The barriers blocking the entry of small businesses into direct marketing — namely, minimum orders and mailing know-how — are crumbling as Web sites are launched that connect data providers with long-ignored potential clients. Experts expect the rise of online list purchases to increase mailing volume and eventually augment the business of list brokers.
Gilson Terriberry, owner of list brokerage firm Direct Contact Marketing Group and the recently launched listsnow.com Web site, is one of the pioneers betting the Internet will grow the list business as it has boosted the sales of retailers online. ListsNOW, Grants, NM, doesn't sell lists but earns commissions as a portal to each ListMerchant site.
“The Web opens up another market that, as an industry, we haven't addressed,” he said.
For online list brokerage to work, potential customers must know it exists. Terriberry predicts that affiliate sites like his will spring up across the Web and that branding — through placement on search engines and online advertising — will lead to the same competitive choices now available in the traditional list industry.
Once competition develops, sites will have to differentiate themselves by adding value. ListsNOW, for instance, provides a direct marketing source directory with links to service bureaus and consultants, while infoUSA, Omaha, NE, suggests in-depth business profiles to augment lists in meeting a customer's marketing needs.
While some data providers like I Rent America, Richardson, TX, operate their own list sites, the more common approach is to market data through licensed resellers like ListMerchant, which offers business data from Dun & Bradstreet and consumer data from Polk and the soon-to-be-launched MyProspects.com, Palo Alto, CA. InfoUSA also sells its business and consumer data online at its own site and through directory searches with 2,000 affiliated sites.
“The use of our information is really underutilized,'' said Bill Kerrey, executive vice president of database licenses at infoUSA. “We increased our distribution through CD-ROM and now are taking distribution to the Internet. Directory affiliates are an important part of our strategy.”
List Merchant developer Multiactive Data, Vancouver, BC, has noticed more traffic since ListsNOW launched in late July and is in the process of recruiting partners as diverse as a national copy and computer service center to increase business. Multiactive director Peter Yan said data providers want more competition and more affiliates to promote their products.
“We are starting these types of partner programs now to get more people interested in our service,” Yan said. “Attracting other Web sites, that is something we have been talking about internally to promote our site a lot more and to bring in more customers and more services.”
Those customers will be small businesses that can't meet or don't require the industry standard minimum orders or have never considered direct mail as a viable marketing medium.
The presence of list providers catering to smaller mailers acts not as a threat but a benefit to brokers. Rather than turn away potential clients who seek small list orders, brokers can act as consultants and refer them to sites that cater to their needs and budgets. Should a business grow to the point where online pricing is no longer economical or a mailer needs more targeted response lists, it could then turn back to the broker.
“We're like a wholesaler, a super broker to the small customer,” Yan said. “Brokers use us as a tool to help customers figure out what they want.”
Yan admitted that online services can provide the data but not the service that a broker can and, thus, would not make sense for larger mailers. Lists purchased online are not presorted or CASS certified and don't qualify for the maximum postal discounts.
Until this year, List Merchant and iMarket, Waltham, MA, were the only firms to offer lists online. The service is now taking off because small business customers are finally embracing computers and the Internet. These SOHO mailers realize they need marketing information to conduct business and now the challenge is telling them where to get it.
“I would like to see other brokers getting into it,” Terriberry said. “The more quality players doing this, the better educated the marketplace becomes. Then it becomes who has the best gateways.”