A Premiumisation Playbook for ESPs: Commodity to Profipoly

Published November 11, 2024

1

Recent Trends

Over the past few years, premiumisation has emerged as a notable trend in the consumer landscape, with companies increasingly offering upmarket versions of their existing products. This strategy aims to elevate a product’s perceived value by incorporating exclusive features, superior quality, or enhanced experiences. It goes beyond mere functionality to offer a heightened level of appeal, often commanding a higher price point due to the distinctive benefits it provides.

Knowledge@Wharton wrote about this in April 2023: “Premiumization has been around for a long, long time, but the practice has been spreading across more companies lately. No longer the domain of the automobile, alcohol, or travel industries, premiumization is showing up in products as humble as lubricant and doughnuts…Wharton marketing professor John Zhang said companies are motivated to make upscale versions of their products because price tiers help them reach different segments of consumers, including the wealthy and middle-class earners who socked away cash during the pandemic.”

Andrew Glor writes: “Premiumization, a retail megatrend and strategic move by consumer brands to elevate product offerings and charge higher prices, is on the rise. Over the past couple of years, there’s been a growing demand for quality, authenticity and unique experiences. At the same time, inflation has driven companies to become more comfortable with price increases.”

I asked ChatGPT for some recent examples of premiumisation in the consumer industry.

• Beverages: In the drinks industry, brands like Coca-Cola and PepsiCo have introduced premium versions of their soft drinks, such as Coca-Cola Signature Mixers and Pepsi’s craft soda line, featuring artisanal ingredients and sophisticated packaging to target more discerning consumers.
• Automobiles: Car manufacturers are embracing premiumisation by adding luxury features to their mid-range vehicles. For instance, brands like Kia and Hyundai have launched models with high-end tech, premium interiors, and advanced safety features, blurring the lines between mainstream and luxury cars.
• Skincare and Beauty: Beauty brands like Estée Lauder and L’Oréal have expanded into premium skincare lines, offering products with advanced formulations, rare ingredients like caviar extracts or gold-infused serums, and sleek, high-end packaging, catering to consumers willing to pay more for superior results.
• Subscription Services: Streaming platforms like Netflix and Disney+ offer premium subscription tiers that provide exclusive content, higher video quality, and additional user profiles, targeting viewers seeking enhanced entertainment experiences beyond the standard offerings.
• Fashion: High-street fashion brands such as Zara and H&M have launched premium collections with more luxurious materials and craftsmanship. These lines appeal to customers looking for elevated style at a slightly higher price point, blending accessibility with sophistication.

A recent story in the Economic Times discussed premiumisation in India:

The premiumisation story in consumption has continued unabated in the first half of calendar 2024, as per latest data from companies and researchers. This is even when there is a growth slowdown in car and smartphone sales, while sales of fast moving consumer goods ( FMCG) is yet to recover fully.

For the first time ever, vehicles priced over Rs 10 lakh accounted for nearly half of all vehicles (about 48%) sold in the country between January to June as compared to 44% in the same period a year earlier, as per top manufacturers. Sales of these vehicles grew at more than twice the rate of the overall industry – by 13% to nearly a million units in this period. Overall, passenger vehicle sales rose 5.5% in the same period.

The share of Rs 30,000-plus smartphones has gone up to its highest ever of 20% of the overall market by number of units sold between January to May as compared to 17% a year back, Counterpoint Research data shows. By value, it’s 49%.

Counterpoint said the share of 50-inch plus televisions went up from 21% to 24% in total TV sales in India in the same period. The researcher said preliminary numbers for June show the contribution remains in a similar range.

In this series, I will explore the concept of premiumisation through a new lens – within the email industry. Can email service providers (ESPs) elevate their offerings from commodity to becoming a “profipoly” (profits monopoly)? By premiumising their services, can ESPs break free from commoditisation and create a unique, high-value position in the digital marketing landscape? This journey encapsulates a vision where ESPs transform email services into strategic assets, commanding both superior profits and a dominant market position.

2

Overview

I asked Claude to provide an overview of premiumisation.

Premiumisation, the practice of elevating a product or service to a higher-quality, more exclusive status, has become increasingly prevalent in today’s consumer landscape. This strategy involves enhancing offerings to justify higher price points and appeal to discerning customers seeking superior experiences. While not a new concept, premiumisation has gained significant traction in recent years across various industries.

Historical Context

The roots of premiumisation can be traced back to luxury goods markets, where brands like Hermès and Cartier have long positioned themselves as purveyors of exclusive, high-quality products. However, the concept has evolved beyond traditional luxury sectors. In the 1980s and 1990s, companies began applying premiumisation strategies more broadly, with notable examples including the rise of premium ice cream brands like Häagen-Dazs and the emergence of specialty coffee chains like Starbucks.

Recent Surge in Popularity

Several factors have contributed to the recent acceleration of premiumisation:

1. Shifting consumer preferences: Post-recession, many consumers have adopted a ‘fewer but better’ mentality, prioritising quality over quantity.
2. Rising disposable incomes: In many markets, growing affluence has increased demand for premium products.
3. Social media influence: Platforms like Instagram have fuelled desire for aspirational lifestyles and products.
4. Experiential focus: Consumers increasingly value unique experiences over material possessions, driving demand for premium services and products that offer enhanced experiences.

Why Premiumisation Works

Premiumisation taps into several psychological and economic principles:

1. Perceived value: Higher prices often signal higher quality, influencing consumer perceptions.
2. Exclusivity: Limited availability or unique features create a sense of prestige and desirability.
3. Emotional appeal: Premium products often evoke positive emotions, justifying higher spending.
4. Differentiation: In crowded markets, premiumisation helps brands stand out from competitors.

Advantages for Brands

1. Higher profit margins: Premium products typically yield better returns than mass-market alternatives.
2. Brand equity: Successful premiumisation can elevate overall brand perception and value.
3. Customer loyalty: Premium offerings often foster stronger emotional connections with consumers.
4. Market expansion: Premiumisation allows brands to target new, higher-value customer segments.
5. Innovation driver: The pursuit of premium offerings can spur product development and creativity.

Example: Fever-Tree, a UK-based tonic water brand, successfully premiumised a category long dominated by mass-market products. By focusing on high-quality ingredients and sophisticated flavour profiles, Fever-Tree carved out a profitable niche in the premium mixer market.

Disadvantages and Risks

1. Overextension: Not all products or services are suitable for premiumisation, and attempts may backfire.
2. Alienation of core customers: Shifting focus to premium offerings might alienate price-sensitive consumers.
3. Increased competition: Success in premium markets often attracts new competitors, potentially eroding advantages.
4. Economic sensitivity: Premium products may be more vulnerable during economic downturns.
5. Authenticity challenges: Consumers may perceive premiumisation efforts as inauthentic or unjustified.

Example: McDonald’s attempt to introduce premium burgers (e.g., the Arch Deluxe in the 1990s) largely failed, as it conflicted with the brand’s core value proposition of affordable, convenient fast food.

Successful Implementation

To effectively implement premiumisation, brands should:

1. Understand their target market: Identify customer segments willing to pay for premium offerings.
2. Deliver genuine value: Ensure premium products or services offer tangible benefits over standard alternatives.
3. Maintain consistency: Align premium offerings with overall brand identity and values.
4. Invest in marketing: Effectively communicate the unique value proposition of premium offerings.
5. Balance portfolio: Maintain a range of products or services to cater to different customer segments.

Example: Toyota’s creation of the Lexus brand exemplifies successful premiumisation. By developing a separate luxury marque, Toyota entered the premium automotive market without compromising its core brand identity.

To summarise: Premiumisation remains a powerful strategy for brands seeking to enhance value perception and capture higher-margin market segments. However, its success hinges on a deep understanding of consumer needs, authentic execution, and careful balance with existing product lines. As consumer preferences continue to evolve, premiumisation is likely to remain a key consideration for brands across various industries, driving innovation and shaping market dynamics.

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B2B and SaaS

This section written with Claude, ChatGPT and Preplexity.

While premiumisation is often associated with consumer goods, it’s equally relevant in the B2B and SaaS sectors. These industries have their own unique approaches to creating and marketing premium offerings, often focusing on enhanced functionality, advanced features, and superior support.

B2B

Companies in industrial manufacturing are increasingly adopting premiumisation-based pricing strategies. This involves creating a tiered pricing structure that offers various product variants at different price points, allowing businesses to cater to a broader range of customer segments while capturing additional value. This approach enhances market share and strengthens competitive positioning

• Caterpillar Inc.: As a leading manufacturer of heavy equipment, Caterpillar has successfully implemented a premiumisation strategy by offering value-added services alongside their machinery. This includes personalized customer support, training programs, and advanced telematics solutions that optimize machine performance. These supplementary services not only enhance the customer experience but also create additional revenue streams for the company.
• GE Aviation: GE Aviation offers premiumisation through its “Predictive Maintenance” services, leveraging AI and big data analytics to anticipate and address potential issues in aircraft engines before they cause significant problems. This premium service reduces downtime and operational costs for airlines, offering a compelling value proposition that goes beyond simply selling engines. GE’s ability to provide real-time insights and predictive capabilities justifies its premium pricing and solidifies long-term partnerships with airlines.
• Siemens: Siemens effectively communicates the quantifiable value of its industrial equipment, particularly energy-efficient solutions that reduce operational costs. By showcasing the financial advantages and operational efficiencies gained from their premium offerings, Siemens justifies higher pricing and builds trust with clients
• John Deere: Known for its agricultural machinery, John Deere has introduced premiumisation through its precision agriculture technology, which uses GPS, AI, and data analytics to optimise farming operations. The company’s premium offerings include advanced sensors, automated equipment, and cloud-based platforms that enable farmers to increase yields, reduce costs, and manage resources more effectively. By positioning itself as a technology leader in agriculture, John Deere has successfully moved beyond traditional equipment sales into higher-margin digital services.

SaaS

1. Salesforce: The CRM giant offers multiple tiers, from basic to enterprise-level. Premium offerings include advanced analytics, AI-powered insights, and dedicated support, catering to larger businesses with complex needs.
2. Slack: This communication platform provides a freemium model with paid tiers offering features like unlimited message history, group video calls, and advanced user management for enterprises.
3. Adobe Creative Cloud: Adobe transitioned from selling standalone software to a subscription model with various tiers. Premium offerings include industry-specific tools, larger cloud storage, and advanced collaboration features.
4. Zoom: During the pandemic, Zoom quickly became a household name. They offer premium features for businesses such as longer meeting durations, cloud recording, and advanced team management.
5. HubSpot: This inbound marketing platform offers different hubs (Marketing, Sales, Service) with tiered pricing. Premium tiers include advanced automation, reporting, and integrations.
6. Microsoft 365: Formerly Office 365, Microsoft’s productivity suite offers various tiers for businesses. Premium options include advanced security features, device management, and business intelligence tools.
7. Amazon Web Services (AWS): While AWS offers pay-as-you-go pricing, they also have premium support plans and enterprise-grade services with advanced features and dedicated resources.
8. Mailchimp: This email marketing platform has successfully implemented a freemium model with premium tiers offering advanced segmentation, multivariate testing, and comparative reporting.

Key Aspects of B2B and SaaS Premiumisation

In the B2B and SaaS world, premiumisation often revolves around:

1. Increased Functionality and Features: Premium tiers typically offer more advanced tools and capabilities that cater to sophisticated users or larger organisations.
2. Advanced Analytics and Reporting: Higher-tier offerings often include more detailed insights and data analysis capabilities.
3. Enhanced Security and Compliance Measures: For businesses handling sensitive data, premium versions may offer advanced security features and compliance certifications.
4. Dedicated Support and Account Management: Premium customers often receive priority support or dedicated account managers, enhancing the overall service experience.
5. Customisation and Integration Capabilities: Higher-tier offerings may allow for greater customisation or easier integration with other business systems.
6. Higher Usage Limits or Unlimited Usage: Premium tiers often remove restrictions on usage, storage, or other quantifiable metrics.
7. Scalability: Premium offerings are often designed to scale more effectively, catering to growing businesses or enterprises.

Strategic Considerations

B2B and SaaS companies implementing premiumisation strategies must carefully consider several factors:

• Value Proposition: The premium offering must provide clear, tangible benefits over the standard version to justify the higher price point.
• Target Market: Understanding which customer segments are willing to pay for premium features is crucial for effective pricing and marketing.
• Competitive Landscape: Premium offerings should provide a competitive edge in the market, offering features or services that set the company apart.
• Pricing Strategy: Tiered pricing models need to be structured to encourage upgrades while still providing value at each level.
• Customer Experience: The transition from standard to premium tiers should be smooth, with excellent onboarding and support to justify the higher cost.

Premiumisation in B2B and SaaS sectors allows companies to cater to a wide range of customers, from small businesses to large enterprises, while maximising revenue from those willing to pay for advanced features and support. By offering tiered services, these companies can capture different market segments and provide scalable solutions that grow with their clients’ needs. As the B2B and SaaS markets continue to evolve, we can expect to see further innovations in premiumisation strategies. Companies will likely focus on creating even more personalised and value-added services, leveraging technologies like AI and ML to offer predictive analytics, automated workflows, and highly customised user experiences in their premium offerings.

4

Email

I asked Claude and ChatGPT to suggest how premiumisation could work in the email industry.

Email has long been a staple of digital communication, yet over time, it has become increasingly commoditised. Most Email Service Providers (ESPs) now offer similar basic functionality such as bulk sending, list management, and simple analytics. This commoditisation has led to downward pressure on pricing, making it difficult for ESPs to differentiate themselves or command higher fees. The result is a market saturated with similar offerings, where price often becomes the primary deciding factor for businesses choosing an ESP.

To reverse this trend and premiumise email, ESPs must rethink their value proposition and introduce innovative features that go beyond the basics. By shifting the perception of email from a basic utility to a powerful, strategic business tool, ESPs can justify higher pricing across different market segments.

Key Strategies for Reversing Commoditisation

1. Advanced Personalisation:
   • Leverage AI and machine learning for highly targeted content delivery.
   • Offer dynamic content that adapts in real-time based on user behaviour, preferences, and contextual data.
   • For mid-market and enterprise customers, provide robust integration with customer data platforms (CDPs) for sophisticated personalisation strategies.
2. Interactive and Dynamic Email Content:
   • Implement AMP for Email, enabling users to perform actions without leaving the inbox.
   • For enterprises, integrate complex workflows directly within emails (e.g., approving expense reports, managing projects).
3. Enhanced Security and Privacy Features:
   • Offer end-to-end encryption, advanced phishing protection, and compliance with industry-specific regulations (e.g., GDPR, HIPAA).
   • Provide audit trails, access controls, and secure email gateways for enterprise clients handling sensitive information.
4. AI-Driven Campaign Optimisation:
   • Implement predictive send-time optimisation, subject line testing, and content recommendations based on previous campaign data.
   • Offer automated re-engagement campaigns for inactive subscribers.
5. Comprehensive Analytics and Reporting:
   • Provide insights into customer lifetime value (LTV), attribution modelling, and conversion tracking across multiple touchpoints.
   • Offer AI-powered predictive models for forecasting future campaign performance.
6. Dedicated Support and Customisation:
   • Offer dedicated account managers, 24/7 premium support, and bespoke onboarding and training services.
   • Provide customisation options for email templates and workflows tailored to specific client needs.
7. Omnichannel Integration:
   • Enable seamless coordination of email campaigns with other digital channels (SMS, social media, push notifications).
   • Offer advanced automation for creating complex, cross-channel customer journeys.
8. Premium Content Delivery Features:
   • Guarantee inbox placement, expedited email sending, or priority sending during peak times.
   • Provide scalable infrastructure for high-volume sending with dedicated IP addresses and domain management.
9. Advanced Deliverability Tools:
   • Offer sophisticated deliverability optimisation with real-time monitoring and alerting.
   • Provide IP warm-up services and advanced email authentication (e.g., BIMI support).
10. Custom Data Enrichment Services:
    • Offer demographic appending, purchasing behaviour analysis, and integration of third-party data sources.
    • Provide advanced segmentation tools for more accurate targeting and personalisation.

Premium Offerings for Different Market Segments

ESPs can tailor their premium offerings to address the specific needs of SMBs, mid-market, and enterprise customers:

SMB Premium Offerings:

• AI-powered content generation and optimization
• Automated customer journey mapping and execution
• User-friendly design tools with premium templates
• Basic deliverability monitoring and optimization

Mid-Market Premium Offerings:

• Advanced marketing automation with multi-channel capabilities
• Custom integration services with popular CRM and e-commerce platforms
• A/B testing and multivariate testing capabilities
• Enhanced deliverability tools with IP warm-up services

Enterprise Premium Offerings:

• Enterprise-grade security and compliance features
• Sophisticated workflow automation for complex business processes
• AI-driven predictive modeling and customer insights
• Omnichannel orchestration across multiple communication channels
• 24/7 premium support with guaranteed response times

Innovative Features Across Segments:

• Real-time content personalization based on open-time data
• Interactive email capabilities (AMP for Email)
• Voice-activated email composition and management
• Blockchain-based email security and verification

5

Past Writings

I have discussed many ideas on how email can be enhanced. I have focused more on marketers and the end customer experience.

Epps: The Next Evolution in Email Engagement: “AMPlets (simple use cases) and Email Apps (Epps, which are more complex creations), enable interactive elements like forms, games, and live content within emails, turning them into two-way communication channels. Epps can revolutionise email engagement by containing all interactions within the inbox, eliminating the need for clickthroughs to external pages, and dynamically updating with each open. This seamless experience enhances user engagement and conversion rates, making email a vital channel for deeper customer relationships and improved brand profitability.”

Email’s New Triad: AMPs, Epps, Ads: “The future of email revolves around three key innovations: AMPs, Epps, and Ads. AMP emails (Email 2.0, as I have termed it) are interactive and dynamic, allowing engagement and conversion to happen within the email itself, eliminating the need for clickthroughs to landing pages or apps and thereby reducing friction. Epp (Email App, which can be thought of as Email 3.0) involves building fully functional apps within the email, serving as an alternative to websites and mobile apps. Action Ads are a new format where the landing page is embedded within the ad, improving outcomes. The foundational technology for all three is AMP, a standard endorsed by Google and Yahoo.”

Upgrading Email Marketing: Epps, ActionAds, and More: If Email 1.0 represented the era of static HTML content, and Email 2.0 ushered in the age of interactive AMP-powered experiences, then Email 3.0 (E3) heralds the transformative fusion of AMP’s interactivity with AI’s predictive power and personalisation capabilities. This convergence promises to redefine email marketing, turning every message into a dynamic, individualised touchpoint in the customer journey. E3 can combat AdWaste and boost profitability for brands by enabling hotlines, addressing the issue of attention recession. [Here are] 10 innovations: AMPlets, Epps, Consumer Epps, ActionAds, Atomic Rewards, Email Footer Containers, Email Minis, E3 Inbox, ELM (Email Language Model), and Email Twins.” The essay also discussed various business models: CPM (Cost Per Thousand), CPA (Cost Per Action), SaaS Platform Fee, Ads Commission, Services, Freemium Model, Revenue Sharing, and Licensing Fees.

Epps Footers: New Frontiers in Email Marketing: “By reimagining the email footer as an engaging and dynamic space, we can significantly enhance the effectiveness of email marketing. Transforming the footer into an “Epp within an Epp” allows marketers to include a variety of interactive elements, from feedback forms and data collection to personalised offers and fun quizzes. This shift not only increases the likelihood of emails being opened but also ensures that recipients find value in each interaction, making them more likely to engage with future emails. The potential of Epps Footers lies in their ability to turn a traditionally overlooked part of the email into a powerful tool for driving continuous engagement, fostering deeper connections with customers, and ultimately transforming email marketing strategies.”

Email Envelope: Eight Elements to Energise Engagement: “Think of…an “email envelope” for the brand message and content, designed to drive more opens and actions. This envelope is an element that email service providers can incorporate into their delivery platforms. While the email body remains the primary focus, the envelope can serve as a powerful engagement driver, enhancing the overall effectiveness of email marketing… The Email Envelope solves the critical issue of attention recession in email marketing. With declining open and click-through rates, marketers have struggled to capture and retain user interest. The Email Envelope turns this paradigm on its head by introducing multiple touchpoints for engagement, creating a multi-layered experience that encourages interaction and habitual email checking… There are eight elements which power it: Mu in Subject, Epps Header, Epps Footer, Action Ads, AMPifier, API Injection, AI+Email, and Performance Pricing.”

I wrote this on Performance Pricing: “Performance Pricing transforms the email marketing cost structure by shifting from traditional volume-based pricing to a model directly aligned with campaign performance. Building on the ZeroCPM concept, this approach changes the dynamics between Email Service Providers (ESPs) and their clients. The ZeroCPM model eliminates upfront costs per thousand emails sent, instead tying compensation to specific outcomes such as conversion-based pricing (fees based on actual sales or sign-ups), engagement-based pricing (costs tied to open rates, click-through rates, or time spent interacting with the email), revenue share models (ESPs receiving a percentage of revenue generated from email campaigns), and action-based pricing (charges based on specific user actions within interactive email elements). This outcomes-based approach offers several benefits: risk sharing between ESPs and clients, incentivising ESPs to improve email performance and deliverability, and encouraging innovation in email engagement strategies.”

Email Envelope: Eight Elements to Energise Engagement: “Atomic Rewards – micro-incentives for actions taken within emails. These rewards, which I call ‘Mu,’ can be earned through various in-email actions such as opening emails, providing zero-party data, and completing specific tasks…By positioning Mu as a key component of the Email Envelope and offering it across multiple brands, Netcore (or any ESP) creates a powerful ecosystem that benefits users, brands, and itself. This approach not only addresses the limitations of single-brand loyalty programs but also leverages the unique position of an ESP to create a more engaging, rewarding, and effective email marketing landscape.”

6

Possibilities

Based on my writings, I asked ChatGPT and Claude to list the possibilities for email premiumisation for ESPs.

1. Interactive Email Technologies
   • AMPlets: Simple interactive use cases within emails
   • Epps (Email Apps): Creating interactive, fully functional apps within emails, enabling two-way communication and in-email actions without needing external clickthroughs
   • AMP Emails: Incorporating dynamic, interactive content directly within the email to reduce friction and enhance engagement
2. Advanced Engagement Features
   • Email Envelope: A multi-layered email experience with enhanced elements such as Mu in Subject, Epps Header and Footer, Action Ads, and AMPifier for greater engagement
   • Epps Headers and Footers: Transforming email footers into interactive spaces, adding elements like feedback forms, quizzes, and personalised offers
   • Email Minis: Lightweight, interactive elements that provide engaging experiences within concise email formats
   • In-email forms, games, and live content
3. AI-Powered Personalization
   • ELM (Email Language Model): AI-driven content generation and optimization
   • AI+Email: Leveraging AI for improved email performance
   • Email Twins: Using AI and digital twins to personalise and automate email content dynamically
4. Enhanced Advertising Capabilities
   • ActionAds: Embedding landing pages within ads to improve outcomes and streamline user experience
   • API Injection: Real-time content insertion based on external data
5. Loyalty and Rewards Integration
   • Atomic Rewards (Mu): Offering micro-incentives within emails to boost engagement and create a more rewarding email ecosystem
6. Innovative Pricing Models
   • Performance Pricing: Tying pricing to performance metrics like conversions, engagement, or specific actions rather than email volume
   • ZeroCPM: Elimination of upfront costs per thousand emails sent
   • Revenue sharing models based on email-generated sales
7. Email-as-a-Platform Capabilities
   • E3 Inbox: A transformative email experience blending AMP’s interactivity with AI-driven personalisation and predictive capabilities
   • Consumer Epps: Apps within emails designed for end-users

These innovative features and strategies represent a comprehensive approach to email premiumisation. They address key challenges in the email industry such as engagement, personalization, and measurable outcomes, while also introducing new revenue models for ESPs.

By implementing these possibilities, ESPs can:

1. Transform email from a static, one-way communication channel into an interactive, dynamic platform
2. Address the issue of attention recession in email marketing
3. Enhance user engagement through interactive and personalized experiences
4. Provide measurable business outcomes, justifying higher pricing
5. Create new revenue streams through performance-based pricing and rewards systems
6. Offer unique value propositions to both marketers and end-users

This approach to email premiumisation positions email as a central, high-value element in modern digital communication strategies. It allows ESPs to differentiate their offerings, command premium prices, and drive innovation in the email industry.

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Four Paths

ESPs can consider four paths for creating premium email offerings.

Higher CPM for Enhanced Performance

This approach is straightforward and easily implementable. By improving email engagement and actions, ESPs can justify charging a higher CPM for email delivery. ESPs could offer two solutions: “Email Classic,” a regular email pipe, and “Email Premium,” which incorporates advanced features like the Email Envelope (Mu in Subject, Epps Headers, Epps Footers). This content and gamification wrapper around the brand message enhances outcomes, making higher pricing more justifiable.

To further differentiate Email Premium, ESPs can:

• Develop pre-built Epps, such as a “magic cart” for eCommerce, tailored to specific industries or use cases. (See The Coming of Inbox Commerce and Email Shops can Transform eCommerce.)
• Integrate ELMs (Email Language Models) and Email Twins into their core platforms, offering unique AI-driven personalization capabilities.
• Provide detailed analytics comparing the performance of Email Classic vs Email Premium, showcasing the ROI of the enhanced features.

CPA for New Email Use Cases

This idea focuses on tapping into non-consumption, identifying scenarios where emails are underutilised. One example is reactivation campaigns. ESPs could offer performance-based pricing by delivering emails for free and charging based on outcomes like clicks, add-to-cart actions, or even purchases.

To make this model more attractive, ESPs can provide detailed cost comparisons between their CPA model and traditional reacquisition costs through adtech platforms. They can also develop a sliding scale of fees based on the value of the action (e.g., lower fee for a click, higher fee for a purchase). ESPs can also offer risk-sharing models where the ESP invests in the campaign upfront and shares in the resulting revenue.

ESPs can also develop new categories, such as subscriptions to Email Minis, where they provide both content and delivery in an integrated solution. This could include daily industry news digests, personalized product recommendations, interactive quizzes or polls, and micro-learning courses delivered via email. (See Email 2.0 Progency: eCommerce’s Profit Powerhouse.)

Revenue Sharing from New Streams

ESPs can collaborate with brands to generate revenue through ActionAds embedded in emails. To make this viable, ESPs would need to build email ad networks to create ads that leverage AMP to bring the landing page experience within the email itself. (See Ads in Emails: Some New Ideas.) To enhance this model, ESPs can:

• Develop partnerships with existing ad networks to expand reach and inventory.
• Create a self-serve platform for brands to easily create and manage their ActionAds campaigns.
• Offer advanced targeting options using the rich data available from email interactions.
• Provide real-time analytics and optimisation tools for ActionAds performance.

This model enables ESPs to share revenue from the ad performance, aligning their interests with those of the brands.

Email Kaizen Services

ESPs can enhance their offerings by adding a “thin” layer of services designed to improve email performance and justify higher pricing. These services could include

• Bespoke development of Epps tailored to the brand’s specific needs and audience.
• Fine-tuned monitoring of email analytics beyond the brand’s marketing team’s capabilities, with regular performance reviews and optimization recommendations.
• Insights generated by AI Twins, providing deep analysis of customer behavior and preferences. (See AI Twins: The Future of Marketing Intelligence.)
• Continuous A/B testing and optimization of email content, design, and delivery strategies.

Brands would likely pay a premium for expert teams focused on consistently improving email outcomes. This service layer would also increase ESP stickiness, making it harder for brands to switch providers. (See Bundled Kaizen Services: An Advantage for Indian SaaS and New SaaS: Services, AI Agents, Sharing.)

**

In a rapidly evolving digital landscape, premiumisation offers ESPs an opportunity to break free from the constraints of commoditisation and create significant new value for brands, their customers, and for the ESPs themselves. By leveraging advanced features, performance-based pricing models, and strategic service layers, ESPs can transform email marketing from a cost-driven channel into a performance-focused, ROI-generating engine. As email continues to play a central role in customer engagement, those ESPs that embrace innovation and tailor their offerings to meet the diverse needs of brands will be best positioned to capture new revenue streams, foster deeper client relationships, and lead the future of email marketing. The key to success lies in continuous innovation, data-driven decision making, and a relentless focus on delivering measurable value to clients. By positioning email as a strategic asset that can help re-engineer retention and drive profits rather than a commodity service, ESPs can drive growth, remain at the forefront of digital marketing evolution, and craft their own path to becoming a Profipoly.