Email Service Provider versus In-house

A common question among professional senders is: should I use an Email Service Provider (ESP) or can I send my emails in-house? To find a good answer can be difficult. There are a lot of ESPs and a lot of software vendors ready to help you, but where to get objective advise from? My customers are senders that use ESPs, in-house senders, and the ESPs themselves. In this post I will try to help with some considerations.

Some senders think that ESPs are essential to good deliverability, as if they are a gateway to email delivery nirvana. Well, ESPs certainly understand and monitor deliverability, and they do help getting the technical pre-requisites right. But in the end it is the sender’s list and content what drives the deliverability, and infrastructure is not more than an important pre-requisite.

Quite the opposite, some think that sending in-house just requires a server with email software. As soon as you start sending more than a few thousand emails you need to know about best practices, provider policies, and deliverability management. This doesn’t have to be a hurdle, since there are resources and consultants to help, but it will either cost effort or money to address these matters.

So what are the advantages of using an ESP? I think the most important are the following:

  • Low setup costs
  • Easy provisioning
  • High availability
  • Deliverability management
  • Email marketing support

And for in-house infrastructure, the following are important advantages:

  • No CPM (per mail) fees
  • Tight integration
  • Dedicated system resources
  • Full control over deliverability
  • Data remains in-house

How this works out in the situation of a specific sender depends on the situation, and how one values certain aspects. With regards to the costs, volume is very important. The ESPs charge a rate per thousand (CPM) of about € 0,5 to € 3. The one-time costs of an in-house system typically vary between € 5K and € 30K and the monthly costs between € 500/mo and € 1500/mo.

If you ask me, senders that send less than one million per month are most often better of using an ESP. Above that, it can be interesting to send in-house. Because it is cheaper in the long run, because it integrates well with other in-house systems, or just because a self-owned system is of strategic importance.

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