Q&A: How will e-mail, social media marketing merge?

E-mail marketing giant ExactTarget bought CoTweet, an early leader in helping businesses manage their presence on Twitter, in a move today that will combine their offerings in e-mail and social media.

It’s probably the right move: ExactTarget decided it would be better off buying an enterprise-focused Twitter startup instead of building a social media product in-house, while Twitter’s forthcoming commercial features may encroach on CoTweet’s core offerings. Neither disclosed terms of the deal.

For now, the two products will remain separate but they may merge into a platform where companies can run e-mail, Twitter and Facebook campaigns from one place.

CoTweet raised $1.1 million in funding last July from Founders Fund, Ron Conway’s SV Angel fund, Baseline Ventures, First Round Capital, Maples Investments and Freestyle Capital while ExactTarget attracted $140 million in capital last year from investors including Battery Ventures, Scale Ventures, and fund-of-funds Montagu Newhall Associates.

ExactTarget’s CEO Scott Dorsey and CoTweet chief Jesse Engle answer a few questions below:

VB: How did the acquisition come about?

Engle: This market is moving incredibly fast. Demand from companies right now is overwhelming and we can’t keep up with the inbound interest. We saw a couple of paths — we could have raised a whole lot of money and tried to grow as fast as possible organically. Or we could have just found someone who already had relationships and a sales and marketing infrastructure in place to make the company successful. We saw all of that in ExactTarget.

Dorsey: We started building a relationship with Jesse and CoTweet about a year ago through common friends. CoTweet helps enterprises leverage Twitter; we had a very similar vision and were very culturally aligned. Rather than bolt on additional functionality, we wanted to partner with experts in social media.

VB: Were Twitter’s upcoming commercial accounts and analytics a factor in the sale?

Engle: We gotten these kinds of questions since the very beginning. One of the strategies we’ve had out of the gate was to establish a close relationship with Twitter. We brought on advisers who had helped Ev Williams when he was creating Blogger and who had advised Summize when they were sold to Twitter in 2008. We raised money from investors who were early investors in Twitter and Facebook and we enjoy a really, really close relationship that starts at the board level and goes through the executive management and API teams.

We have a really good working relationship and a good understanding of where they’re heading. They’ve shared a great deal with us about their commercial accounts and we’ve been actively testing many of those features with our customers. While I don’t want to speak about what they’re doing, we have a really good handle on where they’ll go.

VB: What will you be able to offer that they can’t?

Engle:
For one thing, we’re going to be offering a Facebook integration by the end of the second quarter. At a very high level, we’ll offer aggregation across multiple services. There are things like workflow management that Twitter has no intention of developing that we can offer. We don’t see them addressing the unique requirements or level of sophistication that larger companies are demanding.

As we move forward, it will become more important for us to offer sophisticated ways of telling clients which tweets are important or require an immediate response. We’ll need to make engagement as efficient as possible without getting away from the core idea that it’s a human that must ultimately send out a tweet or not. Twitter has made it very clear that they don’t envision a future with bots.

VB: What will they be able to offer that you can’t?

Engle: I can’t speak for them, but they can offer visibility and the best estimates for just how many people have actually seen a tweet. There’s a lot of other data they’ll have, but their vision is to make it available through the API.

VB: You (ExactTarget) took a possible IPO off the table during the credit crisis. What’s the plan now?

Dorsey: There’s a reasonable likelihood that we may go public in the future but in the short term, we’re focused on growing the company privately.

VB: What are some killer features you might add now that you have both e-mail and and social media tools?

Dorsey: What we’re finding is that social media, e-mail and mobile marketing management software is all siloed. There’s an opportunity to create one dashboard and digital platform to manage all communications out there. Companies have to understand how they’re engaging with a consumer across all kinds of digital media.

With our e-mail products, we help customers track open and unsubscribe rates, get feedback and track clickthrough rates and conversions including revenue generated on a web site that may be from an e-mail campaign. CoTweet helps organizations understand what’s being said about them and they have great functionality around scheduling tweets, tracking links and conversions. The parallels are very, very similar.

Engle: We’re going to continue operating as two separate platforms for awhile but there are several integration opportunities that are really interesting.

We could tap into customer data and surface that on CoTweet, so when a company interacts with a user on Twitter, they’ll know whether that’s an existing customer or a prospect. We can also start pulling in the kinds of data that can tell us how effective Twitter is at driving sales.

VB: What advice would you give to a business owner overseeing a Twitter and e-mail campaign? How should they use each tool?

Engle: It’s important to look at different social networks and community platforms and understand what they offer that’s unique and piece them together. For instance, I look at Flickr and YouTube as content repositories that have communities around them.

Facebook offers a richness for a consumer brand because it’s a destination where you can have lots of different types of interactions and media. It’s a good place to focus on building a community outside of your own site. Twitter is the place where you engage in real-time conversation and that’s the place you announce everything you do. It’s brings traffic and attention to what you do elsewhere.

Social media has changed what marketers need to do. There are things they’ve been able to control in the past that they can’t now. You used to be able to control what message gets sent out to what audience and what time and you didn’t have to deal with feedback.

The best thing to do is to engage in an authentic way. You have to be real and acknowledge shortcomings and failures and places where products or services break down. You have to demonstrate through engagement that you are really interested in what customers have to say, who they share media with and how they share them.

There is an expectation of transparency and authenticity. Those that try to fight it will get rooted out. I love the idea that the key strategy now is how to out-behave your competitors. How do you do a better job by being good and doing what’s right compared to your competitors? All of this is being driven by the forced transparency that social media is bringing out.

Dorsey: Tailor your message to the medium. E-mail gives you an opportunity to present images and content that can drive customers back to the web site. Twitter is very different. It’s more about short, pithy conversations. E-mail is one-way, while Twitter is very bi-directional; you have to listen to what’s being said and jump in. It’s also an interesting convergence of marketing and customer service.

VB: Based on the numbers, Facebook is much more mainstream than Twitter and while data suggests that its growth is trending upward again, there’s still a possibility that it may end up being a more niche style of consuming content. How do you see that playing out?

Engle: The implicit contract that Facebook has made with users is that it’s a safe place to be where you can communicate privately with the people you already know. That’s how it’s grown up. Facebook’s challenge is clearly to continue offering that safe experience while encouraging people to share what they’re doing more publicly, because it’s the public data that accelerates growth.

Even if Twitter stopped attracting new users, it has already achieved a level of critical mass where it’s crucial for any business to pay attention. That’s because everything on Twitter is public by default. Things can go really bad, really fast because of it’s real-time nature.

We’ve paid very close attention to our clients and have prioritized resources based on what they’ve been telling us. We’ve asked them whether we should go deeper on Twitter or broader with Facebook, and up until recently, no one requested more services on Facebook.

Once Facebook launched their application programming interfaces for Fan Pages in late 2009, they’ve become more and more important. At the end of the day, Facebook is optional while Twitter is a must-have. You have to be listening. You have to be on top of your brand on Twitter.


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