It’s sort of the best of times and the worst of times,” says Larry May, CEO of Direct Media, about the state of the lists marketing industry. With seemingly endless ways to market directly to the consumer, experts say today’s lists business is at a crossroads — marketers must branch out to remain relevant and to compete in an uncertain economy.
“From a marketing perspective, the lists and database business is more exciting than it’s ever been,” adds May. “There is so much access to information now.” But list marketers, like marketers in any other sector, must also contend with the sluggish economy. “We live by the successes and struggles of our clients,” he says. “Nearly everyone is struggling right now. A difficult economy makes it difficult for our clients, which means it’s difficult for us.”
The backbone of direct marketing
List companies, which both manage consumer and business lists owned by other companies and offer list brokerage services, have been the backbone of the direct marketing industry — every direct marketing campaign requires a list of targets. Nextmark Inc. currently indexes and tracks around 75,000 mailing lists from more than 1,200 sources, giving a sense of the size of the industry.
Since the first Sears, Roebuck and Co. catalog was mailed in 1893, consumer lists have fueled direct mail efforts. But today, list companies are incorporating newer digital mediums — such as mobile marketing, social networking and other Web 2.0 avenues — into their businesses, in addition to focusing on their core competencies. “There are so many new ways to reach consumers,” says May. “Even e-mail marketing is far more sophisticated today than it was a few years ago.” Direct marketers, he insists, must evolve as new technology and media emerge.
Given the multichannel marketing that list companies now employ, the term “list companies” may be irrelevant, says Jay Schwedelson, corporate VP of Worldata, and chairman of the Direct Marketing Association’s List and Data Advisory committee.
“Ten years ago, it was pretty cut and dry,” he notes. “There was direct mail, telemarketing and limited other forms of direct marketing. But the breadth of DM media options now is all over the map. The lists community as we’ve known it, he maintains, is no longer: “Now it’s the DM media community.”
That, he explains, is “the big game changer” — marketers must be experts on emerging media, while still offering their traditional services.
“I think ‘list companies’ is an outdated term,” he says. “If you are just brokering lists and nothing else, you’ll likely not be around in five years.”
While traditional list companies must become experts in new sectors, they shouldn’t be afraid to stress their years of experience in the direct marketing field to potential customers, he adds.
“We are now competing against companies we were not competing against in the past,” says Schwedelson. “List companies should stress that we have longtime direct marketing knowledge that new companies don’t have.”
Despite all the digital media at a marketer’s fingertips, a good portion of the industry is still direct mail. May and Schwedelson agree that while direct mail will become a smaller part of the entire DM universe, it will never disappear.
“I think there will be a certain core constituency who will always respond to direct mail,” Schwedelson believes. “But as the Internet generation gets older, that direct mail constituency will continue to get smaller.”
The impact of do not mail on lists
One factor that dramatically affects the direct mail universe, however, is do-not-mail legislation. Nineteen states have proposed a form of do not mail since 2007, although none have passed. There currently is no federal do-not-mail law. State measures have been supported by various environmental groups, such as Forest Ethics, which released a report this month linking direct mail with global warming.
Whether focusing more on the digital side of the business or on traditional direct mail, list companies must always strive to mail more effectively, says Susan Rice Rappaport, president of customer acquisition for the American List Counsel.
She calls consumer privacy issues “potentially handcuffing,” but adds that as long as direct mail is targeted, specific and relevant to consumers, list companies will still benefit clients.
“Digital is gaining market share, but we can’t forget out core competencies,” she says.
And, emphasizes May, companies that retain their core competencies while effectively embracing new mediums will likely be successful.
“The market is constantly evolving — it’s more consumer-driven and less in the control of the marketer,” he says. “We have to find ways to remain relevant.”