DMers: No Gold in E-Mail List Prospecting
The reasons, catalogers claim, are few quality files and high prices.
"E-mail will be a bigger factor when better e-mail files are available to marketers," said Lynn Wunderman, CEO of co-op database marketing firm I-Behavior, Harrison, NY.
A lack of known mail-order buying behavior on e-mail lists is the biggest factor preventing direct marketers from using the files. And without that all-important piece of the puzzle -- lists of known mail-order buyers far outperform so-called compiled lists -- mailers are hesitant to test e-mail names.
"We all know that there's a whole psychographic component to people who are willing to buy things sight unseen for which there is really no substitute," Wunderman said.
Indeed, e-mail marketing list firm yesmail.com has more than 14 million opt-in e-mail addresses divided into 30 primary interest categories, but it still cannot get catalogers to test its file.
"Catalogers want to reach people with transactional level buying behavior," said Michele Frost, director of campaign management at yesmail.com, Chicago. "What a prospect is interested in is not enough. They need to know what they bought."
The main reason buyer names are not available is that most traditional direct marketers that have lists of e-mail addresses with known mail-order histories refuse to put them on the market, even if their customers have opted in to third-party mailings.
"Unlike the traditional world, people are very sensitive about their e-mail addresses," said Stephanie Healy, co-founder/CEO of e-mail lead generation firm WFSDirect Inc., Omaha, NE.
And therein lies the catch-22: No one wants to be first.
However, some consumer catalogers are reportedly getting their hands on direct response e-mail names by quietly cutting reciprocal deals with other catalogers.
"[Though] it's still a way off until we get some good quality e-mail files on the market, there are some direct deals and exchanges on response e-mail files going on now behind the scenes," said Frank Quaranta, director of media services at Millard InterActive, the Internet arm of direct marketing list company Millard Group Inc., Peterborough, NH.
In the offline list world, these relationships are common among mailers that want to exchange names selectively.
Meanwhile, to meet direct marketers' demand for known mail-order buyers, I-Behavior and Abacus, a division of DoubleClick, have created online branches of their anonymous co-operative databases that allow participating merchants access to known buyers' e-mail addresses for prospecting.
Abacus launched the Abacus Online Alliance late last year and claims it has grown steadily, while I-Behavior plans to launch its online co-op this quarter.
"There is an incredible amount of pent-up demand to gain the targeting efficiencies online that exist offline," Wunderman said. "The prospecting component is extremely attractive to our marketers."
Other ways for offline marketers to dabble in e-mail prospecting include participation in affinity programs -- where their offer is part of another marketer's house file mailing -- and lead-generation services that opt prospects in to receive marketing offers from specific mailers.
"We help our clients build their own permission-based e-mail databases," said Healy, whose firm runs the winfreestuff.com lead generation site. "For the cost of renting a list once, we are able to help them build a prospecting database that they can market to over time."
Meanwhile, direct marketing experts believe that e-mail list prices must come down, especially on files that do not offer quality information.
Average catalog lists rent for $100 per thousand names. E-mail cost-per-thousand rates are generally twice as high.
And while e-mail list owners are reportedly becoming more receptive to discounting their files, even that will not matter unless mailers can get them to work, Quaranta said.
"Lowering the cost is one side of the equation, but it still doesn't help the quality of the prospects," he added.
At least one cataloger agreed.
"They're asking double the price for something that performs one-tenth or one-one-hundredth as well as an offline response list," said Steve Schofield, marketing director at Old Glory Distributing Co., Westbrook, CT, a cataloger selling rock T-shirts and novelty items targeted at 16- to 25-year-olds.
Plus, he added, the marketer still ends up having to send out a physical catalog as well.
Old Glory does not prospect using e-mail, nor does it rent out its e-mail list.
For now, experts say, e-mail will continue to be a better customer retention tool than a prospecting tool.
Wunderman added that, although e-mail will never replace traditional direct mail, it has great potential as a supplemental prospecting vehicle.
"E-mail could be a viable off-season prospecting vehicle for marketers that only mail a few times a year," she said. "Even though they may not have a catalog in the mail, their Web site is up 365 days a year."