As chairman and CEO of MarketFirst, one of the major players in the marketing automation industry, Pete Tierney has his finger on the pulse of the market. He recently spoke with SMA Senior Business Editor Douglas McWhirter about marketing automation and the role his company will play in its future.
SMA: How important is the Internet in marketing?
Pete Tierney: I saw this question, and I wrote "DUH" after it.
SMA: Yeah, it's a no-brainer, but I want to hear you say it.
PT: Okay, let me say that there is one very logical characteristic here. In traditional direct marketing, the marketer bore the cost of the distribution model-basically printing, direct mail, fliers and brochures, and then mailing them. With the Internet, the recipient bears a large burden of the distribution channel. That changes the economics dramatically. The second reason is the responsiveness, where you can get responses in literally seconds or minutes, whereas with traditional campaigns it can take weeks or months. That really redefines the whole concept of direct marketing, in terms of testing, analyzing, and managing campaigns, because you've got a very low cost and tremendous responsiveness. So the Internet is, so far, the ultimate marketing platform.
SMA: What kinds of companies need marketing automation?
PT: Anybody that is going to deal with an e-consumer. And an e-consumer is either in business or in the consumer market. Where these people want to do business is on the Internet. Just having a sales portal is simply not enough to market your goods and services and build relationships with people. That's where marketing automation software comes in.
SMA: Analysts predict marketing automation will be a $2 billion market in a few years. Do you agree with that estimate?
PT: Yes, of course I do. I think it is going to be much bigger. Consider some numbers I picked up from the DMA recently. Their view was that in 1999, the direct marketing industry would be $1.5 trillion worldwide, of which about $800 billion is in the United states. This is a little difficult to predict, but with the Internet becoming the ultimate marketing platform, we can look and say that some percentage of that $800 billion is going to move into electronic marketing. To give you an example, Dell Computer spends 55 percent of its marketing budget on electronic marketing.
SMA: With stiff competition from Rubric, Annuncio and other players, how much of that $2 billion do you see MarketFirst capturing? All of it, I'm assuming?
PT: Of course all of it (laughs). Our objective is to capture all of the business that's out there and to appeal to the broadest number of companies that want to do electronic marketing.
SMA: Do you anticipate competition from the big, established CRM vendors?
PT: Yes, I think so. Their customers who are buying sales and support systems from them are naturally curious about marketing systems. They haven't been able to deliver the functionality yet. And in some cases, marketing automation is a singularly different type of product than sales force and support automation where those products are built around client/server technologies and are used by employees. Marketing automation is used primarily by prospects and customers and mostly completely Web-based applications, so that is slowing those guys down a little bit. I think we will have opportunities to compete as well as partner with the CRM guys.
SMA: Is "partnering" going to be essential to your survival?
PT: Over time, as the market starts to generate more and more revenue, then the hurdle race that these larger companies have to deal with becomes crossed in terms of them making investments in marketing automation. They will have to reach make-or-buy decisions.
Phones are no longer being viewed as a voice device. An infocentric appliance is where I'd like to take them.
-Stephen Blust, a technologist at BellSouth Cellular as quoted in the San Jose Mercury News.