Hi-Tech Lists Fraught With Peril

Hi-tech direct mailers have reason to worry. Several trends point to a universe of direct mail-generated hi-tech prospects declining in both quantity and quality.

As mergers continue, the number of hi-tech publishers is shrinking. When one publisher acquires the properties of another, the usual result is for a number of the acquired publisher's magazines to be folded into the buyer's titles.

Some of the acquired publisher's titles may be folded altogether. And the acquiring publisher ends up cannibalizing the subscriber base of the publications it bought to increase the subscriber base of its core publications. The result: fewer lists and databases for hi-tech direct mailers to choose from and test against one another.

The increasing use of telemarketing to acquire and re-qualify subscribers poses another threat to the hi-tech direct mail universe.

Although it can give better initial response rates and eliminate mailing costs, a telemarketing qualification doesn't confirm a valid mailing address; it only confirms a valid telephone number.

A mailed qualification card can't be returned unless it reaches the prospect in the first place, proving that he or she is mailable. But telemarketing qualifications often don't capture changes in mail stops and other critical address information. The result: Direct mail response rates drop when mailings end up in the “dead-letter” portion of corporate mail rooms and get thrown away instead of reaching their target. Print ad response suffers when readers don't get their magazine for the same reason.

This results in a vicious cycle: As more direct mail-generated subscribers become conditioned to respond to telemarketing, publishers are forced to telemarket more to maintain their rate base. Why fill out a lengthy qualification card when someone will take the information from you in a quick phone conversation?

Experience shows that telemarketing-generated subscribers respond to direct mail at a much lower rate than direct mail-generated subscribers. So what starts out costing less, winds up costing everyone — the publisher, the advertiser and the mailer — a whole lot more.

Many hi-tech publishers are turning to the Internet to acquire and re-qualify subscribers. And many hi-tech catalogers are generating as many orders on their Web sites as they are with their paper catalogs.

Preliminary results indicate that Internet respondents reply to Internet offers, not direct mail. This should come as a no surprise to seasoned direct marketers who know the importance of renting lists with a history of responding by mail. Look for more of these names on hi-tech subscriber and customer lists.

Hi-tech publishers are increasingly using the Internet to qualify subscribers. Techies seem more willing to answer qualification questions by clicking on choices in an e-mail then filling out qualification cards. Sending the qualification forms via e-mail is cheaper than paper mail. And Internet-captured responses eliminate the expense of having response data from paper qualification cards keyed in manually.

BPA rules sometimes work to compromise direct mail-list quality. Most people are aware that controlled-circulation publications are required under BPA rules to renew or drop subscribers every three years.

However, few mailers know that the publisher may send a “short form” with a quick yes/no check-off box to re-qualify a subscriber as a one-year name and still use their previously supplied demographics for up to three years.

In the hi-tech world, three years is an eternity. Prospects change job functions and titles. Operating systems and technology platforms become obsolete. If you are selecting a list based on demographics, make certain the demographics, not just the subscribers, were qualified within the past 12 months.

For example, XYZ Co. wishes to send a mailing to computer executives still using Novell NetWare; the objective is to entice them to move their networks to Windows NT. XYZ's list broker selects a list of information systems professionals who responded to a publication within the past three months and makes a further selection of only those who use Novell Netware. The executives probably will receive the mailing because the names and addresses are very recent.

The problem is that the publisher collected the demographics (Novell NetWare installed) 36 months ago, and the company has long since migrated to Windows NT. Naturally, mailings based on products that run on platforms the prospect no longer uses pull poorly.

What can hi-tech direct marketers do to combat these declines in the quality and quantity of hi-tech lists?

* Take a look at the publication's BPA or Audit Bureau of Circulation statement. It shows how many names are one, two or three years old, and how many names were direct mail- or telemarketing-generated. When renting controlled-circulation lists, ask your broker to select 100 percent from “one-year personal written request” names only.

When using paid-publication or mail-order responder lists, request “100 percent one-year paid direct mail-generated” names only.

If you are using a demographic select, omit any “short-form” respondents, regardless of how recently they've replied. The more telemarketing-acquired names on the list, the lower your direct mail response rates are likely to be.

* Conversely, if you are planning a telemarketing campaign, be sure to request “100 percent telemarketing respondents.” The telephone numbers on a list generated via telemarketing will be much more accurate than those generated through direct mail.

* Use best-customer models, mailed models, data mining and other modeling techniques to select segments of files most likely to generate maximum response. Avoid mailing to prospects that don't match your customer profile or respond to your type of offer.

* Explore alternatives to paper-based ads and direct mail. The majority of hi-tech prospects are Web-enabled. Many hi-tech files contain opt-in e-mail addresses, allowing you to carry out highly targeted mailings over the Internet. Potential buyers can respond by e-mail or even go to your Web site to make an inquiry, review product information, or place an order. Why not encourage them to do so?

Stevan Roberts is president of Edith Roman Associates Inc., Pearl River, NY, which provides list brokerage, list management and database and Internet marketing services.

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