Why Free? Why Now?

June 30th, 2010 by Roy Russo

Earlier today we announced the release of LoopFuse FreeView, a free version of our popular OneView marketing automation service. The decision to take LoopFuse freemium was made almost a year ago and we have spent much of that time preparing for this launch. After briefing some of the analysts, journalists, and bloggers who cover this space I realized that many of the questions they posed regarding our adoption of freemium may be of interest to others.

Why Now?

The timing of this move is based on several factors. Digital marketing is no longer a niche part of the overall marketing budget. It is quickly becoming the dominant channel for marketers to reach their prospects and their budgets are reflecting this trend. Zenith Optimedia reports in their Advertising Expenditure Forecasts that online advertising spend has doubled in the past 4 years and Forrester’s data indicates that it will likely double again in the next 4-5 years.

We have also witnessed a dramatic rise in the number of digital touchpoints over the past few years from traditional email marketing and website click tracking, to banner ads, SEO, paid search, online events, communities, and the onslaught of social media channels such as Twitter, Facebook, LinkedIn, YouTube, etc. By tracking every one of these touchpoints for each prospect we can create an extensive behavioral dossier that allows marketers to gauge and engage prospects more effectively before they are handed to sales.

If DIGITAL is the future of marketing then MARKETING AUTOMATION is the future of digital. However most analysts in the space estimate market penetration for marketing automation is between 5 and 10%, meaning that the space is still in its infancy. The most technically sophisticated marketing organizations (e.g. software companies) are, of course, the early adopters. These organizations pay a premium to gain a strategic advantage through the adoption of new technology and marketing automation vendors are likewise able to charge a fat premium to provide this advantage.

Unfortunately, many of these services require require 12 or 24 month subscription contracts, professional services implementation consultants, onsite training, and often a pricing model based on the size of your wallet. All of these factors create artificial barriers to adoption, especially for SMB companies. Organizations who do take the plunge face a daunting task of evaluating an overcrowded vendor list with minimal distinction and hope that they make the right decision.  The time is right for marketing automation to “tip” and become a tool for the 90-95% of B2B companies who have yet to adopt it.

Why Free?

As certain markets mature, a disruptive player sometimes steps in to challenge the accepted pricing model in the interest of mass market adoption. Sometimes it’s a free on-ramp that lowers the barriers to adoption. Other times it’s a massive price reduction in the market. Either way it provides the opportunity for a de-facto provider to emerge. Over the past decade we have seen several examples of this : PayPal did it to Western Union, opensource software did it to proprietary software, Skype did it to the telcos, AVG and Avast did to McAfee and Norton, and DimDim is doing it to Webex right now. A highly efficient sales, distribution, and support model can disrupt high-touch / high-margin industries by providing a cost effective alternative for the masses.

Freemium business strategies can be very challenging to organizations who are not well prepared.  For example, sales teams and processes must be able to adapt to the internal competition provided by the free offering.  Infrastructure and architecture must be designed to scale for massive volume. The user experience must be refined to enable mere mortals to be productive without week-long training courses. And dozens of other changes must be undertaken to support freemium. Balancing what is provided gratis against what is available to paying customers. Lucky for us, all of the members of LoopFuse’s executive team have experience in freemium and/or opensource (which is a flavor of freemium).

With the introduction of FreeView, LoopFuse provides an on-ramp that will allow SMB marketers in the B2B space to adopt marketing automation without the hassle and cost previously required.  Use it for free and prove to yourself that marketing automation can benefit your organization with zero risk.


2 Responses to “Why Free? Why Now?”

  1. alex says:

    Great write up…very well said and I think something a lot of startups are thinking about – thanks for sharing your thinking!

  2. John Sweeney says:

    Hi Quin,

    Thanks for the comments on my blog. I wish you luck with your FreeView offering. I’ve even taken up your offer and activated an account. Keep me posted on you developments.

    For Marketing Automation the UK market follows the US maybe by 12 months or more. I’ll be listening out for you.

Leave a Reply