Marketing in the cloud

Marketers should have their heads in the cloud.

If you haven't read The Big Switch by Nicholas Carr yet, you need to add it to your list. Cloud computing — that is, computing infrastructure that is based somewhere out on the Internet, rather than installed on hardware locked in your company's IT center — is becoming real. Fast.

Combined with the maturity of web-based software-as-a-service offerings, the strong gravitational pull of social media sites where marketers now work beyond the borders of their company's sandbox, and the widespread proliferation of web services and mash-up APIs, the cloud has become marketing's new IT platform.

For marketers, this is a terrific opportunity (a) to re-calibrate the relationship between marketing and technology and (b) to expand your capabilities in the "new marketing" environment, where the pace of innovation in online marketing channels and methods continues to accelerate.

I think of "computing in the cloud" for marketing in fairly broad terms — more broadly than the technical definition of cloud computing — and divide it into four buckets:

1. Web sites where you are a participant or sponsor, particularly social media communities. These are sites such as Facebook, Twitter, LinkedIn, Xing, MySpace, Yahoo! Groups, Digg, del.icio.us, Twine, etc. This isn't what most tech people think of when they talk about cloud computing, but from a marketer's perspective, these are important services out on the Internet that you must plug into to do your job. Your audience is in the cloud, and you have to go in there after them. The IT aspects, however, reside outside of your control.

2. Software-as-a-Service (SaaS) applications. These are applications that you access through your web browser, are hosted on a server farm by a third-party, for which you have zero operational involvement. Some are free, such as Google Analytics, but many are provided on a subscription basis, such as Salesforce.com. Pay only for as much as you need for as long as you need. There are a plethora of SaaS applications for marketers available today, with more coming online every month — if you have a favorite that I've missed in my "for instance" below, please add it in the comments:

• customer relationship management (ex: Salesforce.com);
• landing page management (ex: LiveBall — disclaimer, my firm);
• surveys and questionnaires (ex: SurveyMonkey);
• email marketing management (ex: ExactTarget);
• web site analytics (ex: Google Analytics);
• marketing resource management (ex: MarketingCentral);
• blogging platforms (ex: Typepad);
• lead nurturing (ex: Marketo);
• digital asset management (ex: Celum Imagine);
• search marketing management (ex: SearchIgnite);
• project management (ex: AtTask);
• web conferencing and webinars (ex: WebEx);

3. Web services and on-demand IT infrastructure. If there are specialized applications that you still want or need to build yourself — including online applications that are built into the ecosystem of your product offerings — you can take advantage of components, services, and infrastructure layers out in the cloud. Your programmers will develop your app, which will nominally live inside your IT environment, but certain components or layers of it will be dynamically accessed in the cloud. These include:

• data storage services (ex: Amazon S3);
• semantic processing (ex: Reuters Calais);
• mapping and geotargeting (ex: Google Maps);
• APIs for Twitter, Facebook;
• payment processing services;
• feed aggregators (ex: Yahoo! Pipes);

4. Platform-as-a-Service (PaaS). The furthest down the continuum, platform-as-a-service means that you develop your own custom applications, but they live entirely in the cloud. Salesforce.com was one of the pioneers of this idea, by opening up their platform — force.com — to let any developer create application on their infrastructure. Google recently announced their Google App Engine with a similar vision.

The value proposition for developing on a cloud-based platform is that you get all the scalability, reliability, and high-speed performance of these environments without having to build up all that infrastructure yourself. Put in terms that marketing can appreciate: you can create a custom app on the web without necessarily having to engage the overhead or ongoing involvement of your IT department or corporate data center.

Advantages of cloud computing and SaaS/PaaS in general:

• you can try a new idea with less up-front investment, which facilitates and encourages a more experimental culture — this is a great way to quickly engage the leading edge of new marketing channels and methods;
• if you end up with an overnight sensation, you have "instant elasticity" for matching capacity as demand requires it;
• economies of scale, since cloud providers are aggregating infrastructure for a certain type of service across hundreds or thousands of firms;
• time from concept-to-launch of a new application is shortened, since you're not reinventing the wheel or waiting on physical installations;
• more direct relationship between expense and benefit, as cloud computing is usually a variable cost;
• direct IT maintenance overhead is almost completely eliminated;
• for SaaS applications, new features come online automatically without having to engage in the delay, cost, or frustration of "upgrades";

There are, however, objections, caveats, and trade-offs as well:

• you end up with dependencies on third parties for these applications, rather than having the safety (or the illusion of safety) of being self-reliant for uptime, availability, continuity, etc.;
• your data can become fractured in many different silos by working with many different providers in the cloud;
• security and privacy risks: what happens if someone breaks into your account or hacks the provider's database?
• business continuation risk: what happens if the provider in the cloud goes out of business?
• terms of service risk: what if the rules of how you can use the service change unexpectedly?
• price change risk: what happens if usage costs rise unexpectedly?

While these are legitimate concerns that should be weighed when adopting any cloud application, the reality is that many of these risks already exist with your internal IT operations. Uptime, security, privacy, sustainability, data integrity, etc., are all issues that plague IT departments.

This is the "fear of flying" phenomenon. The odds of a fatal car accident far exceed the odds of dying in a plane crash. However, many people who are afraid of flying aren't afraid of driving because in a car their hands are on the wheel. This is a false sense of security. (Sorry, hope I didn't spoil your commute.)

Failures of major cloud computing applications and platforms get a lot of attention, but the number of internal IT "crashes" are actually much higher, the far majority of which receive little or no publicity outside a company's four walls. (And sometimes not even that.) Because cloud computing providers are under such intense scrutiny for their performance — their reputation, and hence their business, is on the line — they often take far more precautions and invest in heavier and more redundant infrastructure than IT departments hosting the same application for their own firm.

The other concerns can be mitigated by taking a few proactive steps and common sense precautions:

• have a technical gatekeeper in marketing who vets cloud applications (e.g., a chief marketing technologist or some such role);
• define and defend "core data" structures, while being open and flexible with more ancillary data feeds;
• understand the service level agreements (SLA) and track record of the provider;
• read the fine print of the agreement for terms of service;
• how much control do you have to customize via configuration and/or APIs?
• determine how easy is it to get your data out;
• think through "switching costs": if your concept works, but this provider doesn't, how easy is will it be to migrate to a different solution?
• follow security best practices with your cloud applications: good passwords, changed frequently, not distributed across multiple users, always used over secure connections, etc.;
• keep tabs on your provider, an ear to the ground on their business, more closely than you would a software vendor whose product you've installed internally;

Overall, working in the cloud enables marketing departments to react much faster to new ideas and new opportunities, without necessarily having to drag along IT. But, as has been said, "with great power comes great responsibility".

As marketing becomes more in control of its technological destiny, it must absorb technical leadership into its management and ranks. The future of the chief marketing technologist awaits in the cloud above.

Comments

[Dharmesh Shah]

Great article!

Life is getting increasingly interesting for marketers. Marketers that I know are most excited about the fact that the cloud allows them to better control their destiny instead of always having to rely on "corporate IT".

[Philippe Cardyn]

Scott, I see you did not mention web-to-print as an example of Saas. We often see these type of applications as easy & entry-level web-apps. If you want an idea of the added value this can bring, check out our website http://www.artoos.com/marcomfactory

I agree with Dharmesh, this is a very goood article. The marketers we know & serve with our SaaS offering are indeed enthousiastic about the possibilites offered by webapplications to improve their operations. From our experience however, this doesn't free us from complying with the rules that govern corporate IT environments. It's often about keeping the marketers happy while we work our way through procedures govering access, security & data transfer.

[Scott Brinker]

@Dharmesh -- thanks for the comment! As you know, I'm a fan of both your blog (http://www.onstartups.com) and your own all-in-one SaaS for SME marketers (http://www.hubspot.com). I see the same excitement from marketers that you describe, but surprisingly, I frequently encounter matching excitement from "corporate IT", which is often equally happy to have the marketing department off their back when it comes to some of these rapidly evolving and experimental applications.

@Philippe -- thanks too for the comment and the link to your web-to-print SaaS application. Great example! I also agree with you that providers in the cloud have as great, if not greater, responsibility for governing both their own IT and its intersection points with their customers. If on the customer's side, there can be a "chief marketing technologist" role that provides the glue and oversight to bridge corporate IT with marketing's cloud providers, I believe that's one of the best way to close the loop.

[Jon Miller, Marketo]

Scott -- As you point out, SaaS has many benefits for marketers, but too often SaaS applications are 1997 business apps recast on the web, without new business models that make it easy for the customer to buy and that ensure customer success. The result is limited sub-optimal usage and sub-optimal value to the customer. In fact, a recent SandHill.com survey found that 2/3 of software buyers report that their effective usage level is under 50%!

I believe that today we’re in the early days of a whole new wave of software innovation focused not on functionality and not on delivery but in a new area that I can sum up in one word: Easy.

By “Easy” I don’t just mean easy to use, though usability is critical to ensuring usage. I mean the entire business model is optimized to ensure user adoption, fast time to value, and most importantly customer success.

In particular, when looking for marketing technology, be sure to look for these things:

1. No upfront costs: Marketing departments typically have significant monthly or quarterly program budgets, but large one time payments can be hard – especially if it isn’t planned for months in advance. The same marketer that can commit to a $25,000 agency contract (paid monthly) without batting an eye needs CxO approval to justify a technology investment of similar size.

2. Free trial: Seth Godin says that most businesses aren’t price sensitive; they are value and risk sensitive. They need to justify to the people they work with that they didn’t get ripped off, and they don’t want to have to apologize to their boss for buying the wrong thing. A trial is a great way to get comfortable that the solution really works and meets your needs. If a vendor can’t offer a free trial to serious prospects, it’s probably because their software takes too long to install or is too hard to learn without significant training.

3. Great support: A great solution is much more than just the software you get. To be successful, marketers need easy ways to get started, access to tips and best practices, and responsive customer support. Of course, success shouldn’t come with a price tag, so you shouldn’t have to pay extra for these services.

[Marlena Fernandez Berkowitz]

This is one of the best articles I have read pulling all of this together. It truly is easier than ever for small busineses to get up and running. I would like to offer up my company's payment processing services for consideration to this audient., the PaySimple Solution. We have 15oo customers and we focus on the small business. We are an SaaS and we are rolling out our newest version, PaySimple 2.0. If you or anyone else would like to review the product please contact me at mfb@paysimple.com

Again, great stuff!

[Scott Brinker]

@Jon -- thanks for the in-depth comments. All good points. When I think of SaaS applications for marketers, the examples that jump to mind are mostly "new" applications. It's semantics, but perhaps this is a distinction between old ASP (application service provider) models of "remoting" software that were circa 1997 vs. SaaS today, where apps have been built from the ground up to be purely web-based services in the cloud.

A big advantage of this new generation of marketing applications is that they were conceived and grown in the "new marketing" era, so much of their purpose, architecture, and feature set is natively aligned with forward-thinking philosophies of online marketing. A lot of great SaaS tools make it feasible for marketers to go from zero-to-hero on a particular dimension in a matter of weeks (vs. the old time scale of months and years). I completely agree that making it easy and providing superb customer support are key enablers of that success.

@Marlena -- thanks for the kind remark and the pointer to your payment processing SaaS. Will definitely check it out!