List Firms Rethink Operations for Net Age

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NEW YORK -- List companies are struggling to come to grips with their own inefficiencies and the potential of the Internet, said attendees and presenters at List Vision '99 here last week. The conference, which in previous years was called List Day, focused on the factors pressuring companies to rethink the way they do business.


"Direct marketing and the Internet are linked together, and they always will be -- and those who are not playing in both sides of the game are going to be lost," said Jeremy Barbera, president of marketing services company MSGI, New York.


Speaking at the "Industry Implosion -- Who's Eating Who?" session, Barbera said more of his company's clients expect to be provided a range of online and offline marketing services, which is one of the factors driving the merger activity in the list industry. But list companies haven't been able to simply transfer their offline functions into the online world, in part because of the dearth of available e-mail lists.


"There's not a lot of prospecting [on the Internet] because there's not a lot of good lists out there," said Direct Media Inc. chairman Dave Florence, who spoke as part of the "Predicting and Forecasting the Future of the List Industry" panel. He said it would probably take another two to three years before enough good e-mail lists become available for large-scale prospecting to become practical.


Ben Perez, president of Millard Group Inc., Peterborough, NH, who also spoke on the panel with Florence, said few major consumer brands have put their lists of e-mail names on the market like they have with their other customer lists. Other attendees said the owners of business lists also have been reluctant to market their e-mail address compilations.


"Most [list owners] haven't even put their big toe in the water yet when it comes to e-mail," said Barbara Gill, president of Chessie Lists Inc., Silver Spring, MD, which handles only business-to-business lists and specializes in list management. "They have the names. They're just not giving them to us."


Gill said she thought many list owners are hesitant to market their lists of e-mail names because they are afraid marketers will overuse them, which is the same reason many professional associations no longer market their lists of telephone numbers and faxes, she said.


The desire to gain a foothold in cyberspace has been one of the driving factors in the list industry's consolidation. Ralph Stevens, president of Stevens-Knox & Associates Inc., New York, said MSGI's Internet capabilities played a role in his decision to sell the company earlier this year.


"MSGI just seemed to have all the right things we were looking for," he said, speaking on the "Industry Implosion" panel along with Sheldon Zaslansky, president of Walter Karl, New York; Mark Bailey, data content coordinator at Acxiom Corp., Conway, AR; and Barbera of MSGI. "We wanted to do things with the data and we wanted to do things with the Internet that we just weren't capable of doing [on our own]."


The Internet is not the only factor affecting list brokers and managers, however. Donn Rappaport, chairman/CEO of American List Counsel Inc., Princeton, NJ, and this year's List Leader of the Year, said the shift from customer acquisition toward customer development also promises to affect the list business.


"We have to rethink what our role is with our clients. The emphasis has been on customer development, and we have always focused on prospecting," he said. "[But] nobody can do what we do in terms of customer development."


Rappaport also tried to put a positive spin on the Internet's impact, saying it presented as much of an opportunity as it does a challenge.


"I'm tired of people asking, 'What's the affect of the Internet on the list business?' " he said during his acceptance speech. "It's positive. It needs us as much as we need it."


Speaking on a panel at List Vision, Rappaport predicted online and offline list management and brokerage eventually will merge even closer.


"I think there's going to be a convergence between direct mail and the Web," he said, noting that America Online has been one of his largest customers for offline list brokerage this year as the Internet service giant has used traditional mail vehicles to drive people online. Conversely, Rappaport said his company has conducted e-mail campaigns for book seller Barnes & Noble to drive people to its brick-and-mortar stores.


Keynote speaker Richard Karlgaard, publisher of Forbes magazine, also had a positive outlook on the future of list companies and direct marketers in the Internet Age, although he cautioned that new competition can crop up at any time.


"It's really your opportunity to bring great value to your business," he said, "but there are a lot of 23-year-olds out there with venture capital that have the same idea."


In addition, several leaders said the antiquated systems used by list companies are preventing them from operating as efficiently as they could.


"We're still in the '50s as far as paperwork goes," Florence said. "There is too much inefficiency in our business."


Some panelists suggested that bold technological improvements must be made to streamline the processes that list companies use to market and broker their lists if the current operators want to remain competitive.


"We need to have someone say, 'You will do your data in this format or we will not do business with you,' " said Scott Chilcutt, founder of the Marketing Information Network that is now used as a the standard list database tool among brokers and managers.


Zaslansky summed up the prevailing attitude at the conference: "Our industry is sort of the Gumby of marketing," he said. "We have to bend to whatever the market wants us to be."
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