Comments on: CPM Pricing Will Ultimately Put EMSPs Out Of Business http://nxteramarketing.com/2008/03/05/cpm-pricing-will-ultimately-put-emsps-out-of-business/ Elana Anderson's musings, ideas, and -- sometimes -- random thoughts about data-driven marketing. Thu, 10 Sep 2009 21:52:15 +0000 http://wordpress.com/ hourly 1 By: Matt http://nxteramarketing.com/2008/03/05/cpm-pricing-will-ultimately-put-emsps-out-of-business/#comment-305 Matt Tue, 08 Jul 2008 15:44:12 +0000 http://nxteramarketing.wordpress.com/?p=50#comment-305 Elana, What's been revealed recently in the new pricing structure by Bronto Software is their new 'use it or lose it' email minutes component. For customers paying quarterly, we must use our allotted email minutes or let them expire like a gallon of milk. This pricing component provides little incentive to improve email relevance. Not only is it volume-based pricing, it's now time-based ... rush those messages out before the email minutes expire. Have you seen this with other EMSPs? Matt Elana,
What’s been revealed recently in the new pricing structure by Bronto Software is their new ‘use it or lose it’ email minutes component.

For customers paying quarterly, we must use our allotted email minutes or let them expire like a gallon of milk.

This pricing component provides little incentive to improve email relevance. Not only is it volume-based pricing, it’s now time-based … rush those messages out before the email minutes expire.

Have you seen this with other EMSPs?

Matt

]]> By: Elana Anderson http://nxteramarketing.com/2008/03/05/cpm-pricing-will-ultimately-put-emsps-out-of-business/#comment-120 Elana Anderson Fri, 07 Mar 2008 14:53:46 +0000 http://nxteramarketing.wordpress.com/?p=50#comment-120 Joe, Thanks for your comment and feedback. What struck me as interesting in your feedback was your comment: "CPM pricing makes for better email marketing than volume-based pricing." I tend to view CPM pricing as volume-based pricing. In fact, in my post, I almost used the terms interchangeably. The way I've always seen CPM pricing implemented is: the higher the volume, the lower the CPM... Your point about list size pricing not being an incentive to improve email targeting is also a good point. But, I don't see either model as providing any incentive to emailers to improve the level of relevance of their communications. The challenge for EMSPs, like yours, is how you can continue to provide more sophisticated tools to your clients when your back is up against the wall of these pricing models that essentially reward volume mailing. Elana Joe,
Thanks for your comment and feedback. What struck me as interesting in your feedback was your comment: “CPM pricing makes for better email marketing than volume-based pricing.” I tend to view CPM pricing as volume-based pricing. In fact, in my post, I almost used the terms interchangeably. The way I’ve always seen CPM pricing implemented is: the higher the volume, the lower the CPM… Your point about list size pricing not being an incentive to improve email targeting is also a good point. But, I don’t see either model as providing any incentive to emailers to improve the level of relevance of their communications.

The challenge for EMSPs, like yours, is how you can continue to provide more sophisticated tools to your clients when your back is up against the wall of these pricing models that essentially reward volume mailing.

Elana

]]> By: Joe Colopy http://nxteramarketing.com/2008/03/05/cpm-pricing-will-ultimately-put-emsps-out-of-business/#comment-119 Joe Colopy Thu, 06 Mar 2008 14:04:51 +0000 http://nxteramarketing.wordpress.com/?p=50#comment-119 Appreciate your feedback. I agree that the future for successful ESPs is strong reporting, analytics, and services that go beyond sending. Already you see a strong trend where ESPs are monetizing deliverability services and other premium reporting offerings above sending. This, however, is not in conflict with CPM-based pricing especially when compared to contact-based / list-sized based pricing (where we were coming from). Providers targeting SMBs price based on list-size because their customer set primarily send email newsletters on a regular basis. Since the volumes are low, it really doesn't matter if the vendor lets them send 3, 6, or 20 times per month for the same price. This is not true with larger mailers. It matters a lot. Also, a pricing model based around list size creates a disincentive against segmenting because the customer would pay the same amount regardless of how targeted their campaigns become. CPM pricing makes for better email marketing than volume-based pricing. The reason that most lower tier providers offer list size based pricing to their customers is because it is easier sell to their customer set that don't necessarily know their email send volume but definitely know their list size. You are definitely right that CPM cannot be the end of the story and it will continue to trend downwards for ESPs that do not offer more robust tools and price them so that they have value beyond just sends. As time goes on, I think that you'll find that the CPM portion becomes a smaller and smaller piece of the overall email marketing contract. Drop me a note or give me a call and I would be share our insights into pricing and where we see the industry going. Joe Colopy CEO of Bronto Software Appreciate your feedback. I agree that the future for successful ESPs is strong reporting, analytics, and services that go beyond sending. Already you see a strong trend where ESPs are monetizing deliverability services and other premium reporting offerings above sending.

This, however, is not in conflict with CPM-based pricing especially when compared to contact-based / list-sized based pricing (where we were coming from). Providers targeting SMBs price based on list-size because their customer set primarily send email newsletters on a regular basis. Since the volumes are low, it really doesn’t matter if the vendor lets them send 3, 6, or 20 times per month for the same price. This is not true with larger mailers. It matters a lot.

Also, a pricing model based around list size creates a disincentive against segmenting because the customer would pay the same amount regardless of how targeted their campaigns become. CPM pricing makes for better email marketing than volume-based pricing.

The reason that most lower tier providers offer list size based pricing to their customers is because it is easier sell to their customer set that don’t necessarily know their email send volume but definitely know their list size.

You are definitely right that CPM cannot be the end of the story and it will continue to trend downwards for ESPs that do not offer more robust tools and price them so that they have value beyond just sends. As time goes on, I think that you’ll find that the CPM portion becomes a smaller and smaller piece of the overall email marketing contract.

Drop me a note or give me a call and I would be share our insights into pricing and where we see the industry going.

Joe Colopy
CEO of Bronto Software

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