With the economy in a state of watchful recovery, the list industry can anticipate new opportunities, growth and challenges this year. DM News discusses some of the key issues with Mal McCluskey, CEO of List Services Corp., Bethel, CT.
What kind of growth can we expect for the list business in 2005?
To begin with, the travel industry is on the brink of a rebound. Our brokerage group has seen a number of travel mailers come back to place orders for their 2005 campaigns.
Insurance, for example, is still strong. Financial services, including the banking industry, which has experienced so many mergers and acquisitions this past year, will be in the mail to build brand identity, customer retention and new business. Personal wealth management and home business opportunities are still formidable and will continue to grow in 2005. Consumer publications are executing aggressive postal and e-mail campaigns and are using premiums in both direct mail and online for new acquisition.
Inserts are becoming a bigger piece of the pie, with traditional mailers including inserts, bind-ins and blow-ins in their 2005 mail plans. Our catalog clients report that business is on the move and prospecting is back in vogue. Our fundraising group had a good year in 2004 and is projecting similarly in 2005. However, with the tragic disaster in Asia and the great amount of giving to tsunami-hit countries, there will be new and greater challenges for other fundraising causes.
How many lists are on the market?
There are more than 51,000 lists, databases and insert media programs on the market today. However, privacy issues, state and federal legislation, the continued pursuit and penalties imposed on those in noncompliance and the reduction in telemarketing names all contribute to a reduction of hotline names available. This is a genuine concern by mailers seeking that fresh source of prospects for customer acquisition.
Are databases a bigger component of the business?
As a database management company, we consider it our charge to dig deep into our clients’ master files and carve out segments to meet the needs of emerging markets. As an industry, list owners and list managers have the ability to drill down into a list source to uncover new names, segments and even older refreshed names to make them available for list rental.
Thirty-three percent to 50 percent of business-to-business and business-to-consumer mailers using in-house databases are planning to analyze and rebuild their databases for campaign mailings in 2005, and large universes of well-tested names will become an even more important source for modeling.
Are e-mail lists gaining currency?
There’s no doubt that what we have seen in e-commerce sales in the past five years will continue over the next five years and beyond. Higher confidence levels in shopping online are feeding the domino effect of online sales.
Integration of all channels into the marketing mix gives life and new opportunities for sources of names. As e-commerce matures and quality lists are developed from traditional direct marketers, higher response rates will follow. Heavy direct catalog and retail store catalog mailings will continue to drive buyers to Web sites at twice the rate as non-mailers, and all this translates into increased numbers of names available.
In 2004, there were more postal and e-mail combination lists available for exchange, and 2005 will see more of the branded names making their e-mail lists available for rental. We see a dramatic move to online ordering from direct mail sources, and higher response rates to online offers will expand the number and size of higher-quality e-mail selections this year.
List pricing continues to be an issue, right?
As both a list management and list brokerage company, we have participated in net name arrangement negotiations for our management clients and as brokers for our mailers.
Across the industry, mailers are attempting to push the boundaries, seeking the best deals, and list owners in some cases are more willing to take a look at mutually beneficial arrangements. Portions of buyer files that may not previously have been available may be open for rental or exchanges and should be revisited. In publishing, postal and e-mail list pricing combinations are becoming more common.
Do you expect companies to mail more this year?
We anticipate that some mailers are planning increased mailings as a result of the U.S. Postal Service’s expected first-quarter 2006 rate increase. In addition, for the first time in history, First-Class mail this year is projected to fall below Standard mail as the largest-volume product, according to the USPS. This shift in the mail mix will result in smaller profit margins for the postal service, as Standard mail takes over the top position.
E-mail Mal McCluskey at [email protected]