Dot-Coms Embrace Tried and True DM ListsDot-coms are storming list management firms in search of traditional direct mailing lists for old-fashioned direct marketing campaigns, supporting widespread reports that dot-comers are ready to learn from their marketing elders.
"Dot-coms have been using a great many postal files and direct mail methodologies to drive traffic to their sites," said Roy Schwedelson, CEO of Worldata Inc., Boca Raton, FL.
"I have to admit that at first I was skeptical because I always believed, coming from the direct mail side of things, that you should work within the same medium, but it seems that the well-targeted direct mail lists are working very well," he added.
The testing phase began last fall, said Linda Thompson, director of catalog list management at Millard Group Inc., Peterborough, NH.
"Dot-comers started using our core lists at a time when we really didn't even have a lot of Internet-sourced names on the market yet," Thompson said.
It is becoming much more common, but the move toward direct mail has been gradual for the dot-coms, said Fran Golub, senior vice president of list management at Walter Karl, Pearl River, NY, a division of Donnelley Marketing.
"It's been an education process; they don't know what's available in the direct mail world," said Golub. "Using direct mail is a whole new concept to the dot-coms."
"Dot-coms are representing a discernible slice of the pie," said Fran Green, executive vice president of American List Counsel Inc., Princeton, NJ. "In the last analysis we did, we found that dot-com mailers represent 10 percent of our total volume as opposed to less than one-tenth of a percent three years ago."
Donna Belardi, managing partner at ALC of New York LLC, which brokers for several dot-com companies, said many dot-coms enlist ALC of New York for help with direct mail campaigns.
"We look for mailing lists of consumers who like buying through online and offline channels," Belardi said. "We start with Internet buyers at postal address, then go to straight traditional lists that fit the buying behavior and demographic profile of the customer."
Golub and Thompson have both seen increasing usage from dot-coms on traditional files as well as Internet-sourced postal names.
"They are taking targeted postal files that are relevant to their sites and Internet-sourced names," Golub said. "Names with known Internet-related usage are preferred."
Thompson has found dot-comers to be very interested in catalog shoppers as direct mail prospects.
Although it may be a bit early to tell, according to Golub, it seems that the tests placed by dot-coms on postal files are leading to continuations.
"The dot-com mailers using our postal files are continuing at a rate of approximately 21 percent, meaning that of the test orders placed, 21 percent come back," Green said. "That is pretty good all in all -- about the same as other more traditional categories."
"Millard is starting to see some retests and continuations now," Thompson said. "I think that by spring and summer of next year we will be seeing a lot more activity from the dot-coms."
"Several [of ALC's dot-com] clients have had successful mailing campaigns and have come back a number of times," Belardi said. "We are seeing some good continuations, some rollouts and a lot of potential for a good future."
Schwedelson does not characterize the list use by dot-coms as testing at all. He said that they are coming in for large quantities initially instead for testing 5,000 names and slowly rolling out.
It is common practice within the list industry to require prepayment or a letter of guarantee on list rental orders for first-time mailers. This allows list owners to rent their files to dot-coms without the chance of financial risk.
"Most list managers are being very careful because many of the dot-coms will have a lot of funding initially, but there are also a lot of companies where that funding runs out very quickly," Belardi said. "We have been very cautious and protective of our list owners and, at least on a first-time basis, we are requiring cash upfront from the dot-coms."
Any smart company establishes a payment history before extending credit, she added.
ALC of New York, Millard and Walter Karl have not yet experienced payment problems from dot-coms.
Depending on who the brokerage house is and depending on who the dot-com is, Schwedelson treats the issue of prepayment differently.
"If it's somebody who started yesterday at a kitchen table, we're going to handle that differently than a Yahoo," he said.
Millard has even considered waiving prepayments on a case-by-case basis if there is a big opportunity, Thompson said. Ultimately, she added, the list owner has the final say.
List firms are not thinking of dot-com list rentals as a short-term way to make some extra money. In fact, most companies are forming Internet divisions, such as ALC Princeton's Impower, ALC of New York's NetMail, Millard InterActive and Walter Karl Interactive.
"We are really cultivating that business," Green said. "A lot of these dot-coms are starting to realize that direct is really the way to go and that an integration between postal and electronic marketing is really, really the way to go."
Millard is planning a direct mail campaign to dot-coms to promote its list rental files, Thompson said. "We see this as a huge opportunity for Millard."
"Many clients who ALC has worked with strictly on e-mail campaigns, are certainly not ruling out direct mail in the future," Belardi said.