piphany, Kana, Onyx, Amdocs, PeopleSoft, SAP and Oracle.

Incidentally, Applix, with its recent exit from the CRM market (see Will A Big Fish's Splash Cause Minnows' Flush Out Of The CRM Pond?), may exemplify the dark side of the CRM medal nowadays, as droves of smaller pure-play CRM vendors have been hard pressed to survive owing to the combined effect of CRM users' disenchantment with the products' hardly ever materialized benefits, compounded with the tight IT budgets due to the worldwide economic recovery delay and with Microsoft's entry into already crowded place. Although many mid-market pure-CRM solutions have been maturing and improving, they must continue to facilitate integration with back-end systems, given the increasing awareness of this need for full-fledged benefits of CRM. Further, they must also provide the differentiation through verifiable ROI metrics, and indispensable features and functions germane to selected industry verticals.

Larger CRM vendors have, on their hand, been weathering the storm by relying on cross-selling broader CRM application suites to their existing and potential customers, involving also components such as Sales Force Automation (SFA), employee relationship management (ERM) or call centers. Marketing automation point solution providers have also fallen prey to pessimistic investors and diminishing global corporations' appetites for technology. They have taken the impact of the slowdown because of a more budding market yet to create the market awareness of its true value proposition, and because of the slower adoption of information technology (IT) in marketing departments (i.e., there is still cultural resistance to software automation, which is perceived as restrictive to the art of marketing, with an oversight that automation might actually eliminate the low-value activity to relax more time for true creative work.

Yet, these applications will have also often been perceived either as luxury (a nice to have' but not show-stopping) applications in these days of anyone hardly having any customers at all, or, in cases of customers valuing the proposition, they might be much more inclined to obtain it only as a part of a broader CRM suite (if not even from an ERP provider) rather than as a point solution. Thus, the need for providing a full, comprehensive CRM suite rather than an individual solution or a bundle of point solutions for each distinct CRM area remains firm, and will urge further CRM (and overall enterprise applications for that matter) market consolidation.

The gravity of these narrow product footprint vendors' predicament might be well illustrated by the Applix' exit, given the vendor had a solid CRM product breadth and technology foundation, a good implementation track record with nearly 1,000 satisfied customers, and some notable endorsements from ERP vendors that have been remiss in delivering their own CRM (i.e., SSA GT and Geac Computers Corporation). Many pure-play CRM players that cannot even come close to the above traits should do their own math and analyze the justification of their independent existence within the CRM battleground. Not surprisingly, marketing automation-only providers have long been falling away to the extent of only a few possibly also endangered remaining providers like Unica, Aprimo, MarketSwitch, and MarketSoft. PeopleSoft's acquisition of Annuncio (see PeopleSoft Annuncio-es Continuation Of Its Shopping Spree), Kana and Broadbase merger (see The Mid-Market Is Consolidating, Lo And Behold), Pivotal's recent acquisition of MarketFirst, DoubleClick's acquisition of Protagona, S1 Corporation's acquisition of Point Information Systems, Vignette Corporation's acquisition of DataSage, SAS' acquisition of Intrinsic and Verbind, and Chordiant's acquisition of Prime Response all should indicate diminishing life expectancy of independent CRM point solutions providers.

The good news nevertheless is that there are huge untapped opportunities for business improvement, given marketing has a unique vantage point in any enterprise to understand the customer needs, buying behavior, and value perception. Increasingly, marketing automation solutions are being adopted by large enterprises with multilevel, multi-LOB marketing departments. Those organizations need to coordinate their marketing programs and campaigns and are creating increased demand for holistic marketing-automation suites that include marketing operations, analytics and management functionality. Thus, we expect to see more marketing-automation suites that offer marketing analytics and campaign management in a single product offering. However, the large packaged enterprise suite vendors still have it as a mere afterthought to the product blueprint rather than a strategic enhancement to their product offering.

What Is So Unique About Unica?

Conversely, Unica's focus on marketing automation and management per se rather than treating it only as a mere component of CRM has apparently been paying off. The vendor has to that end long embarked on tackling the pieces of an Enterprise Marketing Management (EMM) suite that should eventually support all core processes in marketing from planning and budgeting, activity management, knowledge and content management, to supplier management, and customer needs management. As Unica cites, EMM solutions should give marketers the tools to develop deeper customer understanding while delivering more personal and compelling marketing throughout the customer life-cycle. The concept of EMM should improve an organization's ability to acquire, retain and grow customer value, establish the corporate value proposition and brand as well as efficiently manage the strategic planning process and marketing resources including people, time, inventory, and content.

Unica's key success factors have so far been a broad multi-faceted and functional marketing solution (with varied and sophisticated analytical tools for marketing analytics, as well as campaign management and design), adept marketing and execution (even if benefiting from its peers' plight by poaching their perturbed customers), open and adaptable product architecture (i.e., its ability to read from any available database should appeal to enterprises that are loath to other vendors' need for proprietary technology such as data marts), widespread global presence and well-developed distribution channel, and, last but not least, quick implementation, scalability and flexibility afterwards.

A comprehensive, integrated and open marketing application suite like Affinium that offers such features as planning, predictive analysis, campaign management, workflow, real-time queuing (i.e., the ability of software to communicate with other systems based on events), marketing content management and reporting should go a long way towards enabling enterprises to respond quickly to market fluctuations and to successfully execute on marketing strategies. Unica even includes a feature in its marketing automation suite that ensures an organization has sufficient resources available to respond to many events, such as checking to see if there is enough inventory available to satisfy an event-driven customer offer.

With the Marketic acquisition, Unica continues to broaden its suite with Marketic's marketing operations functionality, and it greatly strengthens its customer base and geographic coverage in Europe especially in France, given Marketic's renowned customers including many leading French banking, insurance, telecommunications, utility, automotive and retail enterprises. Unica should now have possibly the largest customer base for marketing automation in Europe, going neck-to-neck with Chordiant in many markets worldwide.

Still, while the deal strengthens Unica's local capabilities in Europe, the acquisition might, in a short term, distract the vendor's laser-sharp focus. Namely, while Unica has a sharp focus on marketing automation and on large enterprises, Marketic has broadened the product range into call center CRM applications and has also targeted the mid-market in southern Europe. Also, Unica pledges to continue to support and develop Marketic's products for the French market, but it also intends to soon introduce its own Affinium product, localized for France. This might give an opportunity to rivals such as Chordiant, E.piphany, DataDistilleries and NCR Teradata to prey on current Marketic clients made anxious by Unica's takeover, e.g., for still uncertain upcoming Unica's pricing, licensing agreements and product support levels.

User Recommendations

Existing Marketic users should be encouraged by the purchase, since Unica's Affinium is one of the most complete marketing software suites, and they should anticipate a unified offering in the foreseeable future. Particularly multinational consumer-driven companies with a need for real-time interactive marketing and for detailed customer segmentation and targeting to make database marketing accessible to a wider group of marketing decision makers, should evaluate extensions Unica will soon provide to them.

Still, current users of Marketic call center applications and/or all current users outside of France, may want to contemplate product replacement strategy over time. In the long term though, even the existing customers in France should reexamine their EMM applications needs, and decide whether they should remain on the current Marketic product, migrate to the Affinium product, or possibly consider a switch to a competitor's product.

On a more general note, prospective marketing automation customers should start by scrutinizing closely their major motivators for marketing automation and to determine whether they align with the overall CRM and corporate strategies.

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