Special Report List Buying Guide

IntroductionAt a not-so-long-ago List Vision event held by the Direct Marketing Association (DMA), I remember hearing either Don Mokrynski or Mal McCluskey state that the number of datacards had practically tripled in recent years. The result: An overwhelming job for brokers trying to make sense of the prospecting opportunities for clients.While I understand the difficulty such datacard proliferation presents to brokers and mailers, it also represents a step forward in the list industry recognizing a need for more segmented and digestible list files.And that diversity is showing up all over the list business. This special report details the immense work going into turning consumer and business data into predictive sources of future behavior. On top of that, there are numerous market reach opportunities involving partnerships, sponsorships and more options that aren't exactly list-based. As Deb Goldstein, the DMA's 2005 List Leader of the Year puts it, "More data is available to marketers these days than just list rentals." The future of the direct marketing industry depends on "list" professionals changing their business models along with that of their clients.--Hallie Mummert, Editor in ChiefWhat a Mailer WantsProspecting trends from the list owner's point of viewGone are the days when prospecting for new customers meant simply renting a list and mailing the names. To compete in a multichannel world with jaded consumers who feel accosted by advertising, marketers want—make that need—more than names and addresses.Depending on how you look at it, this can be a good development. This new environment requires all marketers to do what direct marketing legends deemed necessary more than a decade ago: Spend more time on lists. Today's lists involve more complex processes of building the files up with tremendous amounts of information just to whittle them back down to precisely the segments that are apt to perform best for each mailer.Given that list owners are on the receiving end of marketers' list and data demands, let's take a look at the top requests crossing their desks these days.The Big Slice and DiceHow can a marketer find more list opportunities, especially when it's run through the files in its particular category? Can list owners help more mailers test out-of-category—e.g., might there be an opportunity for an insurance company to rent subscriber lists for a publisher's fashion titles?The answer lies in determining what data is important to different business sectors, then segmenting your file to make finding those pockets of names easier.Marijke Bekaert, senior director of database marketing at Bensalem, Pa.-based HCI Direct, which markets the Silkies hosiery continuity program, has noticed an increase in the number of customers asking for segments of its customer database. In addition to insert programs, the company offers around 17 different angles on its masterfile, including Spanish-speaking buyers, Generation X buyers and large-size buyers.At Des Moines, Iowa, publisher Meredith Corp., Cheryl Dahlquist, director of database marketing services, is fielding similar requests. To meet this demand, Meredith identifies pockets of specific customers and then develops datacards just for those segments. For example, an overlay of outside data helped Dahlquist and her team determine that the female homeowners on the customer housefile were likely to have home-based businesses; this knowledge produced a B-to-B list that is drawing a new client base for the publisher.In addition, Dahlquist says Meredith has invested in offering more selects, even on files that have been segmented into smaller categories.Since Bekaert reports hearing from mailers that they are continuing to mail their housefiles, it seems that companies are concentrating on finding an effective balance between prospecting ventures and increasing share of customer. It's certainly true that the better all marketers understand how customers come onto their files and then behave over time, the better they can help one another identify smart mailing strategies.But big list owners—such as Meredith Corp., with 11 million-plus names, and HCI Direct, with nearly 2 million active buyers—aren't the only ones who can get in on this selectivity trend. Pam Mulligan, vice president of list management for MKTG Services, a full-service list firm in Newtown Square, Pa., has said both smaller files and "sleeper files" (lists that can't attract a wide variety of renters), can be incorporated into larger lists and made more usable. For example, she offers, Web-generated files often don't perform great on their own, but can be combined with other lists that offer strong affinity to create a more robust product with good volume.Sure, marketers could rent, merge and dedupe these different lists themselves, but list owners and managers are finding it pays to create these special multisource databases to make it easy for mailers to order—one rental process, one payment—and to find the names they need.Mulligan predicts this trend toward multisource files will continue, since it offers marketers the chance to find like names from a large source without hitting the same files over and over. Note: Some list owners participating in these multisource files do so anonymously; you'll have to decide if you can rent names without knowing their precise origin.More Data Yields More Mailing OpportunitiesWhat is driving aggressive list segmentation is the appending of less traditional data elements as well as the effort by list owners to pull in more self-reported data.In addition to the regular data overlays of age, income, presence of children and other demographic data, list owners are adding lifestyle, ethnic, generational, and other types of niche data."Data appends work," says Bekaert. "As a result, list owners will see increased usage from niche and ethnic marketers."For example, by applying a credit score overlay, HCI Direct was able to provide a credit qualification dimension on its Silkies Hosiery New Starts file and help mailers more effectively use these new customer names.There's no doubt about it, explains Dahlquist: Mailers require better performance on campaigns, which necessitates enhanced data for more defined segmentation. In addition to numerous data overlays from leading data brokers, Meredith uses surveys in its billing series to capture customers' out-of-category activities, such as catalog purchases. This insight is used not only to develop successful cross-sell offers for Meredith, but also to create niche lists for rent—files that have pulled significant interest from mailers.An interesting side note for list owners: At the 2004 Direct Marketing Association annual conference, Dahlquist told attendees that these customer surveys generate a 30 percent response rate—and that's without providing a postage-paid reply envelope.Beyond data appends to create niche files, Dahlquist reports continued interest in multichannel names. While marketers are getting better at matchbacks and other methods to identify customers across channels, tracking offline and online behavior remains an overall industry challenge.To learn more about its retail book buyers, Meredith has been using more surveys, this time placed in the front of its retail-sold books. Stores simply aren't equipped to collect personal data at the point of purchase, and it's more privacy-conscious to allow book buyers to choose whether they want to share this information with the publisher.E-mail lists are a popular tool for use in multichannel campaigns, but not all list owners make their customere-mail addresses available for rent. Meredith is one such company, although Dahlquist explains it's finding ways to fill this need via Web registrations. For some of its more popular magazine groups, Meredith is experimenting with asking visitors to register on the titles' Web sites to receive information and to opt-in to receiving third-party offers.A Model Solution"Modeling continues to be of interest to many mailers, and the inquiries for it are growing as more companies become better educated about [it]," says Dahlquist.As companies have success using response and best customer models to tease performance from their housefiles, they're gaining more insight on how to use models to help select better prospecting lists. "We're getting more and more requests for credit screening processing and modeling. Both allow mailers to use our file successfully," Bekaert confirms. HCI Direct offers a separate datacard for its file modeling services, through its list manager, Direct Media in Greenwich, Conn.Just as Meredith Corp. has created special datacards for specific list segments, it also has worked with its list manager, Princeton, N.J.-based American List Counsel, to create special datacards to promote its modeling and analytic services.Dahlquist notes that modeling works well for a variety of marketers, but there is a definite affinity for companies that have mailed a Meredith list in the past. Experience has shown that a model can open up more files from the Meredith family of lists that might perform well.One of the hurdles list owners and marketers have to clear when it comes to selling modeling services is cost. When modeling a list to find strong segments, marketers are paying for the names and the modeling fees. Of course, the end result is supposed to be a better-performing list that drives down acquisition costs.To remove some of the risk, list owners and their managers are doing what they can to keep upfront costs from being a deal-killer on modeling opportunities. Dahlquist says she's been encouraging mailers to try modeling by offering test quantities; when mailers see how a model performs, she knows she's more likely to get extra volume on rollouts.With Opportunity Comes Responsibility"Privacy issues are still very much a concern" when it comes to responsible list rental and data sharing, Dahlquist states."There is much discussion everywhere around encryption of name/ address/data files to ensure that when list owners and their service bureaus send lists, there will not be misuse—or that the lists will be vulnerable if they are 'lost' in delivery," she says.And, Dahlquist is keeping a watchful eye on customer overload. While the increased segmentation and modeling efforts help refine mailers' audience targeting and remove names that maybe shouldn't receive offers, the generation of more list products increases the chance of overmailing people or households.Meredith's list rental parameters don't limit the number of third-party offers sent to postal addresses, but her database team does keep an eye on internal promotions to avoid hitting the same people with magazine offers.In the end, the goal with any list work is to create more targeted efforts that help recipients become less resistant to direct mail and e-mail because it better addresses their needs and interests. Every step marketers and list owners take to safeguard people's right to privacy, respecting their wishes not to be bombarded with direct marketing and advertising, the better business conditions will be for all companies.Editor's Note: Part of this article appeared in "Fire Up Your List-rental Income," published in the January 2005 issue of sister publication Inside Direct Mail.B-to-B: Integrated and Poised for GrowthWith more than 20 years of experience serving the audience reach needs of B-to-B marketers, IDG List Services President Deb Goldstein pretty much has witnessed many of the big trends that have shaped the current B-to-B climate. She was one of the frontrunners in the development of e-mail lists, and has worked with industry associations and professional groups to establish protocols for this marketing tool.This month, Goldstein will be recognized as the Direct Marketing Association List & Database Marketing Council's 2005 List Leader of the Year, presented before the annual List Vision seminar. And given the state of B-to-B list marketing, it seems like a very appropriate time to recognize one of this sector's leading professionals. In chatting with Goldstein a few weeks before the show, Target Marketing Editor in Chief Hallie Mummert learned that the buzz at the recent DM Days conference among list industry members was that "B-to-B is doing better in terms of growth potential than B-to-C." Here, Goldstein shares some other observations on—and predictions for—the present and future of B-to-B list marketing.Target Marketing: What factors are driving the B-to-B list market?Deb Goldstein: The list business is a customer-driven environment, so growth has been following the opportunities that B-to-B mailers are seeing, such as emerging technologies, vertical markets, integrated marketing and other things. Integrated marketing is big for B-to-B; there's no such thing as straight product launches anymore.And with B-to-B becoming more vertical and targeted, it's important to garner selects for mailers to help them refine their reach and zero in on their audience effectively. Finally, more business is happening on the Web side, so the focus has been on capturing information in this channel to use for both targeting and new list opportunities.TM: What new market reach opportunities are evolving in the B-to-B sector?DG: More data is available to marketers these days than just list rentals. B-to-B media providers have to create total lead generation programs for marketers, as opposed to simply following the traditional list rental protocols.The direction we're heading into is one where the list brokerage moves into more of an agency model. We need to understand myriad media to assist clients with marketing mix strategies that might include SEM [search engine marketing], webcasts, online banner ads, e-mail newsletter sponsorships … And we have to understand the whole prospecting process, from data procurement to modeling, enhancement and more. If we don't adapt, then advertising/marketing agencies will take on list brokerage [duties].TM: What's the future of B-to-B e-mail lists?DG: The number of lists is growing and the quantities are growing, so I'm optimistic. In some sectors, lists are shrinking, but the overall push is to work with clients to grow their files. Put it this way: The brokerage division at IDG is working 80 percent to 85 percent in e-mail. This probably is because many young marketers came up in the dot-com environment, and so they're not thinking of traditional direct marketing [for their campaigns]. They're thinking about online opportunities, such as e-mail sponsorships and webcasts. They just can't wait six to eight weeks for their response results!But on the management side, we're making more money from postal lists than e-mail. And I've heard that from other list colleagues, too. I think this is because companies realize they have to balance their online efforts with the offline media. It's ironic, but the integrated marketing approach we've been talking about for years is finally in full swing because the CMO [at companies] is now involved [with all the different aspects of lead generation and conversion].TM: With B-to-B companies using a diverse array of media to surround their market, how have prospecting strategies changed?DG: Companies are thinking more carefully about how to use channels and media to target prospects effectively. They are leveraging soft-reach vehicles like e-mail sponsorships to generate leads; they then take these names to drive selects on postal and telemarketing lists to further refine their reach and close the sale. More than ever, telemarketing is getting its due respect as a good tool to use for getting the sales conversion. In fact, the best part of this integrated approach is that it's proving to B-to-B marketers that direct response does indeed drive sales.

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Special Report List Buying Guide

Melissa Sepos

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Melissa Sepos