Here is a new take on an old adage. The more things change, the more things change.
The list business is no different. I remember seeing a mailing list order for 4,000 veterinarians written up in 1921. Total cost — $4.25/M or $17.00 — Boyd City Dispatch was the list owner — labels delivered in three or four weeks.
But let's forget all the changes that have taken place in the last 80 years. Instead, think of what we can look forward to in the intermediate term — say five years.
Prediction No. 1. As database technology advances, I envision a plethora of databases. List owners will recognize the value of this rental income. Some list owners report this income as a major contributor to their bottom line. As business firms increase in number, more rental lists will come into existence. About 5 percent will be large databases. This means more opportunity for brokers and managers and more choices for the mailers.
Prediction No. 2. List owners, anxious to reduce their mailing costs, will segment their files to mail less. In order to segment, they will need to add more and more data. The RFM theory (Recency Frequency Monetary Value) will continue to dominate the selection process but further qualification will include how recent, how frequent and how much money. The net or net net or triple net is already costing the list owners valuable income. I foresee an increase in the passing charge rate as a percentage of the rental rate rather than a flat per thousand cost.
Prediction No. 3. List owners are appending more demographic information to their files. The reason is twofold: First, the owner-mailer can make additional decisions and test different combinations of information in his ongoing quest to beat the control percentage. Secondly, he will reap greater profits from list rentals because of extra selection charges plus the fact that more renters will search out the list, which will offer more selections. When the census is completed next year, an entire array of new and accurate information is available for appending.
Prediction No. 4. Psychographic data has assisted many thousands of mailers in their thirst for new or improved testing techniques. The fundraisers, publishers, mail-order houses, travel and tourism and insurance marketers are the primary users of psychographic data. Warranty cards, questionnaires and telephone interviews, plus control circulation magazine questionnaires, will increase substantially in number. Advertisers on the Internet will probably be faced with restrictions in gathering an abundance of personal information. State and federal legislation will continue to protect the consumer from unwarranted incursion into their privacy.
Prediction No. 5. As mentioned in my third prediction, the census will be more comprehensive than ever before. More people will be found, more information will be updated. Such data will permit the small local mailer to append valuable data to his existing list. In so doing, he will mail smarter by mailing less. The big consumer databases will undergo major changes since the 1990 census is now virtually valueless. A wholesale change of information is mandatory. Look for a master increase in computer service bureau activity.
Prediction No. 6. Instant counts and instant delivery of lists will be the norm in five years. You can see it now. Data is delivered on fiber optic lines at an increasingly faster speed. Computer Service Bureaus and inhouse computer rooms of list owners will obtain the software to provide list brokers with instant counts on the Internet. Delivery will be made by modem in seconds. Diskette, mag tapes, etc., will take a little longer. Speed is imperative. Speed equals profits. This is another boon for the service bureaus who act positively to this change.
In addition, the increase in e-mail lists will have its effect on the industry by reducing the printing of circulars and envelopes. Addresses and phone numbers are not necessary for e-mailers now but look for enterprising firms to locate this information. This will affect all of us.
I foresee a major improvement in the appearance and promotional ability of e-mail. Videos and music are currently being developed to accompany more attractive e-mail messages.
Prediction No. 7. The manager and brokers role in this computer environment remains the same. There will be a need for computer literate personnel to contact renters and owners who need legitimate list information. I suggest that it's more important for these list middlemen to understand the marketing function. Knowing what lists will work and which ones won't is far more important than computer clerking.
Prediction No. 8. Mergers and acquisitions will continue unabated. I envision the demise of many small list brokers, compilers or managers. List exchanges are reducing the middleman's revenue. Medium and large size list companies are being absorbed by the giants. It's been happening during the past five years and it's sure to continue. Compilers want to buy the customer lists of their competition. Computer service bureaus buy other service bureaus. Economy of size is paramount. Acquisitions always reduce the employment rolls. We have seen it in the ad agency area, in the magazine publishing area and now in the list and service bureau arena.
So, stay on top of the changes. Adapt quickly. List prices will increase 20 percent in five years. But, the cost of operations may increase 30 percent. This extra cost may bankrupt the smaller companies. Perhaps they will flock to the acquirers (i.e., Snyder, Acxiom and InfoUSA).
We will see the changes occur. How we react will decide our success or failure.
Robert Dunhill is president of Dunhill International List Co., Boca Raton, FL.
