State of the List Industry: Issues Have Changed Since '99

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When was the last time you compared the business environment for your company in 2005 with that of 1999? If you do, I'd bet that you would find a number of major differences. Here are a few that present critical issues for the list industry:

· The competition is much keener, and not just from other DM companies. Retailers have grown smarter about product offerings, promotions and making the shopping experience more satisfying. Online merchants have become more prominent in consumers' minds. And major retail chains have invested more into their online channels.

· List results are down from their peak 1999-2000 performance, and list sizes have declined considerably. A combination of reduced prospecting and increased reactivated house file mailings, along with greater use of promotional techniques like dollars off and free shipping, has changed the composition of many mailing lists. They're smaller, composed of fewer new-to-file names and are often more promotional.

· Online marketing has grown exponentially. Various customer and prospect marketing opportunities are now available, and it has become an integral part of most companies' marketing plans.

· More and more consumers buy on the Web. The Internet accounts for an average of 35 percent of sales for our clients, and it continues to grow.

· Consumers are more savvy, aided greatly by the Web.

Five or six years ago, almost all of our clients' marketing expenditures were for direct mail, either customer mailings or prospecting efforts. The marketing budget was essentially identical to the direct mail budget. Now, our clients' marketing plans are truly multichannel and multimedia. At a minimum, our clients must plan, execute and analyze at least the following different programs: direct mail, e-mail marketing, search engine optimization, paid search marketing and affiliate marketing.

Many companies also manage aggressive insert media and space marketing programs. This means that a company's marketing can encompass seven or eight discrete programs that must be integrated into one strategy.

And we haven't forgotten our roots. List brokerage and management remain key parts of all direct marketers' business models. Indeed, direct mail is still by far the largest portion of most companies' marketing budgets.

In short, the list business is not just the list business anymore. That's because lists are no longer the only acquisition medium available to DMers. The list business is now, more precisely, the marketing business. The most successful "list" companies will be those that position themselves as a valued partner to their clients in all of their marketing efforts.

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