Technology and privacy are two sides of the same coin that list companies need to bank on to ensure future success in the multichannel marketing environment.
Technologies such as search engine marketing and e-mail have presented opportunities to reach customers and prospects while the counterpoint has been legislation such as CAN-SPAM and the national do-not-call list. List companies have needed to tread cautiously, yet keep up with the latest targeting methods.
“Privacy and governmental regulation will continue to be concerns for the industry,” said Darlene Ellman, executive director of list management at Rubin Response Management Services Inc., Schaumburg, IL. “When looking at the changes over the past 10 years, it is difficult to imagine the industry 10 years from now. Technological advances, possible governmental regulations and changing demographics will all have a hand in revising the industry.”
DM News asked Ellman and other list professionals about key issues and the future of their business. Here are their answers.
What are the biggest issues facing list firms today, and how are you dealing with them?
Joann Kropp, president of Walter Karl, Pearl River, NY, a Donnelley Marketing and infoUSA company: One of our biggest issues are clients requesting a reduced commission or other list companies lowering their commission to get the list management or list brokerage contract. Every time that happens it affects the rest of the industry as well as reduces your ability to truly service that client the way they should be serviced.
For example, marketing a list. The list company invests a large portion of their commission to pay for trade show representation, media kits, print, online, fax, face-to-face presentations and direct mail promotions. If the commission is cut, something suffers. Don’t forget about staffing up to ensure that the expected level of customer service is met. When it’s explained to our prospects and clients the down side of the reduced commission coupled with the added value proposition from products and services we own and bring to the partnership, prospects usually weigh it and quickly realize that they can win in other ways rather than us cutting our commissions.
Steve Mertel, account executive in the list brokerage division at Rubin Response Management Services: Some of the issues that we see for our consumer, business-to-business and high-tech clients include lack of new files on the market and the rise of affinity and search engine marketing. We are searching for lists that are not openly available on the market that we can offer our clients and focusing on more vertical industries that are proving to be rich in response.
Chris Paradysz, CEO of ParadyszMatera, New York, and co-chair of the DMA’s List Leaders: In previous forums, I’ve stated that I believe privacy remains the greatest challenge to our business, but so much has been written about this that I’ll leave the issue aside here. Beyond this, I believe the lack of investment in our industry is what’s going to impact the business the most, long-term. Unlike any other, the media brokerage industry (and list business specifically) is well positioned to evolve its role to becoming a partner with its clients in the purest sense: that partner goals are aligned with client goals. From how we get paid to the capabilities we develop, our priorities should be exactly in line.
Because we are responsible for uncovering, developing and targeting the appropriate market, media and mix, as well as planning and forecasting how it will perform, clients need our counsel to help them solve their marketing challenges. That means the Internet, print, radio, partnership marketing and other forms of alternative media sources should be part of our future. Clients want to know how these media can work together and how they will impact their profits.
At ParadyszMatera, we’ve taken that challenge seriously. But it takes real money and continued investment to innovate what works. More than this, though, is the time it takes. We know that an investment today won’t be useful for at least a year, so we’re in constant testing mode. Many times we fail, but it takes these failures to get it right. And that’s all before the client sees it. From there, the art and science of tailoring and improving it takes over. It’s not our job just to “get the lists.” It’s our responsibility to help our client’s business grow in size and profits.
Adrea Rubin, CEO of Adrea Rubin Marketing Inc., New York: A challenging issue facing direct marketers is the continuing lack of new direct response-generated lists being brought to market. Every direct marketer should test multiple transactional databases, which could become an essential component of campaigns in the future. List brokers must become proficient in the understanding and use of this data, from ZIP+4 summarized credit statistics to self-reported consumer interests.
For example, catalogers need new unique sources of responsive names to supplement their use of co-op databases. Financial services and insurance mailers use this data successfully. They select age, income, automobile insurance expire date, credit card new issues and type of cards to reach their target audience regularly. Other mailers should follow their example and at least test the concept.
Mark Traverso, vice president of list management, new business and e-commerce at Lighthouse List Co., Pompano Beach, FL: Multichannel marketing has become the buzzword of our industry. And we have seen list firms move into this arena with the emerging availability of e-mail files. Other industries do this better, such as retailers. They have discovered that direct mail and e-mail promotions often direct traffic to their stores. The issue is how marketers can do what they do well with traditional marketing efforts in a relatively new area such as e-mail.
How has your business changed?
Ellman: In addition to concerns about privacy and governmental regulations, the economic scene of the past three to four years has had a definite effect on the industry. Mailers have tightened their budgets, and list owners have a greater need for rental revenue. Brokers are looking for better pricing, and managers must walk a narrow path in order to offer competitive pricing but also meet the needs of their list owners.
Linda Sandler, president of Adrea Rubin Management: We have seen that list management revenue is no longer found money to a company’s bottom line. It has become and will stay a true P&L line item that clients bank on. Since mailers are mailing more finite selections and honing in on their true target audience, the number of orders is increasing while order sizes are shrinking. List managers must sell like a list broker thinks. They need to be more educated about the lists they sell, sell smarter, be creative, structure reciprocal and negotiate parity pricing arrangements so all partnerships are equitable. This type of mindset is essential to land a sale and stand out in the crowded arena of list management.
How have you adapted to the current climate in terms of privacy, technology, etc.?
Ellman: Our e-mail lists offer only opt-in or permission-based names. All of our e-mail lists are business lists. We offer spam scoring and online tracking. All of our lists that allow telemarketing have a requirement that DNC lists must be applied before calling and Subscriber Account Numbers are required from the users. We have online count systems for the majority of our lists. We directly fulfill many of our orders. We are heavily involved in database building and marketing for our business and technology clients. We ensure that advances in technology help both mailers and list owners.
Kropp: We have hired a privacy officer.
Where do you think the list industry will be in two years? What about 10?
Kropp: List companies that lack the ability to offer a multichannel solution to their customers will have a difficult time retaining and acquiring customers. Consolidation of companies will continue, and in five years only a few list companies will remain.
Ellman: In the consumer arena, affinity marketing and search engine marketing will continue to increase, though the need for prospecting through mail order and e-mail will still be important. Though Internet shopping will increase, mailers will still need to prospect and get their catalogs and mailing pieces into the hands of new customers.
In the business-to-business and technology field, marketers have moved to e-mail or multitier marketing. The challenge of the next period of time is to protect ourselves from spammers. Legitimate mailers will find a way to clear the clutter and make room for respectable and responsible messages.
Traverso: I believe e-mail will continue to grow, and I believe marketers will have to become better at it. I also think as professionals in this industry we will need to allocate time and money to learn how to become more effective in using e-mail as a tool.
Aside from traditional list management and brokerage services, what else does your company offer these days?
Kropp: Walter Karl offers a full marketing solution for both postal and e-mail. As an infoUSA company, we own both business and consumer data, manage and broker response data, process data, append databases, as well as a full menu of services in the interactive space from retention, acquisition, search, e-mail append, to co-registration. It’s all done without outsourcing. Clients like the ability to have one contact in a company that can act and interact on their behalf. It’s cost effective for them because additional charges are incurred if a list company has brought in another company.
Mertel: Rubin Response offers custom list development. We have a team of researchers building lists that our clients are demanding. We also developed an in-house tracking system. This monitors open rate, click-through rate and cost per click – all in real time.
Traverso: Lighthouse and its subsidiaries have launched several e-mail marketing programs in addition to growing our list management properties. We have also started marketing database services and are marketing a transaction database for rental. List brokerage continues to be an area of growth. We are also moving into licensee agreements with smaller list companies to have access to our own Brand New Business Database.
Kristen Bremner covers list news, insert media, privacy and fundraising for DM News and DMNews.com. To keep up with the latest developments in these areas, subscribe to our daily and weekly e-mail newsletters by visiting www.dmnews.com/newsletters