As we look at the consolidation taking place in the direct marketing industry, many long-time marketers, from list brokers and list managers to presidents of companies, are wondering, why is this happening so often and so rapidly? Why are some of the leading companies in the industry being bought and consolidated under one umbrella, such as this year’s purchase by InfoUSA of the Millard Group, Mokrynskidirect, Rubin Response and Digital Connexxions, which joins them with Walter Karl, Edith Roman and Yesmail?
As is evidenced by the purchase or merger of some of the most well known names in the catalog and publishing industries by venture capital companies, the answer is that our fragmented industry is now facing economic challenges, changing the fundamental structure of how business must be done.
The direct marketing industry has and is continuing to evolve so rapidly that being a single-solution provider, such as list brokerage or list management, is just not enough to enable a traditional list company to thrive and grow profitably.
Our clients are looking for strategic multichannel solution consultants, requiring that their vendors become a single source of quality resources and business functions, such as postal and Internet services, database analytics and modeling, CRM platforms, data hygiene, enhancements, list management, list brokerage and other related services.
The integration of all of these resources under one umbrella offers advantages both to the list company and to their clients.
First, the list company is able to market its products and services to a much broader and diversified client base in many different verticals.
Second, the list company has the ability to offer a host of unique products, data and services to its clients, which it could not do as a single-solution provider.
Third, these services permit the list company and client to focus on both acquisition and retention solutions.
Fourth, the list company can invest in the newest technology and training techniques, as well as hiring skilled talent with the most experience.
Fifth, it can now offer their clients the ability to have their lists and programs cross-sold to an expanded roster of potential users through the corporate umbrella.
Finally, the client can maximize its ROI by picking and choosing the most valuable, cost-effective, applicable services available from one vendor, instead of negotiating with several. This helps the client leverage its spending.
Nothing is cut and dry in our constantly changing environment. This is not to say that big is always better, but scale does provide leverage, financial stability and resources that a boutique company may not be able to provide. Specialization in a unique vertical or service is a good thing, and there will always be a place for that in our industry. But in responding to the issue of consolidation in the direct marketing industry, I think leaders in our industry will agree that our aim is to face the challenges together, and to make the industry not just survive, but grow and prosper for many years to come.