List Panel Discusses Strategies for Down Market
"It's no secret that the direct marketing industry has been in a recession since fall 2000," said Don Mokrynski, president of Mokrynski & Associates Inc.
As a result, mailers began relying more on house file names and less on prospecting, which led to shrinking list universes, he said.
Further, many new lists on the market lack the quality of a traditional direct response list, another panelist said.
"Many of the names generated by other sources are not as productive as traditional lists," said Adrea Rubin, CEO of Adrea Rubin Marketing Inc.
As for the proliferation of cooperative, compiled and private databases, panelists had mixed feelings.
These types of databases have been around quite awhile for business to business and are used successfully by most mailers, said Max Bartko, president of business to business at Direct Media Inc. Many list firms offer private databases to their BTB clients, he added.
In the BTB co-op arena, "Abacus has the lead as far as I can tell," he said.
But on the consumer side, the multitude of cooperative databases hurts response, according to one participant.
"Response is going down due to databases," said Lon Mandel, marketing services officer at ClientLogic Specialists Marketing Services.
He also noted that list brokers get about 10 percent commission on several of the co-ops and no commission from the Abacus co-op.
"We've helped to grow these databases, and we get half or none of our regular commission," he said.
The topic segued into the general pricing issues that list professionals confront daily. Panelists agreed that though some mailers need a price break to make a list work, some brokers ask for discounts that their clients may not need. Mandel called this phenomenon the "broker bluff."
"I tell my clients to be prepared to walk away," Rubin said about pricing negotiations.
Fee structure for list brokers and managers also was discussed. The traditional commissions of 20 percent for brokers and 10 percent for managers are often discounted, panelists said.
"You don't expect to work for a client and lose money," said panelist Mal McCluskey, CEO of List Services Corp. List companies need to look seriously at return on investment and focus on accounts that can make them money, he said.
All agreed that these days the rule seems to be more work for less money.
"Fee structure concerns all of us," Rubin said. "We should be paid for the performance and the work we do."
The moderator, Rosemarie Montroy, executive vice president at Direct Media Inc., ended the session by asking each panelist to name one positive thing about the current list industry.
The panelists all cited the ways in which technology has improved the industry, though Mokrynski also noted insert media as an area with room for growth and McCluskey mentioned strategic alliances.