The rise and rise of 'SaaS' is an unstoppable movement

I've always wanted to say this in writing…I’ve got SaaS!

In fact, you've probably got SaaS. It's fair to say SaaS surrounds us in many aspects of our professional and personal lives.

Software-As-A-Service has become a prominent business model for technology vendors in almost every sector across the world. It is defined as a business model where centrally-hosted software (normally accessed via a web browser) is delivered on a license/subscription basis directly to the end customer. SaaS has also become synonymous with low and no customer service.

SaaS is not a new concept. It dates back to the 1960s when IBM amongst others pioneered widely distributed software packages aimed at providing mainframes and utility computing. However, the growth in online software solutions and the development of new platforms for that software to run on, has seen the use of SaaS grow significantly over the past 10 years. Some of the world’s most prominent and widely used solutions are now sold as SaaS services, including Office 365, LinkedIN Premium, Xero and HubSpot.

Never has the rise of SaaS been more keenly felt than in digital marketing, a sector dependent on software solutions to power the functions that underpin the industry. The growth in digital marketing over the past 10 has created a huge demand for platforms to power that marketing. And a large number of those platforms have turned to SaaS commercial models to operate their businesses more efficiently while offering their customers freedom of choice, ease and cost-effectiveness that would not be available from the more integrated digital marketing solutions which are sold on high-price, high-service models.

Removing the service layer has allowed digital marketing solutions to be more agile, innovative and responsive to industry changes. But SaaS solutions for digital marketing owe their success to some fundamentally important trends that have emerged in the industry in the past 10 years.

Chief among them is the rise of open source software platforms including the likes of Twilio and Clearbit which have made it easier for companies to deliver products and features quickly and comparatively cheaply.

However, the development of knowledge within digital has been arguably even more important to the success of SaaS. The major online marketing disciplines like Search, Display, Email and Affiliate are now all more than 20 years old. This level of establishment has brought a depth of expertise that has allowed technology only SaaS platforms to sell directly to an informed and knowledgeable audience. That audience scarcely existed 15 years ago.

The acceleration of knowledge democratisation that digital marketing has seen in recent years has also changed the way advertisers view their marketing service providers. Control, autonomy and ownership are now fundamentally important concepts in the supplier/advertiser relationship. The old way digital media was sold, where a ‘relationship layer’ tended to keep the budget owner at arms-length from where their pounds were being spent has been dissipated by technology-first platforms that aim to put more control into the hands of the people actually spending the money that drives the digital marketing industry.

You could say the old media tradition of the “long-lunch” now belongs to a bygone era. And that’s thanks largely to the advent of SaaS platforms. However, let’s not pretend that SaaS has removed the need for agency-led digital marketing completely. Digital agencies are still very much in demand. But it has changed the role of the agency from conduit to advisor and resource-hub. In some cases, SaaS has even allowed agencies to become quasi-technology providers in their own right. White-labelling of SaaS platforms in the Display and Affiliate industries are great examples of how SaaS has made marketing technology more accessible, particularly to digital media agencies, who in turn can open that technology to a wider group of marketers.

And of course, there is the most obvious, and to many unspeakable, benefit that the SaaS model has brought to digital marketing. Price. SaaS solutions have streamlined the role of a digital marketing intermediary and added competition. These two factors have allowed SaaS businesses to sell third-party digital marketing at an ever more competitive price. And while plenty of avant-garde digital marketers might bemoan the leveraging of price “as devaluing our channel” SaaS platforms could just easily be viewed as enhancing a channel’s value by reducing supplier-associated costs and making digital channels less insular.

With all that said, Software-As-A Service isn’t just a land of opportunity and innovation for digital marketing.

The detractors of SaaS solutions point to the sheer number of them in the digital marketing space. Indeed, there always seems to be a few million pounds of start-up funding hanging around for a good SaaS concept, and the SaaS space has never been more competitive. All this leads to the accusation that the growth of SasS has commoditised the digital marketing industry, particularly its technology, and drives the market’s value down to its lowest common denominators. The counter-argument would be without the presence of so many technology-centric SaaS businesses in digital marketing there would be very little competition and even less innovation.

Another major criticism of SaaS marketing platforms is they blur the lines of linear digital marketing channels because their businesses are either designed to operate cross-channel or do so by accident thanks to unclear positioning and/or the need to compete in crowded markets. Again, this point is true for the most part. But we also have to remember that this is often driven by advertisers working with very good, competitively priced SaaS platforms for specific channels that then seize on opportunities to mould their solution to solve challenges that advertiser might have in other channels.

SaaS models are opportunistic in the way they operate, and in the case of digital marketing have come into a well-established industry to enhance it. SaaS models need some prerequisite conditions to thrive, such as established practices, expertise and price sensitivity. SaaS doesn’t tend to create an economy. A case in point is how SaaS solutions in the affiliate channel have thrived in highly developed markets like the US and the UK, working with multi-territory advertisers to standardise technology and lower costs. However, it is unlikely a SaaS solution for affiliate marketing will be able to go out and take advantage of an emerging market, recruiting publishers and establishing best practice.

Digital marketing undoubtedly benefitted from the success of large, full-service agencies and technology suppliers. These companies grew their respected disciplines, developed good practices, enhanced understanding and provided a platform for individuals to gain knowledge. It’s inconceivable that digital marketing’s growing reliance on SaaS won’t change this climate in the future. SaaS solutions are unlikely to significantly develop digital marketing. Perhaps that is a bad thing because the industry’s development and innovation will slow down? But maybe that won’t be the case because established industries simply don’t need to foster the same culture of quick advancement and learning that they do when they are maturing. One thing is for sure. Digital marketing likes SaaS. And the model is here to stay.