Guest post by Tony White

The web content management (WCM) market began circa 1995, as it emerged as a separate space from document management (DM). The early significant players in the market were companies such as Vignette, Interwoven, ATG, BroadVision, Stellent, Net Perceptions, Future Tense, RedDot, Percussion, Ektron, Mediasurface, PaperThin, Day Software and others. A few of the early players still exist. Some are defunct. Many were acquired.

However, in the time since the mid-1990s, WCM has remained a robust stand-alone technology and independent market space, even with some overlap with markets such as digital asset management, records management, portals, enterprise information management, collaboration and search. Relative to the rest of the technology market, WCM has been a particularly strong performer over the last 15 years. In approximately 2005, when the market realized that the overblown scope of ECM made it an impossible strategy to implement, buyers returned to the more realistic, tactical objectives of WCM. 

By 2005-2007, however, WCM products had reached full maturity, and they began to experience the effects of commoditization. In about 2007, we began to see a bifurcation in the WCM market. There was downward pricing pressure on pure-play WCM vendors, and products which had been selling relatively well at the $70k-80k price range began to be so discounted heavily so that they were actually selling in the $40-50k price range.

Simultaneously, former pure-play WCM vendors who were able to supplement their product lines with compelling value-added layers - often focused around enhanced online marketing capabilities--were able to increase their prices. The average sales prices for these products moved up from the $70-80k mid-market to the $100-125k range.

Current pricing trends in the WCM market

Since the beginning of this simultaneous downward and upward pricing momentum, WCM had continued to evolve into late maturity as a technology. While WCM has been a mature product type since 2007, some vendors (and even new market entrants) continue to occasionally add features and functions to their core CMS feature-functionality lists. But this continued evolution is occurring at a much slower pace, and the effects of commoditization have only strengthened in the period from 2008 to 2011.

This leads us to an interesting point in the market. WCM as a pure-play, stand-alone application, is reaching the end of its lifespan. Right now, we have:

• Pure-play WCM vendors competing at the $40k price point. Without significant additions to their product lines, prices will continue to fall over the next few years.
• Former pure-play vendors who have been able to enhance their product lines with marketing-centric modules. These vendors now tend to compete in the $50-150k price range. These vendors will remain a competitive force in content-technology markets for the next few years, given continued enhancement to their marketing-centric modules.

Enterprise, cross-platform, experience management vendors have also emerged. Their products include WCM, but their primary value rests in holistic marketing capabilities, such as managing customer and partner interactions across multiple enterprise applications, devices, channels, sites, etc. These vendors are competing in the $250k+ range. The few vendors who are currently able to compete in the enterprise marketing management (EMM) or customer experience management (CEM) markets commonly have license sales of $400-500k.

Product development opportunities and market Leaders

Our advice to technology vendors in these areas looking to evolve their product lines or to launch new ones is to exploit the readiness in the market for applications that excel at:

• Mobile marketing;
• Multi-site, multi-channel, multi-device capabilities based on an understanding of customer behaviors and needs across channels;
• Comprehensive enterprise brand- and marketing-management; and
• Customer experience management.

It is in these areas where the opportunity to make the most compelling value proposition exists. Existing CMS vendors who don't focus on these or closely-related areas will only get forced further down-market over the next 2-3 years. Those who successfully address pent-up and growing demand for these capabilities--all related to cross-channel marketing and the ability to manage customer interactions--stand to grow quickly and to secure meaningful market traction in these nascent spaces.

As the market currently stands, we believe that Adobe, Open Text and SDL are in the best positions to make a compelling value proposition to prospective clients. Their product lines already contain many of the components required for EMM or CEM, though only Adobe has assembled the components into a unified, cohesive CEM product offering (very recently). Open Text's and SDL's offerings still require considerable assembly and customization to function effectively as CEM or EMM solutions.

Aside from these three vendors, there are only two or three others whose products could be assembled and customized in this way--possibly Oracle (NASDAQ: ORCL), HP (NYSE: HPQ) and IBM (NYSE: IBM)--but doing so would require a Herculean, risky effort.

Emerging markets and conclusions

As for prospective entrants to this emerging market, we see the pure-play WCM vendors who are currently adding marketing-oriented, multi-site, cross-channel, analytics-based feature-functionality as the ones with the best chance of success. All of the core feature-functionality in WCM applications can be leveraged in these new product types. Entrants from non-WCM backgrounds would have significant work to do in filling in the missing WCM functionality. That said, WCM vendors will still need to supplement their products considerably.

So the question arises, "Why are existing pure-play WCM vendors in a better position to capture this market than, for example, CRM lead management vendors?" The answer is that WCM feature-functionality is a major component of EMM and CEM solutions, and it is a component that requires a lot of development time. The leading CRM lead management vendors such as Aprimo, Eloqua and Marketo would need 25+ man years of development time to create the feature-functionality of the current WCM offerings on the market. Comparatively, the existing pure-play WCM vendors would need only 4-5 man years to develop the supplemental features required for respectable EMM.

The second reason is that vendors such as Aprimo, Eloqua and Marketo have relatively immature products. That is, their solutions don't add all that much to stand-alone CRM products such as Salesforce.com (and the missing pieces can be added by Salesforce's AppExchange partners). Relative to existing WCM products, they really have no advantage in being able to supply multi-channel, multi-application EMM solutions.

In sum, any technology vendor with a complete set of core WCM functionality and 5 or more years of discretionary developer time that can be devoted to multi-channel online marketing requirements stands a good chance of assuming a competitive role in EMM.

Tony White is Founder of Ars Logica, a vendor-neutral analyst firm that helps companies evaluate their web content management requirements and select suitable WCM software. Ars Logica also assists software vendors in analyzing the market and planning their product roadmaps. Prior to founding Ars Logica, Tony ran the WCM Practice at the Gilbane Group; he was an analyst at the Yankee Group and Giga Information Group; and he served in senior marketing roles at Interwoven and BroadVision.

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