State of the List Industry: Investment Is Crucial to Survival of List BusinessList brokerage commissions are shrinking, job duties are multiplying and profit margins are tight all over, but list companies need to step up and invest in their futures if they want to survive and prosper. That's the opinion of list business executives who talked with DM News about the state of the list business and where it's headed.
"List companies that do not have the ability to offer a multichannel solution to their customers will have a difficult time retaining and acquiring customers," said Joann Kropp, president of Walter Karl, Pearl River, NY, a Donnelley Marketing and infoUSA company. "Consolidation of companies will continue to occur, and in five years there will only be a few list companies remaining."
In the spirit of this week's Direct Marketing Association List Vision 2005 conference at the Marriott Marquis, New York, Kropp and other list professionals shared their insights in contributed columns and a question-and-answer article. Chris Paradysz, CEO of ParadyszMatera, New York, and co-chair of the DMA's List Leaders group, said investing in the future begins with money, but once it is spent the other key investment is time.
"I believe the lack of investment in our industry is what's going to impact the business the most, long-term," he said. "We know that an investment today won't be useful for at least a year, so we're in constant testing mode. Many times we fail, but it takes these failures to get it right. It takes money to get started but time to become successful."
Education and training of staff members are another area the industry must invest in, said Linda Huntoon, chair of the DMA's List and Database Council and executive vice president of Direct Media Inc., Greenwich, CT.
"On the vendor side, where are the new, aggressive, hardworking and dedicated list managers and brokers?" she asked in a contributed article. "For the most part, the list companies have cut their training programs and lowered the qualifications of the people they hire in order to keep up. In many cases their margins -- think about the list manager working on 10 percent of the final base cost of the names they manage -- haven't remained strong enough to run healthy businesses."
Huntoon said profit margins began to decline in the early 1990s, and list companies are trying to figure out how to stay afloat.
"We need to revisit the business model that evolved in the early days and adjust it to fit today's business climate," she said.
Kristen Bremner covers list news, insert media, privacy and fundraising for DM News and DMNews.com. To keep up with the latest developments in these areas, subscribe to our daily and weekly e-mail newsletters by visiting www.dmnews.com/newsletters