List Vision: Where Did All Our Profits Go?
I came to direct marketing in the mid-1980s from publishing, when direct mail was rocking and rolling and data was king. Somewhere along the way, energy levels became lackluster, data lost its value and the once high-margin list business became a thing of the past. We could blame Sept. 11, the anthrax scare, postal rate increases, privacy concerns, the Iraq war, a sluggish economy or even exchange databases in the catalog and publishing industries.
Those of us who exhibit at trade shows continue to witness less delegate attendance and general disinterest in industry events. Those of us in list sales are experiencing a fierce competitive landscape. Those of us who are list owners see less value given to our data and watch longstanding clients mail in smaller volumes. We could blame all of the above, but I think many problems in the list business we created ourselves.
In recent years, it has become tougher to flourish in lists, with acquisition costs rising and data becoming more of a commodity. The cost of doing business at times has become prohibitive.
Why is this happening? First, in desperate times many companies would rather give their data away in order to secure business. Second, with so many companies whole-selling data in the market, the inexperienced buyer, who does not do due diligence, cannot distinguish a list owner from a list reseller. Those of us who spend considerable money each year acquiring and scrubbing data as well as branding our companies find this indifference by the buying public rather unnerving. The result: We compete against ourselves, for smaller orders, for less money and less profit.
How can we protect our intellectual property and our profit margins yet still deliver a quality product?
First, it is imperative that we set industry guidelines or protocol so the average list buyer, whether broker or mailer, can distinguish between a reseller and compiler/owner. At least, if buyers want a discounted product, they would know beforehand that they may not be buying from an owner and perhaps not be getting the best product. Just because someone hangs a sign and sets up a booth at DMDNY does not mean they have an established track record nor a loyal clientele, and the inexperienced buyer of data needs to know this.
Second, we in the list business must establish price point benchmarks for the data we rent or sell. Competition is healthy and keeps us on our toes, but simply slashing price to get the sale does us all an injustice. For example, we launched a telco, new connect (new mover file) in 2003. In just three years, we have seen our published rates halved and now we have 15 or more competitors in the space. Everyone deserves a piece of the pie, but not at the expense of misleading the buyers and devaluing our products into oblivion.
One might say this is well and good, but does this really benefit the end user, too? By distinguishing owners from resellers, mailers could better scrutinize their list rental decisions. List owners would be placed higher in the merge/purge process where they belong and many of the "pretenders" would be eliminated from the process. Fewer lists being ordered would drive mailers' costs down.
And, as for maintaining consistent price points, we all could forecast sales more accurately, and over time, all parties could reflect more consistent profits in our respective businesses.