Email marketing software: In-house and self-hosted vs a Serviced solution

Email marketing solutions today are offered primarily in two forms:
  1. Self-hosted
  2. Email marketing software as a service
In this article we will compare self-hosted solutions as opposed to serviced solutions (services).
  • Self-hosted (server-based) means that you install and maintain it on your own server like your website.
    It usually comes with a database where your newsletters, subscribers and reports are stored.
    Typically after installation your only need a browser to use it.
  • Email marketing software as a service is maintained by a 3rd party provider and offered to you as a service usually with a periodic subscription fee or a volume-based fee.
    Similarly a browser is all you need to use the software.
  • Both models have pros and cons that you should consider based on your particular needs.
  • There is also a 3rd category; Desktop-based software that you install on your personal computer. Usually it is quite limited in capabilities compared to server-based email marketing software especially when it comes to interacting with your subscribers and tracking your campaigns. We will not cover this category in this article.
Here are some basics to get you started.
Self-hosted
(In-house)
Serviced model
(Saas, Cloud)
Features Features tend to converge in all modern solutions. As soon as a new feature appears every business will follow with the same or even better offer. But it still can be a differentiating factor.
Good In-house solutions especially open source ones are more expandable and scalable (customization, integration with the rest of company's software). However, software vendors knowing that their product will be installed on a variety of servers sometimes tend to compromise on some features. That's why you usually read about the Requirements. Serviced solutions also have some unique and powerful features because the provider has full control of the underlying technical infrastructure. A modern browser is usually what you need to have.
Cost of ownership & use With an In-house solution you pay only once to acquire the software. And you don't have to pay recurring monthly or volume fees. You may have to pay for updates/upgrades but this is optional.
This is clearly a more cost-effective solution.
With Serviced solutions you pay monthly subscription fees and/or volume-based fees. For frequent mailings and big mailing lists a serviced solution will be more expensive in the long run.
For occasional, low-volume senders, a strictly pay as you go plan without a fixed fee may be a cost effective choice.
Capacity / Volume If you use shared hosting, with an In-house solution you will be limited on the number of outgoing emails that you can send in a time frame. But today with the abundance of cheap VPS hosting plans, dedicated servers and mail relay services this limitation should not be a concern. With Serviced solutions you don't have this limitation. But the more you send the more you pay. And with some subscription plans you pay even if you don't send at all.
Deliverability
Getting your emails in the subscribers mailbox.
There is a general belief that with a serviced solution you will have better deliverability. There is some truth in it. Reputable email marketing services providers take efforts in this aspect.
However there are practises one can implement to achieve equally good (and occasionally improved) deliverability when running your own self-hosted software. Mail singing, Unique IPs, feedback loops are easily and broadly available. See below the "Hybrid model".
Technical involvement Most vendors will offer you free installation and set-up. But there may be some configuration that you will still need to do yourself. Normally these are basic and easy. Minimal to none. The service provider sets-up and monitors everything for you.
Data ownership and protection Companies may have policies that dictate the use of an In-house solution where data access is limited to its owners. This issue is constantly gaining a lot of attention today due to the proliferation of cloud-based services, privacy concerns and new laws (see GDPR).
Content & mailing list quality
What you send and to whom you send it to
You have 100% control of your newsletter content and your mailing lists.
For example, self-hosted email marketing solutions are particularly popular in the adult entertainment industry.
Service providers may have "content filtering" and other restrictions related to the "quality / source" of your mailing lists.
For example, they may not allow a "first cold mailing" although this is not prohibited in US.
And the winner is,
None really. It depends on your needs and objectives.
At this point it is worth considering the hybrid model.

The Hybrid model

  • You purchase a software package to install on your own server.
  • If you have volume restrictions by your Hosting company then don't use their smtp service.
    You can purchase a 3rd party mail-relay service (aka smtp services) from an external provider. For example, Amazon SES is a popular and low-cost option ($1 for 10k emails).
  • The hybrid model is particularly attractive to medium-heavy senders. Overall it results in a lower cost of ownership and greater technical flexibility.

Decision criteria

For most users it is not necessary to draw a Decision Matrix or do a Net Present Value analysis....
Whether you evaluating a serviced or an in-house solution keep in mind the following:
  • Does it have the features that I need?
  • Is it simple and easy to install and use?
  • Do I feel comfortable with the interface?
  • Is it affordable? In the short-term and in the long run?
  • Is it scalable? Can it support a growing business?
  • Is it based on widely used and supported technologies? Will this vendor or provider be here tomorrow?
  • Are there any lock-ins? Can I take my data and change provider or solution?
  • Does it have sufficient documentation and support?
  • Does it give me sufficient freedom with my content and my mailing lists?
  • Is my data secure and protected?
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