A recent spate of announcements suggests that more list owners are acknowledging the benefits of a shift from inhouse to outsourced list management.
CMP Media, Manhasset, NY, first transferred its hi-tech lists to an outside manager when it tapped Worldata, Boca Raton, FL, in August 1996. Fellow hi-tech publisher Ziff-Davis, New York, followed suit in January 1997, when it chose Acxiom/Direct Media, Greenwich, CT. In the last two months, direct marketing firms The Polk Co., Detroit, and ADVO, Windsor, CT, and publisher Hearst Business Communications, Garden City, NY, have moved files to professional list management firms.
As more companies focus on the core competencies of their businesses, outsourcing has become an attractive option to grow list rental income more effectively than could be done with internal resources. The integration of technology and subsequent expansion of services by today's list managers makes replicating those functions within a large, corporate environment even more costly and difficult.
“The cost-benefit relationship has swung over to the list management side,” said Stevan Roberts, president of Edith Roman Associates, Pearl River, NY, which recently took over management of the 123,540-name Electronic Products subscriber file, which had been managed inhouse by Hearst for more than 40 years. “You are seeing much larger marketing budgets for list managers. It's a wonder there are any lists still managed in house.”
List managers can offer better customer service, increased market visibility and higher revenue because that's all they do. Former inhouse list managers agree that outside firms can devote more resources than they ever could.
“It's been great for us,” said Lynn Fischler, director of list services at Ziff-Davis. “We have a team of people at Direct Media handling all our lists and no one else's. We're getting the time and attention of a whole group of people.”
“Why not put the power of an organization behind the effort rather than it be a partial process in your organization,” said Barry Green, corporate circulation director at Hearst. “They can spend a lot of time and money on promotion. That adds a lot more power in getting additional renters to use your file. Their presence out there adds a lot.”
An outside manager handling list marketing lowers overhead and frees an organization to better use its resources in other areas. In turn, list companies justify spending as an investment in their core business and thus can budget more for database and modeling capabilities, for instance, than publishers focused on editorial content.
Even if that publisher were willing to invest in an inhouse management team, spending doesn't ensure success or even proficiency.
“List management has become a very sophisticated process,” Roberts said. “It is not something you can just wing. You have to know what you're doing. The cost of attracting, training and retaining talent is a significant monetary outlay.”
Peter Candito, who served as inhouse list manager for CMP for 11 years and now manages it for Database Marketing Concepts, Bohemia, NY, cautions against labeling the transfer of a few high-profile list properties to outside managers as a trend. While an outside list management company has a view of the entire picture, the list owner's market and the entire list rental market, inhouse managers tend to operate in a vacuum.
“That could be a good or a bad thing,” he said. “It points to focus but it also points to maybe not leveraging all the opportunities.”
The transfer of list management has gone on for years, and Candito predicts it will continue to occur whenever list owners deem the time is right. But as he said, “Whether it's a trend or just a continuing pattern that makes a lot of sense is a matter of semantics.”
