Direct channels like the Web, email, and interactive television are changing the discipline of marketing. According to Forrester Research (Nasdaq: FORR), use of direct channels will shift the industry from the traditional mass-marketing approach to more sophisticated direct techniques. To adapt, marketers must reduce their reliance on third-party services and increase internal investments in enterprise marketing automation software.

Marketing automation applications help companies deliver the right message to the right prospect or customer at the right time. First embraced by financial services firms, telecom companies, retailers, and catalogers roughly a decade ago, this software lost some momentum in 2001 due to the bad economy, decreased marketing budgets, and marketers’ continued reliance on outsourced services that delivered economies of scale.

“Given this bleak environment, it is reasonable to question whether the demand for marketing software has peaked — but it hasn’t,” said Eric Schmitt, senior analyst at Forrester. “Marketers are undergoing a cultural shift and demanding more control over their customer interactions. To do this successfully, firms are turning to marketing apps that allow them to tailor communications to individuals and track their efforts and resources more accurately and cost-effectively.”

To reach wider audiences, Forrester recommends that marketing automation software vendors move beyond campaign management and analytics to address the breadth of marketers’ needs in planning, process, lead, and asset management. Additionally, to make the technology more palatable, software vendors need to price more creatively with pay-as-you-go packages that look like services, with pricing terms tied to campaign or contract volume, or with hard fiscal goals like revenue uplift.

How To Evaluate Marketing Automation Software

At first glance, marketing software products can look surprisingly similar. A closer look reveals the need to distinguish apps based on both business capabilities and infrastructure issues. Key business differentiators include high-end analytics, Web-based campaign delivery, real-time decisioning, and process management features for planning, managing, and approving marketing programs. To separate marketing apps along technical lines, users should focus on data architecture, database support, and globalization.

To help companies choose the best product and vendor to optimize customer interactions, Forrester Research has updated its Marketing Automation Application TechRankings with new lab-tested products and enhanced vendor criteria. TechRankings combines independent laboratory evaluations, objective analysis of product and vendor capabilities, and online customization tools to help users prioritize their requirements and create a custom ranking.

As of March 27, 2002, Forrester and its evaluation partner Doculabs, Inc. have evaluated the following products: Chordiant’s Marketing Director Suite v 3.2, E.piphany’s E.5.03, MarketFirst v 3.1, NCR Teradata’s CRM 4.02, Protagona’s Ensemble v 5, SAS Institute’s EMA v 2.1, Unica’s Affinium Suite 2.0, and Xchange 7.

Forrester evaluated these products on more than 500 detailed criteria, from which it identified nine key attributes that users should consider when evaluating marketing apps: sophistication of marketing analytics; campaign management capabilities; administration and security; integration with external data sources and software; globalization for use in non-English-speaking/US environments; architecture; consistency across the application’s modules; vendor strength in this market and support for the product; and the product cost.

About TechRankings

Launched in October 2000, TechRankings combines independent laboratory evaluations, objective analysis, and online tools to help firms customize their requirements and rankings. TechRankings’ laboratory-based methodology is open, rigorous, and unbiased. Forrester invites all important vendors, based on their product fit and momentum, to participate.

Each product is evaluated in the lab by Doculabs, Inc. (www.doculabs.com) based on more than 500 key criteria that matter most to Global 3,500 firms. Forrester does not charge vendors in any way to participate in TechRankings. Forrester extensively checks and verifies results and updates the research quarterly with new vendor information.

Forrester offers TechRankings research, analysis, and selection services in eight software technology markets: application servers, commerce platforms, content management, customer service applications, enterprise portal servers, eProcurement applications, integration servers, and marketing automation applications. In 2002, Forrester will continue to add important vendor evaluations and update the existing categories to reflect buyers’ evolving needs, in addition to adding new categories of software for evaluation. To learn more about TechRankings, visit www.forrester.com.

Note: Aprimo and KANA are scheduled for evaluation in Forrester’s Marketing Automation Application TechRankings in Q2 2002. Forrester expects to evaluate new releases from E.piphany and Unica in Q2 as well. PeopleSoft and Siebel Systems have yet to schedule lab time. These vendors have a standing invitation from Forrester to be evaluated in future updates to this TechRankings category.

About Forrester Research