Economy spurs list price drop
List prices drop across categories
For the first time in more than 20 years, list prices have declined across the board, according to Worldata's Fall 2008 List Price Index.
“It's unprecedented,” said Worldata SVP Ray Tesi. “There is no doubt that the direct marketing industry as a whole is taking a hit, mirroring the economy as a whole. I also have no doubt the industry is going to rebound.”
Permission-based e-mail business-to-business, the highest-priced category with an October 2008 straight average price of $293/M, also took the biggest hit, with a decrease of $12/M from last year. Business-to-consumer lists were a close second, dropping $11/M from the previous year. This category also reflects the largest percentage point decrease — nearly 7%.
Tesi said it was surprising to see prices decrease in all categories because “it's usually in flux — there's one category up, one category down.”
The smallest decreases in price occurred with attendees/members, consumer book buyers and public sector, each dropping $1/M from last year. The lowest percentage loss occurred in the public sector; that drop was slightly more than half a percent.
Public sector and newsletters are the next highest-priced categories, with a straight average price of $174/M and $165/M, respectively. For newsletters, this represents a $10/M drop from last year.
Tesi said international lists are now at a premium, because more US marketers are using them.
This was the first year Worldata tracked permission-based international e-mail, and prices averaged $420/M “There's been significant growth in that area,” Tesi said.
Lead generation programs also dipped in cost. Cost-per-lead consumer programs averaged $1.15 per lead, a 4.17% decrease from last quarter; cost-per-lead b-to-b programs averaged $4.80 per lead, a 2.4% decrease from last quarter; and whitepaper syndication cost-per-lead programs showed an average of $12.50 per download, a 3.85% decrease.
When asked about the general economic health of the list industry, Statlistics VP Kayle Plotkin noted that, with companies scaling back marketing efforts and tightening their budgets, it has become more difficult to negotiate list rental orders.
“Mailers are being much more careful about what they're mailing and how much they're mailing because of their own budgets,” she said. But, she added, “I've seen these economic cycles before, and it does turn around.”
The value of mergers and acquisition activity during the third quarter of 20 has also dropped, according to a report from the Jordan, Edmiston Group Inc.
The aggregate transaction value of M&As is down nearly 70%, the report said. However, the number of deals has remained relatively the same. The total of 619 M&A transactions for media, information, marketing services and related technologies through the first nine months of 2008 is within a few percentage points of the same period in 2007.
Database and information services was one of the most active sectors over the past three quarters, with a 64% increase in number of deals over 2007 levels, yet nominal transaction values declined. Value for marketing and interactive services transactions reached $7.3 billion for the first nine months of 2008, off more than 60% over the same period in 2007. The number of deals rose 13%.
Tolman Geffs, managing director of the Jordan, Edmiston Group, said the slowdown in larger M&A transactions can be attributed to the economy, because major corporate buyers are cautious on the 2009 outlook for consumer, enterprise and advertising spending, so they have been more risk-averse on larger transactions.
Also, financial buyers have seen credit dry up for big, highly leveraged deals, even though smaller buyouts are still being completed with moderate levels of debt.
“In the mid-market range, this creates a pretty significant advantage for financial buyers whose fund parameters and growth investment orientation allow for deals with a greater level of equity,” Geffs said.
A StrategyEye report said that venture capital and M&A investment is down over the past three months across the digital media sector. Total value was $45 billion.