Fear and loathing as Amazon looks to deforest the ESP market

Amazon Web Services (AWS), Amazon.com’s cloud computing division, has announced that it is entering the Email Service Provider marketplace with the launch of a new bulk email offering called Simple Email Service (Amazon SES). The service, which is currently in its Beta phase, has been described by Amazon as “a highly scalable and cost-effective bulk and transactional email-sending service for businesses and developers”.

The major anxiety among ESPs lies in the fact that years of web dominance has allowed Amazon to create a massive infrastructure that is available for anyone to use. Services like S3 (Simple Storage Service) and EC2 (Elastic Computing Cloud) are already powering a ton of websites, for example. This roll-out has already caused a few ripples in emailing circles, with potentially far-reaching consequences for the industry as a whole.

The new cloud-based email service is aimed at developers and businesses that don’t want to build their own email product in-house and want to call upon an external provider to send large volumes of emails.

Like other Amazon services, one of the biggest draw-cards is the pricing of SES. You can send up to 2 000 emails a day free. After that, it’s 10 cents per thousand emails and 15 cents per GB of data transfer. SES works in the same way as the rest of the Amazon infrastructure in that you use a simple API, pay only for what you use (in this case, how much email you send) and then scale it up as you grow. The main advantage of using Amazon SES is that it integrates with other AWS, such as hosting service EC2 and Amazon S3.

The impact of Amazon SES on other ESPs

While most may believe that the API-based SES is potentially a very disruptive force in the email industry, SES is, in a manner of speaking, not a direct competitor to existing major ESPs, since they provide plenty more tools and have user-friendly interfaces for managing email lists and campaigns.

That said, well known ESPs such as GraphicMail, Mail Blaze, Campaign Monitor and Exact Target could shift any portion of their infrastructure via the API to take advantage of the Amazon SES services. The API also enables a competitor to rise quickly without having to deal with the annoying “whole email thing” that long-standing companies have mastered.

ESPs may not have as much to fear as they initially thought. The SES API requires a worrisome degree of technical knowledge to get set-up with and is not as simple as entering your SMTP server address, username and password into your current software.

For email service providers that operate at a higher level by managing mass email campaigns, providing dynamic content assembly, reporting and analytics, targeting, auto-reponders and so on — SES isn’t a threat, since the service is very much bare bones and provides no email tracking or ROI reporting.

Amazon SES and the question of Deliverability

Since a very large percentage of global email traffic is spam, all your sent email messages are scanned by one or more ISP. Each ISP is equipped with automated filters to detect email messages that appear to be spam, and prevent these messages from being delivered. Due to stringent practices, even if your email is legitimate an ISP’s spam filter could still accidentally flag it as spam and block it.

This is where SES is fundamentally flawed as an ESP. When it comes to actually sending email, you just don’t get good email delivery from the cloud. Low-cost shared IP space usually ends up generating a lot of low-quality email (non opt-in messages), and eventually the entire service provider is flagged as a spammer. So the email industry will be watching Amazon’s deliverability very closely, and whether or not SES will be able to earn a reputation of getting through to the inbox.

Even with the handicap, Amazon is doing a number of things to nurture its deliverability; such as gradually increasing the allowable send rate for a user, applying outgoing spam filters, and making use of the various feedback loops that Internet Service Providers and the email industry have evolved over the years. But even with all that, it remains to be seen over time whether SES delivery rates will be on par with top ESPs.

It’s also worth pointing out that SES is mainly built as a transactional email service. Transactional messages are usually one-to-one system notifications (such as account setup emails, online shopping receipts etc). Mixing bulk email with transactional email will, however, cause problems both for the ESP and its clients, since these are based on different communications requirements and paradigms.

Think of Amazon SES as a big engine which can power the driveshaft of an ESP, but lacks the support structure and advanced features that would allow it to compete with established email marketing companies.

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