RightNow Adds Social Community Capabilities (But Don't Expect Support Costs to Fall as a Result)

Summary: RightNow has extended its social media footprint by purchasing HiveLive, which lets companies build public and private communities. It also released a benchmark survey showing that online channels (email, chat, Web self-service) don't do much to reduce customer service telephone calls.

In keeping with my recent posts about broader utilization of social media, I had a chat earlier this week with on-demand CRM vendor RightNow , who updated me on their recent purchase of HiveLive. HiveLive provides a social community platform, which means it lets companies build their own discussion groups, forums and such. HiveLive has many features to support business communities, both in terms of engaging with customers over issues such as product features and bugs, and in terms of building internal communities such as project teams.

HiveLive fits with RightNow’s vision of giving customers a seamless flow between community applications and a company’s traditional service systems. For example, if a question posted to a forum goes unanswered for a specified time, it can be escalated into a service system as a case to be handled by the company’s support group. If I understood correctly, RightNow and HiveLive can do this already.

We discussed deeper sharing, such as having answers developed in a public forum become part of a company’s internal customer service knowledgebase. That’s something RightNow may add in the future.

Our discussion veered onto other topics, and in particular how seriously companies really take the goal of improving the customer experience. RightNow shared a copy of its recent RightNow Multi-Channel Contact Center Benchmark Report, which was interesting in its own right.

One tidbit I found particularly intriguing was how few telephone service calls are “deflected” into email, chat and Web self-service channels. In the survey, most companies reported that fewer than 10% of customers in those channels would otherwise have made a phone call.

You could see this as bad news for the theory that having alternate channels available will reduce the need for call center agents. Or you could consider it good news that customers have more choices to pick the interaction method they find most congenial.

Another interesting item was that 55% of companies have some mechanism to gather feedback from customers, but just 10% of those use an IVR survey, which I personally consider the most effective way to gain broad participation. Again, you can treat this as good news (at least half the companies are trying) or bad news (just 5% of the total are doing it effectively). Either way, it’s food for thought.

Acxiom Uses Social Media Data to Segment Email Lists

Summary: Acxiom's new social media marketing tool gathers public data about social media links and uses it to segment email lists. It's a different, and arguably more practical, approach to helping marketers take advantage of social media.

Acxiom last week released a new “social media marketing” solution called Relevance-X Social.

The press release is frustratingly vague (“With the ability to engage socially active customers and prospects in their preferred networks, marketers can link that knowledge to relevant communications that ignite conversations on behalf of the brand.”) But, on talking to the company, it turns out there is a pretty interesting product here. (Disclosure: I am a consultant to Acxiom, although I had nothing to do with this product).

What Acxiom has done – and this is so Acxiom – is to ignore the content posted in people’s social media comments or profiles, and just capture the “hard” information about links between people and membership in groups. Apparently (and I’m taking Acxiom’s word on this), this data is publicly available from most social networks (Twitter, Facebook, MySpace, LinkedIn, Plaxo and some more specialized ones) once you know someone’s email address. So Acxiom has taken its own database of more than 500 million email addresses and found the connections for each.

Relevance-X then accepts a marketer’s own email list – presumably its customers or prospects – and returns information from its own database about the matching names. This avoids at least some privacy and spam issues, since marketers are only given information about people they already have some type of relationship with.

The main application of this information is sending targeted emails. Thus, a bank might send one message to customers who belonged to a financial planning group, and a different message to customers who don’t. Other segmentation might be based on the total number of connections, membership in the company's own fan group, or information the company already knows from other sources.

The key point here is that Acxiom is using social media to execute traditional database marketing. This is quite different from most social media marketing products, which boil down to monitoring for posts on specified topics, responding to individuals, or to publishing messages to groups through the network itself. In a way, it seems rather old-fashioned to use social media data as a basis for outbound marketing. But for marketers struggling to find a practical use for social media, it's better than many alternatives.

(As Ed Park points out in a comment below, other vendors including RapLeaf and Unbound Technology also build similar databases by capturing social media links.)

Relevance-X includes two other components. One is the ability to tag the content it publishes – such as links within emails or messages posted to group pages – so marketers can track response. This is done with standard page tags and browser cookies, so what’s important here is not the technology but the ability to measure results. Again, this is something that traditional database marketers consider essential – and that other social media products sometimes struggle to accomplish.

The other component is a separate social media monitoring service that tracks keyword mentions, sentiments and trends, but on an aggregate basis rather than by tracking individuals. Acxiom is using a third party product for this. The goal is to supplement the direct response tracking with a more general measure of marketing program impacts.

Pricing for Relevance-x Social is based on the number of relationships (typically email addresses) researched and on the number, size and complexity of the campaigns being managed. It can be purchased on a campaign-by-campaign basis or annual subscription. Pricing for a basic campaign could start at around $25,000.

Adobe Buys Omniture: Good for Marketers, Bad for Marketing Automation Vendors

Summary: Adobe's agreement to purchase Omniture illustrates the on-going convergence of Web content management and Web analytics systems. This puts pressure on marketing automation vendors, who also want to provide Web analytics and content management, and who are already being pressed by customer relationship management (CRM) vendors. That's a pretty unpleasant position.

Adobe's announcement that it will purchase Omniture for $1.8 billion makes perfect sense. As I discussed in July, marketers have a lot to gain from tight integration between a Web content management system (CMS) like Adobe's Dreamweaver and Web analytics and optimization like Omniture.

Let's take it as a given, then, that major Web content management systems will soon include integrated analytics. This sets up a new clash between marketing automation vendors and Web CMS vendors. One of Omniture's major selling points before the merger was its ability to combine information across all online marketing channels, and I think they were working towards adding offline channels as well. Although short-term priorities will probably shift now towards Adobe integration, I doubt their long-term ambitions in that direction will evaporate.

And even if the CMS vendors do restrict their focus to online, they will still be competing with Web CMS and analytics solutions from marketing automation vendors who realize that online is too big a sector for them to ignore. Even though both sets of vendors will need to provide some degree of openness so their clients can move data from one platform to another, both will really want to sell their clients the entire execution and analysis stack, and will tightly integrate them to encourage this.

I think I've made this point before, but I'll repeat it again: the marketing automation vendors are really being squeezed between the Web vendors on one side, and the CRM vendors on the other. This is a very unpleasant position, since both CMS and CRM vendors are much larger than the marketing automation specialists. It's hard to see how they can survive as anything but niche products in the not-too-distance future.

This position probably puts me at odds with industry analysts who see great opportunities for growth in the marketing automation space. (I'd point to specific examples but can't find any just this minute.) The general argument seems to be that low adoption rates mean there's plenty of unmet need that will eventually lead to sales. I agree that adoption is low -- but there's no guarantee that the marketing automation specialists will be the ones who fill the gap. Improved CRM or CMS offerings might actually meet marketers needs. And if since nearly everyone has or needs a CRM and CMS system, it will actually be easier for companies to use the expanded features in their existing systems than to buy a separate marketing automation product.

If anybody has a good counter argument, I'd be happy to hear it.

Two further thoughts:

- When I asked one of the marketing automation vendors recently whether he considered CMS vendors as competitors, he said he didn't because CMS vendors still sell primarily to IT, while marketing automation is purchased by marketing. Assuming this is true, then Omniture also helps Adobe by giving access to marketing departments.

- The acquisition may make marketing automation vendors more attractive acquisition candidates for CMS vendors wishing to beef up their marketing capabilities. Autonomy (Interwoven), Open Text, and EMC (Documentum) could all swallow a Unica, Aprimo or Alterian without stopping to chew.

A Heartwarming Story of Social Media, Family and QlikView

My son works as a sports researcher at a cable television network. His job seems mainly to be looking things up in online databases and, on broadcast days, watching several games simultaneously. It's nice work if you can get it.

In terms of technology, Microsoft Word and Excel meet most of his needs. But I did introduce him to QlikView several years back, and he learned enough to analyze statistics for his college basketball team. When QlikView introduced its free Personal Edition, he decided to use it at work to track a database of college recruiting prospects. Despite (or because of) his lack of technical background, and without any formal QlikView training, he created a very nice system to find prospects based on different characteristics and create ad hoc statistical summaries.

The centerpiece is a map that displays the number of recruits by state. Because this is QlikView, the map is automatically redrawn each time he makes a selection: so he can see recruits for a certain position, or going to a particular school, or whatever. This is the sort of thing that gets sports people excited. In fact, his colleagues were so pleased that there’s talk of using a version of the map on-air.

The only fly in this ointment was that neither he nor I could find a way to get the map to show the numbers for all the states simultaneously. We could get different sized bubbles reflecting the state counts, and we could see the actual figure for each state by hovering over it. Recognizing my own limits as a QlikView developer, I asked for help on the QlikView user forum and from friend on the QlikView consulting staff. The consultant didn't think it was possible, so we let the matter drop.

Fast-forward one month, to yesterday, when I received a notification that someone had responded to my forum query with a solution. It took a couple of tries, and some additional help from forum members, to get it to work on my son’s map. But you can imagine how pleased we were when we finally saw the map as originally envisioned.

This story illustrates quite a bit about QlikView. Building the original map was easy – my son was able to do it with little help, even though QlikView was doing some very sophisticated processing under the hood. (Specifically, on-the-fly data aggregation along user-defined calculated dimensions, without touching the underlying database). But getting the system to do exactly what he needed did take some special knowledge. (He had to use the number of students by state as his primary dimension, not the X/Y map coordinates.) The adjustment took just a few minutes, but only a QlikView expert would realize that’s how you do it.

To generalize a bit more broadly, then, QlikView really does enable non-technical users to do amazing things, and it really is as powerful as its advocates (myself included) like to claim. But users do need some training to be effective – something that advocates are sometimes reluctant to admit.

The story also illustrates the value of social media. QlikView’s forum is an amazing source of help for users of all skill levels. It works because QlikView has a community of highly engaged advocates who are both expert in the product and willing to help each other.

The forum provides several strategic benefits for QlikView: it helps users become successful (thus driving wider adoption); it lets users succeed even if they don’t receive proper training (which many will not, particularly among users of the free Personal Edition); it reduces the need for paid support staff; and it provides a window into common problems and requirements. It also reinforces the commitment of the engaged users themselves, by publicly rewarding their contributions. Although I’ve never discussed the forum with QlikView management, they obviously understand these benefits well enough to justify their continued investments in it.

This isn’t to say that social media would provide the same value to everyone. QlikView fits several specific conditions – enthusiastic expert users, problems that can be solved fairly easily, etc. – that won’t always apply. But as an example what social media can sometimes accomplish, QlikView is a great case study waiting to be written.

Why Social Media Really Matters

Summary: marketing has shifted steadily over time from passive to active consumer engagement. Social media is the latest stage in this evolution. Marketers need to master new skills at each stage; as they do, advertising budgets will shift to take advantage of the new medium's increased effectiveness.

Of all that research I mentioned last week, two pairs of facts stood out. One was the disparity between the time people spend on online activities (20% to 30% of total media time) and the share of advertising expenditures spent online (10% to 15%). Although some difference may be justified by the differences in media effectiveness, this still suggests to me that ad spending will continue to shift into online media until the spending is roughly proportional.

The other disparity was that search accounts for 5% of online time but 60% of online ad spending. Some of this may be due to the fact that it’s much easier to buy search advertising (think Google AdWords) than other types of online ads. But I think the primary reason is that search serves as a gateway to other Internet activity—so marketers wishing to drive traffic to their own Web sites need search advertising to make this happen.

The final, related factoid is that social media have grown from virtually nothing to nearly 20% of online time over the past few years. This matters because social media are an alternative gateway to finding Web content: instead of doing a search, I can ask my online community for information or recommendations. Thus, social media present a major threat to search advertising revenues. Although social media currently gather under 3% of online advertising, this will surely change as marketers work to find ways to exploit its potential. If you’ve been wondering why Google should be concerned about Twitter and Facebook, that’s your answer.

These shifts from offline to online advertising and from search to social media suggest a progression through four stages:

1. mass media, or broadcasting: this began in the late 19th century with the emergence of national brands and national print media. Today it is represented primarily by television. You can date TV-dominated era from, say, 1950 to 1985.

2. database marketing, or, more poetically, narrowcasting. This is about direct contact with segmented groups of customers. Date it from 1985 to 1997.

3. search marketing. This is characterized by use of search engines to drive traffic to Web sites. I’m being arbitrary but let's date it from 1998 to 2007.

4. social marketing. This is use of social media to connect with consumers. I’ll date it from 2008, although effective marketing uses of social media are just starting to emerge.

As each new medium has emerged over years, some portion of advertising dollars has shifted from the preexisting media. Of course, the old media don’t go away completely. Indeed, traditional mass media (including radio and print as well as TV) still account for the largest share of advertising spend.

The four media differ along several dimensions. These include:

- consumer engagement. Broadcast is the most passive medium; essentially, it’s yelling at people who may or may not be interested in the message. The audience in database marketing is still passive, but it's targeted at segments that marketers have some reason to believe are interested. With search marketing, the consumer takes a somewhat active role in deciding what to look for, even though the ads themselves are still placed by marketers. With social marketing, control is directly in the hands of consumers, who decide which messages they will receive.

- authority. I find this an intriguing concept. Basically it has to do with how consumers decide which messages they should believe. In the mass media, authority is essentially conferred – people believe things because they are "seen on TV" or have the "Good Housekeeping Seal of Approval". With database marketing, the medium (typically direct mail, more recently email or telephone) doesn’t itself confer much authority, so the message itself must command attention because it’s relevant to the consumer’s needs of the moment. This relevance motivates the recipient to actively explore the marketing offer and assess whether its source is credible.

In search marketing, the source of authority is implicitly based on the group itself: Google PageRank is largely determined by the number of links to a Web site – a version of “wisdom of the crowd”. With social marketing, group-based authority is explicit: consumers can see the number of followers, recommendations, reviews and other ratings provided by group members and decide whether to trust them.

- post-sale relationship. This defines the relationship between the marketer and consumer after the initial purchase. In the mass media world, the relationship barely exists: customers use the product and, hopefully, like it enough to buy it again. At most they ask for service if there’s a problem. With database marketing, post-sales contacts become important for cross-sell, upsell and retention. Indeed, this is where database marketing truly shines because it’s where rich data is available for targeting and relationship building.

Search marketing reaches a new level of engagement because customers can interact directly with the company Web site. This lets them initiate transactions, send messages, and in some cases actually change product configurations such as setting telephone features. With social marketing, consumers take direct control, initiating engagement themselves and, even more important, publicly sharing their engagements with other community members.

- marketing focus. This shows the critical task that marketers must master. With mass media, the primary marketing goal is selecting a message that builds a successful brand. For database marketers, the key skill is effective segmentation. Search marketing is primarily focused on developing content, both to attract traffic via organic search and to meet consumer needs once they appear at the site. For social marketing, the ultimate goal is convincing consumers to become brand advocates. Content is still important, of course, but its nature shifts from information that visitors consume to tools like widgets that empower them to share their enthusiasm with others.

The following table summarizes these dimensions.

medium	consumer engagement	authority	post-sale relationship	marketing focus
mass media (broadcasting)	passively exposed	conferred	service / support	brand message
database marketing (narrowcasting)	targeted	relevance-based	cross sell / upsell / retention	segmentation
search marketing	activity-triggered	implicit group	Web self-service	content
social marketing	consumer-controlled	explicit group	public engagement	empowerment

At the risk of stating the obvious, the table shows a steady increase in consumer empowerment from the passive receipt of mass marketing message to active control in social media. Because this is a fundamental change from traditional mass media marketing, it has several important implications:

- for each new medium, marketers must learn new skills.

- as marketers learn new skills, they will use the new medium more effectively.

- as marketers use the new medium more effectively, it will receive increasing portions of their ad budgets.

- since social media is very new, its share of advertising budgets will continue to grow for some time.

In short, social media matters not because it's cool, but because it offers marketers a new and more effective way to reach their consumers. Marketers who fail to master the required skills will fall behind marketers who do.

Show Me the Numbers: Hard Data on Internet Use and Media Spend

Summary: Here are links to about twenty studies with statistics on online media consumption and advertising spend. Many are contradictory, but it's clear that marketers need to invest in social media, which might eventually replace search as the primary way that customers find them.

I’m sitting on a panel next week that will discuss long-term marketing trends. Naturally I have plenty of opinions on the topic, but just for fun I decided to scare up a few facts to reinforce them. This led to a highly entertaining, though uncompensated, scavenger hunt through the Web.

You won’t be surprised that there’s plenty of data out there. But I thought I’d share some of sources I found for answers to my basic questions, and perhaps a couple of insights I hadn’t quite considered before.

1. How are people actually spending their time online? And, in particular, are social media as important as industry gurus claim they are?

Probably the most comprehensive study along these lines was Global Faces and Networked Places, released by Neilsen in March 2009. This showed that as of December 2008, search was still the most common Internet activity (used by 85.9% of the online population), compared with just 65.1% for email. Social networks and blogs are the fastest growing application, now exceeding email with a participation rate of 66.8%.

Digging a little deeper within the social media category, the women’s blogger community BlogHer reported in its 2009 Women and Social Media Study that as of March 2009, 75% of women participated in social networks, compared with 55% who read blogs, 40% read message boards or forums, and 16% update status on platforms like Twitter. (The Twitter figures are surely much higher by now.) Nineteen percent actually publish their own blog while 29% comment on blogs. This reinforces (at least for women) the sense that social networks are rapidly emerging as the dominant Web activity.

Netpop Research reinforces this point in Media Shifts to Social, which found that as of September and October 2008, communications (including email, instant messaging, blogs and photo sharing) had risen to 32% of online time from 27% in 2006. Entertainment (games, videos, and “accessing Web sites for fun”) dropped from 49% to 20% in the same period. Sadly, the public materials don’t tell us where the rest of the time went. Netpop agreed with BlogHer’s general participation figures, reporting that 76% of American broadband users participate in social media (105 million of 133 million total).

By contrast, the Pew Internet & American Life Project Survey in December 2008 found only 35% of adult online Americans had a social media profile. Based on the other studies, this seems low – although a social media profile is a more restrictive requirement than the other definitions apply. Pew did find that 65% of American teens had profiles.

One drawback with these studies is that they only look whether people participate in different activities, not how much time they spend. The Online Publishers Association has tracked time since 2003 in conjunction with Nielsen. Its most recent report shows that in the past year, time spent on “community” applications like Facebook and Myspace has more than doubled from 8.8% to 18.5% of the total. (Blogs are also apparently part of “community”, although this isn't stated explicitly.) Since total time online has also expanded, time per visitor has grown even more.

Despite the growth of community, the OPA still shows content (40.6%) and communications (25.2) asl the dominant uses. Commerce (11.0%) and search (4.7%) account for the rest.

Looking at older OPA figures, which are available on MarketingCharts, the biggest change is the reduction in communications, which had a 46% share back in 2003. At that time, social networks were lumped into content, which had a 34% share. Today, the combination of content and community accounts for 59% of users’ time.

The position of blogs is ambiguous because most reports lump them in with other social media. Forrester’s just-published The Broad Reach Of Social Technologies contains a table, available in Josh Bernoff’s Groundswell blog, shows that social media “joiners” rose from 25% to 51% of the online population in the past two years, while content “spectators” (which includes blog readers) grow from 48% to 73%. But that’s pretty much the opposite of the BlogHer ratios mentioned earlier (55% blog readers vs. 75% social media participation). So the jury is still out.

Summary: What does it all mean? Here are my main observations:

- social media are indeed booming, but still account for a minority of online time. So even though marketers need to find ways to use social media for business purposes, they still have time to figure it out.

- everybody uses search, but they don’t spend much time on it. Search still earns the bulk of online advertising fees because it's a gateway to other content, and perhaps because it's the easiest Web advertising to buy and optimize. But its share may erode as social media provide alternative paths to desired content.

- blogs are probably growing more slowly than other social media, but they still account for a substantial portion of online activity. Marketers might be investing in blogs than they are really worth.

2. How does consumption of online media compare with consumption of other media?

Council for Research Excellence’s Video Consumer Mapping Study found more than five hours of TV watching per day (43% of total media time), vs. 80 minutes of Internet usage (10.7%). The Internet figure seems low, but this was a very careful and sophisticated study. These figures may only include the time when a medium had the consumer's primary attention -- so just having an instant message window open on your desktop wouldn't count.

Magazine Publishers Association reported the share of time with different media, although you have to read the table carefully because it reports minutes spent by of “users” of each medium rather than the average across all consumers. But the MPA also points to a study from MRI MediaDay (again published on Marketing Charts) showing the percentage of consumers using each medium. The combined figures show an average consumer spends about four and a half hours of TV per day (47.5% of total time) but only one and half hours of Internet (15.2% of total).

Incidentally, the MPA also argues that time alone isn’t the best measure of advertising value, since some media are more influential with their consumers than others. This is a point worth considering. The MPA bases this on Deloitte's State of the Media Democracy Survey, which unfortunately I couldn't find posted. The MPA provides other, related data in its 92-page guide Magazines: The Medium of Action.

A Forrester chart, posted on CNET shows five years of data on time spent per week with major media. The chart shows that Internet has more than doubled since 2004 and nearly caught up with TV. It reports about two hours per day with TV, accounting for about 34% of total time vs. 33% for Internet.

The Media Audit gives yet another set of statistics on time by medium. It also finds that TV is just slightly ahead of online, at 33% vs. 29% of time respectively. But it pegs TV viewing around three and a half hours per day.

Summary: These are serious conflicts, which I see no way to reconcile. Two studies show TV and Internet each accounting for about one-third of media time, while the other two show TV accounting for about 45% and Internet for 10-15%. The wide variations in estimated total time are also, um, noteworthy.

3. What is the share of ad spending for different media?

PriceWaterhouseCoopers and Wilkofsky Gruen Associates report in their Global Entertainment and Media Outlook: 2009-2013 (via eMarketer) that ad spending will total $170 billion this year, including $62 billion (36%) for TV and $25 billion (15%) for Internet and mobile.

Zenith Optimedia pretty much agrees: its October 2008 report shows U.S. spending at $179 billion for 2008, with a worldwide share of 37.5% for TV and 10.2% for the Internet.

On the other hand, the Direct Marketing Association shows spending at $339 billion total in 2008 including $75.9 billion (22.4%) for TV and $39.4 billion (11.6)%) for “new media and other”, which presumably includes Internet. The DMA also breaks out the portion of each medium used for direct response. It must have a pretty generous definition, since it puts 52.1% of the total in that category.

WPP’s groupm estimates in its Interaction: Addressable, Searchable, Social and Mobile study (via MarketingCharts) that interactive media’s share of total advertising is 14% in North America and 13% worldwide for 2008.

Summary: it’s hard to compare these figures, but everyone agrees that online spending is somewhere between 10-15% of the total, while TV gets 30% or more. Assuming that consumers spend about the same amount of time with both, and that advertising on both is equally effective, online media should get a larger share of ad budgets.

4. Where are marketers moving their budgets?

Forrester and Marketing Profs report B-to-B Marketing in 2009 shows that business marketers most commonly use their company Web site, email, public relations and trade shows. Another table from the same study, referenced by The Event Marketing Insider, shows marketers plan their greatest increases for the company Web site, search marketing, online video and Webinars.

A Forrester chart posted on Mashable shows interactive marketing spend by category, projected from 2009 to 2014. Search marketing accounts for about $15 billion of $25 billion total today and will grow 15% per year vs. 17% for the total. Mobile marketing and social media will grow faster, but will only expand from 4.4% in 2009 to 8% in 2014. Email marketing and display advertising account for the balance.

Online Marketing Blog surveyed marketers about their planned digital marketing channels in 2009. The top three were: blogging (34%), microblogging (Twitter) (29%) and Search engine optimization (28%).

Summary: marketers are moving their budgets online, primarily into the traditional channels (blogging, Web site, search).

4. Which media most affect purchase decisions?

Marketing Sherpa found buyers making complex purchases were relying more heavily on virtual events (Webinars, trade shows), search engines and Web sites, and less heavily on email, face-to-face trade shows, video programming and advertising.

Forrester (via ReadWriteWeb) found emails from friends, consumer reviews and search engines were the most trusted information sources, while personal blogs, company social networking profiles, and company blogs are least trusted.

TNS Media Intelligence in Digital World, Digital Life (via eMarketer) found that recommendations by friends, online news, newspapers and TV news were the most trusted information sources, while user forums, company brochures, free newspapers and private blogs were least trusted. Product comparison sites, industry Web sites and company Web sites were in the middle.

Summary: Marketers may be overspending on blogs and search. Social media could be a better investment -- if we could find a way to use them effectively.

Net-Results Simplifies Demand Generation for Small Business

Summary: Net-Results is simpler to use than comparable demand generation systems because it applies the same features to many tasks. The system is aimed at small business but offers an interesting design lesson for everyone.

When Net-Results’ showed me their marketing automation system, the demonstration ended so quickly that I wondered what was missing. But on reflection I realized that Net-Results offers a full set of demand generation functions. The demonstration was short because the system uses only a few features to deliver them. In an industry where every competitor is striving for grater ease of use, stand-out simplicity is an impressive achievement.

The key to Net-Results’ approach is to build everything around segments. Email campaigns are targeted at segments; Web visitors are classified into segments; behavior alerts are triggered by segments; lead scores are assigned to segments; leads are sent to the sales system based on segments; reports are run against segments. This simplifies the system in two ways: marketers have fewer features to learn, and they can reuse their work across many functions.

Let’s run through the standard demand generation process to see how this works in practice. This process has five functions: send emails to prospects; capture responses on landing pages; score leads; send qualified leads to sales; and nurture non-qualified leads with multi-step campaigns.

Prospects enter Net-Results from external Web forms (more about that later), file imports, manual data entry, or Salesforce.com synchronization. They’re assigned to campaigns by defining entry conditions for campaign steps, which the system calls “actions”. These conditions are not themselves segments but can be copied from existing segment definitions or built with the standard segment-creation interface.

Campaigns can have multiple actions, each with its own entry conditions. Actions can be arranged hierarchically with several "children" attached to the same "parent". Each lead is assigned to the first "child" action whose entry conditions it meets. This allows leads to follow different paths within the same campaign.

The approach imposes some limits, since different branches cannot be reunited. But it will meet the needs for most marketers. Net-Results plans to remove the limits by allowing actions to send leads directly to other actions, within or across campaigns.

Users can also specify a waiting period between actions, and whether to send alerts when a lead qualifies for an action. The actions themselves can send an email, adjust a lead score, or send the lead to Salesforce.com. Since entry conditions can also accept leads into nurture campaigns, the Net-Results actions by themselves account for four of the five core demand generation functions.

The fifth core function, capturing Web response, is Net-Results’ main deviation from standard demand generation techniques. Nearly all demand generation systems let marketers create and deploy landing pages outside of the company Web site. Net-Results does not. Rather, it copies data captured on existing Web forms and posts it to the Net-Results database. This requires users to add a bit of Javascript to company Web pages.

Loading data from existing Web forms requires mapping the original form fields into the Net-Results databases. Net-Results makes this as simple as possible by reading field names on the existing form and suggesting Net-Results fields that are likely to match. Such mapping may sound a scary to serious technophobes, but it’s less work than building a form from scratch.

Net-Results argues that its approach avoids the “vendor lock-in” that comes from using forms hosted by the demand generation vendor. I guess that’s true, but doubt it’s important to most marketers. On the other hand, the Net-Results approach means marketers cannot create new forms without help from whoever runs the company Web site. This strikes me as a significant drawback, which other demand generation systems are expressly designed to avoid.

I wouldn’t be surprised to see Net-Results add a form builder fairly soon, although they didn’t say they were planning to. The system already has an email authoring tool, which includes a graphical editor and works from user-defined templates. Extending this to build Web forms should be pretty simple.

The Javascript tracking code also allows Net-Results to capture the behavior of Web visitors. This is another standard feature for demand generation systems. Here’s where segments reappear, since Web behavior can be used in segment definitions and system reports are run against segments.

Running reports against segments may not sound too exciting, but it greatly simplifies marketing analysis. Practical applications include reports to salespeople about their own accounts and reports on campaign results. Each report can run and emailed to specified users on a user-specified schedule. Reports include graphs as well as tabular data. The system's main reports all relate to Web behavior: visitors, traffic source, search terms, and pages viewed.

The Web visitor report is particularly impressive: it's almost a separate application, similar to the tools that other demand generation vendors use to give salespeople a view of Web activity. Users start with a list of visitors (within a segment, of course) showing key information including source, name, email address, telephone, company, most recent visit date, pages viewed, and visit duration. They can then select a lead and drill into the details of current and previous visits. They can also take actions including sending the lead to Salesforce.com and issuing an alert. Marketers could easily extend direct access to salespeople, since system security could restrict the salesperson to her own leads. An incremental user costs just $25 per month.

Net-Results can also issue automatic alerts, again based on entrance into a segment. Alerts can be directed to one or more email addresses and are summarized in a periodic report.

So what about building the segments themselves? There’s no truly easy way to define complex selections, but Net-Results does a reasonable job of balancing simplicity with power. Segments can have general attributes including security (specifying which user groups can access the segment), automatic exclusion of known Internet Service Providers (so reports can only show visitors from identifiable companies), automatic inclusion of only known contacts (to report only on previously-identified individuals), and parsing of “get” variables from the incoming Web address (to capture information passed within the URL). Treating these selections as attributes reduces the complexity of the segmentation statement itself.

Users build the segmentation statements by selecting data categories (visit activities, contact attributes, campaigns, lists, Web forms, traffic source) and then choosing attributes relevant to each category. For example, attributes for Web visits include pages visited and duration, while attributes for contacts include name, company and job title. Many vendors use a similar approach, which I consider the best method for helping non-technical users to create complex segmentations.

Users can group multiple criteria into blocks. All conditions within a block must be met for a lead to qualify; a lead must qualify for at least one block to qualify for the segment. (In more technical terms: the system uses "and" conditions within each block, and "or" conditions between blocks.) Although some subtle queries can’t be created with this approach, it should meet the vast majority of marketers’ needs. Few demand generation systems offer more power, and many offer less.

Once a segment is defined, users can view the records it selects to check that it works as intended. They can then save the segment and assign it to alerts or reports.

Is Net-Results really simpler than other demand generation systems? To some extent it depends on your definition. Net-Results supports many marketing functions with relatively few features. This is one type of simplicity. But different features tailored to different functions could, at least in theory, make other systems more efficient at each task. This is another kind of simplicity. In practice, I felt that Net-Results’ shared features were just as efficient as specialized features used in other systems. So, yes, I ultimately think Net-Results will be simpler for most users.

Net-Results’ drive for simplicity is based on its target market of small businesses. Many of its clients have just one marketer on staff. These people don’t have the time or resources to use a complicated system, and may not need the refinements, such as rule-driven dynamic content within emails, that Net-Results doesn't provide.

Pricing is also aimed at small businesses. [Note: the following is revised price information provided by the vendor as of December 2009.] Fees are based on a combination of page views, email volume, support hours and length of commitment. A client with 60,000 page views, 20,000 emails, and 5 hours of support would pay about $700 per month on a month-to-month basis and just over $600 for an annual agreement. Half of those numbers (30,000, 10,000, 2 hours) would run $400/$350 based on agreement length. The company reports its average billing per client is around $500 per month. No contract is required and Net-Results offers a 14 day free trial.

The Net-Results system was launched in April 2009 and the vendor says it now has “hundreds” of clients. Some have converted from a simpler predecessor product that was launched in 2006.

Pedowitz Group's Sweet Suite Builds the Missing Link between Social Media and Marketing Automation

Summary: Pedowitz Group’s Sweet Suite captures social media comments and forwards them to a company’s primary marketing automation system. It’s a small but critical step towards integrating social media with other marketing programs.

Marketers and the vendors who support them are working feverishly to harvest the opportunities created by social media. The result has been a profusion of single-function products that provide one part of a comprehensive solution. Probably the most common are products that make it easier to post comments or share links via Facebook, LinkedIn, Twitter and other public forums. Many demand generation vendors now offer something along those lines.

But social media are for interactions, not broadcasts. Products to monitor different communities for mentions of a particular topic provide the first step towards starting a dialog. These too are increasingly common, although most still operate outside of the marketing automation suites. Many of the monitoring systems also help users post responses to the messages they find.

But truly integrating social media with other marketing activities requires considerably more. Social media events must be logged within the core marketing system, linked in that system to other information about the same individual, and responded to through standard marketing system campaigns. In other words, social media must be managed like any other marketing medium.*

Sweet Suite, a product from the Pedowitz Group, addresses precisely this need. The system scans Twitter, Facebook and LinkedIn for mentions and can make automated replies when it finds something. It can also generate a “social media score” for each individual, using whatever formula the marketer specifies, and provides a dashboard to track over-all social media results.

But what's really important is that Sweet Suite reads the public profile of the mentioner, extracts key information such as name and number of followers, and sends the data to a demand generation system. From that point, the demand generation system can use the data like any other input, for lead scoring and campaign selections. Thus, the critical connection between social media and "normal" marketing processes is complete.

Sweet Suite currently connects with Eloqua via an API, and is likely to connect with other systems in the future. The Eloqua interface also tries to link the commenter to existing records in the demand generation database, generally by looking for a match on the social media username. Sweet Suite can also match on an email address if it’s captured in a social media form.

Sweet Suite can also receive, parse and reply to text messages, and of course send the resulting data to the demand generation system. Pedowitz is working on a spider to scan blogs and other Web sites and add their data as input.

Suite Sweet is still technically in beta, but the product is in production at four clients. Current pricing is set at $1,000 per month regardless of number of users or data volume. The system is sold as a hosted service.

______________________________________
*Or perhaps not: some social media evangelists might argue that social media is so radically different from everything else that it can’t be managed in the same way. But while I do think that the details of the treatments will differ, I see no reason they can’t be brought into the standard marketing infrastructure. The advantage of this integration is that the information gleaned from the social media interactions becomes available to guide messaging in all other channels, and vice versa.

Thinking a bit more deeply about social media integration, the closest existing analogy is probably the telephone call center. Like social media interactions, telephone calls currently must be handled by human agents rather than automated replies. This suggests that tools used to enhance phone agents’ effectiveness, such as context-sensitive recommendations and standardized scripts, can also help to guide social media agents.

Social media interactions are somewhat more structured than telephone calls, so it may eventually be easier to automate them fully. But even if human agents remain involved, both the social media system and other channels will benefit from having all their data in the central system—just as today’s marketing systems benefit from incorporating call center histories.

Aprimo Marketing Studio Expands the Scope of Marketing Automation

Summary: Aprimo Marketing Studio includes traffic generation features missing from nearly all existing marketing automation products. This broader scope should become standard as marketers try to truly integrate their programs.

Aprimo is in the early stages of launching Aprimo Marketing Studio, a new Software-as-a-Service marketing automation suite that is separate from the existing Aprimo product.* The new offering is designed to support all stages of interactive marketing, starting with traffic generation from paid search, Web banner ads and blogging, and continuing with visitor behavior tracking, landing pages and forms, interactive dialogs, multi-step email campaigns, lead scoring and CRM integration. These are supported with Web analytics and extensive marketing operations features including workflow, digital asset management and financial analysis.

If you read that list quickly, it sounds pretty much like every other marketing automation vendor. But in fact it’s a substantially broader scope than I’ve seen in other products.

- Consumer-oriented systems generally limit themselves to outbound email and multi-step campaigns, and sometimes provide real-time recommendations to call centers and Web sites.

- Business-oriented (demand generation) vendors add some Web support through visitor tracking, landing pages and forms, but even they rarely do much with other “inbound marketing” channels including paid search, banner ads, search engine optimization and blogging.

- Both sets of vendors generally do a decent job with asset management, Web analytics and other reporting, although only the consumer-oriented systems tend to offer serious support for planning, workflow and detailed financial analysis.

- Neither group provides tools to build and manage a major corporate Web site (generally called "Web content management", although I've labeled it "Web site management" in the following table). The landing pages, forms and related content management that these systems do provide are only designed to let marketers supplement an existing site. I'm increasingly convinced that effective interactive marketing will eventually require the marketing system to run the Web site.

- Neither group has meaningfully integrated social media monitoring and interactions beyond making it easy to share posts to Twitter and Facebook, although Alterian’s Techrigy acquisition (see my related blog post) and Pedowitz Group’s Sweet Suite (see yesterday's post) are steps in that direction.

I've summarized this in the following table. Of course, I’m generalizing about sets of vendors so there will be individual exceptions.

functionality provided:	consumer marketing automation	business marketing automation (demand generation)
traffic generation:
- paid search management
- banner ad management
- search engine optimization
- blogging
- outbound email	x	x
- social media monitoring, intervention and analysis
relationship management
- Web landing pages and forms		x
- multi-step campaign flows (including trigger, event-driven)	x	x
- real time recommendations to external systems	x
- lead scoring		x
- sales automation integration		x
analytics
- Web visitor tracking (individuals)		x
- Web analytics (aggregate behaviors)	x	x
- general campaign reporting	x	x
- predictive modeling and advanced statistics	x
operations
- marketing planning	x
- content and digital asset management	x	x
- Web site management
- workflow	x
- detailed cost analysis	x

In short: both groups are quite weak when it comes to inbound marketing and social media, and the consumer marketers fall glaringly short when it comes to integrating with Web sites.

The business marketing systems have their own weaknesses, particularly in operational support. But given the obvious and growing need to integrate Web marketing with everything else, the consumer systems’ gap strikes me as more important.

I’m even more concerned because there has been relatively little innovation among the consumer marketing automation vendors in recent years. They have competed mostly by extending and refining existing features than by moving into major new areas. The demand generation vendors have been much more dynamic.

There are good business reasons, or at least explanations, for the consumer marketing vendors' strategy. Number one is probably that their clients haven’t been pushing them to do more. But these gaps in their capabilities ultimately make them vulnerable to new, more comprehensive competitors.

This brings us back to Aprimo Marketing Studio. The new Aprimo product would fill every box on my table except social media, predictive modeling and Web site management. This scope makes it truly different.

Now, promising these features and implementing them effectively are very different things. I can't judge the new Aprimo system because I haven't had a detailed demonstration and the system won't start serving live customer until next month. (The official launch will be in November at the Salesforce.com Dreamforce conference.) But what matters for now is the vision. Even if Aprimo doesn’t execute it immediately, someone else eventually will.

I already mentioned that Marketing Studio is designed as a true Software-as-a-Service system. As discussed in an earlier post, this is unusual for a consumer marketing system – Entiera and Neolane are the only other pure SaaS products I can think of – although it’s standard for demand generation products. Aprimo already serves both types of marketers, so it's a logical candidate to bring SaaS to consumer marketing systems. But other consumer-oriented vendors are also moving in this direction. When you're evaluating those products, the question to ask is whether the vendor has truly reengineered the system to take advantage of SaaS economies, or is simply running its existing software in a hosted mode and sending a monthly bill.

Aprimo Marketing Studio is aimed at mid-size and larger companies. Pricing begins at $4,000 per month for the base version with up to 10 users and 250,000 emails. The marketing operations module adds another $2,500 per month and other modules are priced at $1,500 each. There will also be fees as clients add users and email volume. At the end of the day, Aprimo is expecting the average client to pay $50,000 to $75,000 per year. This is pretty standard territory for consumer marketing systems, but well above the median for demand generation vendors.

_______________________________________________________
* The new product has its own Web site, which you can reach here. The site offers a free copy of an excellent Forrester Research report on interactive marketing, which is well worth the inevitable Aprimo sales call that will follow.

Unica 8.0 Offers New, More Unified Interface

Summary: Unica's new release has few functional enhancements but offers better integration of previously separate components.

Unica on Monday officially launched the 8.0 version of its enterprise marketing suite. The main thrust of the new release was visual – a new company Web site and graphics and, more important, a new interface that finally unified the various components the vendor has built and purchased over the years.

I can’t get too excited about the new visuals, which stress the “U” in Unica in phrases like “Discover the U in business”. The unified interface is better news, although it corrects a problem that I feel should have been solved long ago.

The new release does provide some substantive improvements. The most important is a central offer repository linked to cell-level campaign planning. This makes it easier to track the use and performance of standard offers. The planning is also now integrated with actual campaign designs, saving marketers some work as they move from one stage to the next. That’s good, although I think it’s fair to note that it's been two years since Unica purchased its MarketingCentral planning system.

The other major news involves improvements in the company’s eMessage email system. These include a central content repository, conditional text within system-built emails, better response tracking, and deliverability monitoring services from Pivotal Veracity. Integration is still a bit of an issue here – the email content repository is separate from the central offer repository, the conditional text rules engine is separate from the campaign rules builder, and conditional text rules cannot be shared across documents.

On the other hand, Unica has tightly coupled email execution to its campaign suite: in fact, the only way users can send emails via anyone except Unica is to export a file. Previous versions of the system allowed tighter integration with external email services. Unica sees this as simplifying the lives of its clients, although I suspect some may prefer to choose their own provider. The company said that 50 to 100 of its 500-600 campaign clients currently use its email delivery service. The balance will have to convert when they upgrade to Unica 8.0, or resort to the afore-mentioned file exports.

Pricing remains largely the same as previous Unica releases: clients pay for individual modules based primarily on database size. The one substantial change is the email services will now be based on email volume.

Infusionsoft Pushes the Right Buttons for Small Business Marketing

Summary: Infusionsoft knows exactly how to sell marketing automation to small business: promise more revenue, less work, strong support and a low price. The system is designed for entrepreneurs, not full-time marketers.

Since marketing automation for small business was on my mind last week, I checked in with the good folks at Infusionsoft, whose 15,000 customers make them leaders in the field. I ended up chatting with Scott Martineau, company founder and VP Product Management. It was a helpful conversation for a few reasons.

It solidified my understanding that Infusionsoft is aimed at REALLY small companies – typically four or five employees, and very rarely more than 25. Typical clients are selling business services such as training or consumer services such as landscaping, dry cleaning, legal help and niche publishing. Those companies have no dedicated marketing staff and often no specialized sales person. This makes them significantly smaller than buyers of most of the systems I write about – which is something to bear in mind when looking at how Infusionsoft does things.

It showed that Infusionsoft has mastered the art of a clear, simple value proposition: “Fix Your Follow-up, Double Your Sales. Guaranteed.” Um, any questions? That particular headline is inside their site, but the one on the main page (“One ‘Killer App’ to Grow Your Business Fast”) makes a similar promise about growth.

(As to the guarantee itself, the company Web site says “When you use Infusionsoft to fix your follow-up with prospects and customers, you will double your sales. If after 12 months you have not doubled your sales and you’re not confident with the progress you’re making, you can cancel the software and we’ll refund half of your first year’s subscription fees.” Although there were originally some conditions on the guarantee, the company removed them all last month.)

As Infusionsoft’s main headline reinforces, small businesses want as few systems as possible. Martineau said that Infusionsoft typically replaces separate CRM, email, shopping cart and possibly affiliate tracking systems. But this is where it’s worth remembering that Infusionsoft is working with very small businesses: larger firms might have greater need for separate systems.

Even Infusionsoft doesn’t attempt to do everything. It doesn’t run the company Web site (which most small businesses have someone else do for them) or provide accounting (a market dominated by Intuit QuickBooks).

Nor, more surprisingly, does Infusionsoft provide inbound marketing (search engine optimization, paid search tracking, Web analytics, detailed activity tracking, blogging, etc.) features to help generate initial Web leads. I can think of a few possible explanations: Infusionsoft clients don’t do much inbound marketing, or they let their Webmasters do it for them, or they are happy with free tools like Google Analytics. Marketers at larger companies may be more demanding. Martineau said his main priorities are elsewhere, in better email and general ease of use.

Small businesses need marketing support. Infusionsoft’s original solution was personal set-up assistance funded by a $2,500 to $5,000 implementation fee. But of course the fee itself was a barrier to sales. Infusionsoft has therefore invested heavily in making its system even easier to use and in providing extensive self-help features such as video tutorials. With those in place, it last month stopped charging the set-up fees.

The capstone of Infusionsoft’s self-help is the Campaign Launchpad, which is worth a look no matter where you work. Launchpad leads users from general questions about their marketing goals to specific instructions and materials for predesigned Infusionsoft campaigns. It won't replace a real marketing consultant, since it can’t analyze whether you’ve made sound decisions. But it’s an excellent resource for people who need help in getting started. The Launchpad is open to everyone, not just Infusionsoft users.

Many small businesses will pay for help when the value is clear. For them, Infusionsoft has developed an array of small-ticket service options, such as a $299 “data transition service” to import existing customer lists. This lets business owners purchase exactly what they feel they need. Martineau said he expects about half of Infusionsoft’s new customers will eventually purchase some sort of paid service.

Vertica Announces 3.5 Release

Summary: the new release of Vertica's columnar database can store several related data elements in a single column. Didn't we used to call that a row-oriented database? Benefits seem limited.

Analytical database vendor Vertica yesterday announced its 3.5 release. The main feature is a new architecture called "Flexstore", which can combine several data elements into a single column. This is done for columns that are commonly used together in the same query, such as the “bid” and “asked” price on a stock transaction or the dimension tables in a star schema (to use the company’s examples).

I was skeptical of this notion when Vertica briefed me two weeks ago, and still am today. Storing multiple elements together is what a row-oriented database does, so it seems fundamentally at odds with Vertica’s column-based model. More concretely, a columnar database scans all entries for each column during a query, so its speed is basically determined by the amount of data. Whether it scans two columns that are one terabyte each or one combined column of two terabytes, it’s still scanning the same two terabytes.

Vertica offered two responses to my doubts. One is that it can better compress the data when the two columns are combined, for example by using delta encoding (storing only the change from one value to the next). I’ll buy that, although I suspect the gains won’t be very large.

The other explanation was that data for each column typically ends in one partially-filled data block, leaving a small amount of empty space that must still be read. It’s something like storing 3 ½ cups of water in 1-cup containers – you need four cups, of which three are completely filled and one holds the remainder. (Vertica confirmed that it generally fills each block except the “last” one for any column.) Combining the columns therefore reduces the number of partly-empty blocks.

But the saving is just one partially-filled block per column. It's a bit more for small columns like dimension lists, several of which might fit into a single block if combined. I can’t see how a few partially-empty data blocks would have much impact on performance when a good size database fills thousands of blocks. (The typical block size, per Vertica, is 1 MB). And if you don’t have a good size database, performance won’t be an issue in the first place.

I was willing to be convinced that I was missing something, but Vertica told me they didn’t have any formal test results available. The best they could offer was that they sometimes saw up to 10% improvement when large tables are involved, mostly from compression. For a system that promises to deliver “query results 50 to 200 times faster than other databases”, a 10% change is immaterial.

The other major component of the Vertica announcement is what it calls “MapReduce integration”, which should definitely not be confused with actually implementing MapReduce within Vertica. (Indeed, the footnotes to Wikipedia’s article on MapReduce show that Vertica CTO Michael Stonebreaker has been publicly skeptical of MapReduce, although the nuances are complicated.)

What Vertica has added is a JDBC connector that makes it relatively easy to move data between separate servers running Vertica and Hadoop (the open source version of MapReduce). Since SQL databases like Vertica are good at different things than MapReduce, this generally makes sense. Still, it's worth noting that other analytical database vendors including Greenplum and Aster Data run MapReduce and SQL on the same hardware.

The 3.5 version of Vertica is scheduled for release this October.

Marketo Offers Guide to Lead Nurturing

The folks at Marketo have always recognized that they can only succeed if more marketers learn the basics of demand generation. As a result, they’ve invested heavily in educational materials that are not directly related to their particular product.

Their latest contribution is The Definitive Guide to Lead Nurturing, a 38-page workbook that may not quite live up to its ambitious title but certainly gives a good overview of the subject. In particular, it provides details on how to build several types of lead nurturing campaigns (incoming lead processing, stay in touch, accelerator and lead lifecycle) and provides worksheets for matching content to buyer needs and for calculating ROI.

The workbook also includes a half dozen “How Marketo Does It” sidebars that reveal more than you might expect about Marketo’s own programs. I was surprised to see them share so many details, but suspect Marketo would say their competitors all subscribe to those programs anyway, so they have no secrets to begin with. Whatever the reason, it’s a refreshing and laudably mature approach.

In the interest of fairness, I should also point out that other vendors undertake their own market education programs. Nearly every one of them has a “resources” section on their Web site with a collection of useful papers; they also have blogs with helpful advice. Of these, I’d say Eloqua’s Digital Body Language stands out as an especially good source of information. Indeed, it so happens that today’s post on Auditing Your Content Assets covers some of the same ground as the Marketo paper, including a quite similar worksheet for matching content to buyers.

For that matter, Raab Associates itself has what we consider very useful materials on the Raab Guide Web site. We recently made that all available without user registration, although I'm reconsidering that decision – it doesn’t seem to have increased traffic significantly, and we capture many fewer visitor names. Looking at how Marketo does it, they provide some materials without registration but require your name in exchange for premium content. That sounds like a reasonable approach.

Youcalc: On-Demand Analytics Without Stored Data

Summary: Youcalc is an on-demand analytics vendor with 130 prepackaged applications primarily for sales and marketing reporting. Unlike its competitors, youcalc it reads data directly from other Software-as-a-Service systems rather than loading it into its own database. This saves money and simplifies installation but has some drawbacks too. Still, it's an intriguing alternative to the standard approach.

Youcalc is fundamentally different from other on-demand analytics vendors like Birst, Cloud9 Analytics, Gooddata and Pivotlink: while those vendors all query data stored in their system, youcalc queries the source data directly. That is, youcalc provides analytical applications that read from an existing system, typically a Software-as-a-Service vendor like Salesforce.com or Google AdWords.

Although this sounds like a subtle difference, the implications are huge. It means that youcalc doesn’t need the infrastructure to build and store client databases, thereby reducing its costs dramatically.

It also means that youcalc can to give each new client immediate access to standard applications, since there is no need to adjust for differences in their data. Although this is possible with prebuilt applications at other on-demand analytics vendors, youcalc has made it more central to their business model. In fact, youcalc extends this to related community concepts such as user-contributed enhancements, forums, tagging and rating of popular applications.

I’m intrigued by the youcalc approach but do see some disadvantages. One is that data integration capabilities are limited: the current version of the system can only combine data sources that already share common keys or are linked with an existing cross reference table. I suppose it’s technically possible to allow more sophisticated data matching, but any processing will still be limited by the need to repeat it each time the data is read from its sources and loaded into memory.

A second, more fundamental limitation is that the system can’t access historical data, such as point-in-time snapshots of information which is not retained in operational systems. At best, youcalc could point to an externally-built data warehouse as a source – but now you’re back doing all the database development that youcalc is supposed to avoid. No free lunch here, folks.

Still, there are those cost savings. Youcalc is priced at an astonishingly low $19.95 per user per month, which gives access to 130+ prebuilt applications for products including Salesforce.com, SugarCRM, Google AdWords, Google Analytics, MailChimp and 37Signals’ BaseCamp (project management) and Highrise (contact management). There’s also a free version that is excludes some of the more powerful applications. The full set is available for a 30 day free trial.

Unfortunately, these prices may not last. CEO Rasmus Madsen told me the company plans eventually to charge higher fees for applications linked to higher priced source systems.

None of this would matter if the youcalc applications and underlying technology weren't worth having. But I found them quite impressive.

Applications can contain multiple objects such as charts and lists. They can also contain drop-down selection boxes to filter components and select alternative chart dimensions. A single application can have multiple pages linked by menus. Users can embed images, text notes and external URLs, and have control over style details such as type fonts and background colors. Although the presentation is nowhere near as advanced as products like Tableau or TIBCO Spotfire, it is competitive with other on-demand analytics systems.

Most current youcalc applications display a single chart from a single data source, such as “Time-Day Distribution for Google Analyzer”. But users can change the contents by selecting different dimensions (e.g., date range) and metrics (e.g. visits, new visitors, bounces, etc.). Some applications combine multiple data sources, such as the “AdWords Campaign ROI Overview for Salesforce.com” that compares cost from Google AdWords with revenue from Salesforce.com.

Users can modify these applications or create their own from scratch (although all the existing applications were built by youcalc). Development is done with Java-based desktop software that runs on Windows, Mac or Linux PCs. The interface involves dragging different components onto a whiteboard and then configuring and connecting them. There are two different whiteboards, one to show the actual application and another to display the flows used to construct each object. These flows begin with connection to an external data source and then send the data through functions to apply formulas, convert formats, create summaries, and perform other tasks. Parameters of each function can be edited during the set-up or connected to objects like drop-down menus for end-user interaction. A completed application can be saved as a stand-alone Web page, a mobile phone Web page, embedded within an external page, or deployed as a widget on an iGoogle home page.

None of this requires actual programming, and basic tasks should be easy enough for a skilled spreadsheet jockey. More demanding activities, such as connecting to an in-house data source, take considerable technical understanding. (The system doesn’t query in-house resources directly; rather, it sends a message to a “listener” on the in-house system, which runs the specified query and transmits the results back as an XML data stream.) Connections for standard sources such as Salesforce.com are very simple since they’re prebuilt: users just enter their log-in credentials and the system does the rest.

If youcalc has an Achilles heel, it will turn out to be data volume. The system accesses standard sources (Salesforce.com, AdWords, etc.) through their APIs, which often limit the number of records that can be pulled at once. Youcalc connectors can submit new calls until all the data has been read, but this is still awkward and will probably be slow for large volumes.

In addition, the data must be loaded into system memory during each user session. This also imposes some practical limits—we’re probably talking in the multi-gigabyte range—even though youcalc runs in the Amazon data cloud, which gives it access to very large servers. Madsen says the largest current installation works with data for 150 Salesforce.com users.

Youcalc was launched in its current form at the end of 2008, although the company has been working on its core technologies since 2003. Madsen said that 4,000 accounts were created in the first six months since launch, and there are currently more than 7,000 application sessions per week. Most are from small businesses, which makes sense for any number of reasons including price, functionality and ease of deployment. The company hopes eventually to attract larger firms as well.

Hubspot Offers Small Business Marketers a Big Bundle of Features

Summary: Hubspot offers a bundle of Web traffic generation and lead management features in one low-cost package. Small businesses willing to invest some effort should be pleased with the results.

Yesterday’s post described one strategy to sell marketing automation to small businesses: provide a specific, turnkey service that requires virtually no skill or effort from the user. But I don’t think that can scale: companies require many different services and will not want to buy and run each one separately. So I believe the future lies with integrated marketing automation systems that combine many different functions while sharing data and processes whenever possible.

Of course, these multi-function systems must still be suited to users with little time and expertise. Marketing automation vendors entering this market are essentially betting that they can make their systems powerful enough to be useful and easy enough for a small business to run. If the vendors fail, the business will go to consultants, ad agencies, and other service firms that do the clients’ marketing for them. That would greatly limit the marketing automation vendors' business.

Hubspot has accepted this challenge. Although Hubspot positions itself as an “inbound marketing system,” it actually does more than the search engine optimization, blogging, social media interactions and related analytics needed to generate Web traffic. The current version also hosts landing pages and Web sites, manages a lead database with profiles and Web activity history, generates lead scores, sends alerts to sales people, and synchronizes data with Salesforce.com.

All that’s missing to be full-blown demand generation system is outbound email and lead nurturing campaigns—which the company has announced it will add.

Implementations of these features are intentionally simple, since ease of use is more important than sophisticated options for small business marketers. But Hubspot also applies automation to improve results without making the user work harder. For example, the blogging system automatically connects the blog to social media sites that help to redistribute content. It also checks posts to ensure they are optimized for search engine rankings. Hubspot provides similar graders for the Web site and individual pages, each generating reports and recommendations for improvement.

(Free versions of these and other graders are available from Hubspot at Grader.com. Most seemed fairly useful when I played with them a bit, although the Web “personality grader” managed to be both inaccurate [“your Internet use primarily consists of emailing family pictures and checking your teenager’s Facebook”] and insulting [“engaging in more meaningful conversations and sharing less about your personal life may improve this grade”]. I'm not sure what to make of that, except to suspect that someone left the programmers unsupervised. [I've since been informed that Personality Grader was an April Fool's joke.])

The scope of Hubspot makes it somewhat difficult to assess. The system’s heart is clearly search engine optimization and the supporting features to generate content (blogs and Web sites), receive the resulting traffic (landing pages) and analyze the results. These components seem well designed, tightly integrated and, at least for the graders, innovative.

The one major missing inbound marketing feature is paid search management, such as Google AdWords integration. Hubspot Marketing VP Mike Volpe said that paid search can be tracked as a source, and that clients have not requested deeper integration – apparently because they’re already happy with the AdWords interface. But I still find this a curious gap, since it leaves the system blind to a major marketing expense. It's part of a general lack in Hubspot of the “campaign” orientation found in most marketing automation systems. Maybe small businesses don't think in campaign terms -- or maybe it's just that search engine optimization isn't organized that way.

Hubspot looks more like a conventional marketing system in its ability to manage a lead database. Leads can be captured on landing pages, imported from lists or added through Salesforce.com synchronization. The system can also create profiles of anonymous visitors, using their IP address to infer geographic location and company. The database can include answers to survey questions and fields imported from Salesforce.com. It also stores Web activity history, captured by the usual methods: tracking scripts on the Web pages (created automatically on Hubspot-built sites) and cookies on the visitor’s PC.

Hubspot originally used its lead database largely for analytics. But it added Salesforce.com integration in 2008, which also meant the leads and their activity history could be shared with sales people. It extended this in 2009 email alerts triggered when user-selected leads visit the Web site. It also now uses Salesforce.com opportunity records to measure the close rates of leads from different sources. Users can also flag the closed leads manually.

Closed leads are also used to build a ranking system that assigns each lead a value between 1 and 100 based on its likelihood to close. This is a good example of the Hubspot philosophy at work: the grading system is simple (just one score), simplistic (formulas can look at the number of page visits, but not particular pages) and fully automated (it develops a custom scoring formula for each client and adjusts it over time without any manual input). Volpe acknowledged it takes a long time to gather enough data to build a reliable formula. But he argued (and I agree) that few small business marketers could build a better formula on their own.

Once Hubspot adds outbound email and nurturing campaigns – which Volpe said should be “relatively soon” -- its lead management features will about match other small business demand generation systems. That’s good enough, though not as impressive as its search optimization capabilities. (Actually, most small business demand generation products also offer a lightweight CRM module for companies that don’t have a separate CRM system. But I consider that optional.)

Hubspot also includes some functions that extend beyond traditional demand generation. These draw from its roots in Web traffic analysis. One is an automated analysis of competitive Web sites, based on Website Grader. This shows traffic from major keywords plus several types of rankings. Other features include automated Web scans to identify changes in keyword rankings and relevant social media articles. The social media features also make it easy to comment on the articles and to measure the reach of the company’s own blogs, Twitter, Facebook and YouTube posts. Although none of these is itself a major innovation, they’re useful tools to assemble in one place.

So now that we’ve taken a look at some of the mechanics of Hubspot, let’s circle back to the original question: is Hubspot powerful enough and easy enough for small businesses marketers?

The system clearly succeeds on the power front: although most of its features are fairly basic, they should be more than adequate for most companies. Even though Hubspot is not quite a complete marketing solution (lacking the paid search management and integrated CRM), it does enough different things to replace many other systems.

I have more doubts about user effort. Hubspot isn't hard to use, but it does seem to require a lot of work from its users. In particular, the Web site and keyword reports all seem to issue alerts and recommendations that the user has to execute separately. Whether it’s adding new keywords to page metadata, changing a bid on a paid search ad, or rewriting copy to be more search engine friendly, Hubspot looks more like a demanding boss than a helpful assistant.

In a small business where people are already stretched to the limit, a system that adds rather than reducing work is not very appealing. Even knowing that the added work is valuable doesn't necessarily solve the problem: the time has to come from some other work that has value of its own.

But maybe that’s just me. Volpe said that users’ biggest problem is finding time to write new content, not making the other changes like tweaking page tags. This is because most of the system’s automated recommendations are specific enough that they’re pretty easy to execute.

Of course, the customers are the ultimate judges of success. Volpe said that 98% of Hubspot users renew each month. That sounds pretty impressive, although it does equate to losing nearly 25% over one year. A less ambiguous statistic is the current customer count of 1,400, which is higher than any other small business demand generation system I’ve seen (though still dwarfed by Infusionsoft’s 15,000 clients).

Even small businesses shouldn't have a problem with Hubspot pricing: a version without Salesforce.com integration costs $250 per month, while one with Salesforce.com integration costs $500 per month. There’s a $500 setup fee for both products, which covers four hours of consulting. There are no additional costs related to volume or anything else, although that might change when email campaigns are added. The smaller system is sold on a month-to-month basis, while the larger version requires an annual contract. The company also offers a seven day free trial.