Fire Up Your List Rental Income
The challenge of finding quality lists to rent has changed quite a bit in the last year or two. Some marketers have seen their best-performing prospecting lists cool off, while lists that were marginal at best are now hot. And with fewer new files coming on to the market, says Pam Mulligan, vice president, list management, at MKTG Services, a full-service list firm in Newtown Square, Pa., marketers are forced to dig deeper into the names already available for rent to unearth warmer prospects.
Marketers want more than just a list these days, said Diane Tancredi, when she spoke in a session about list rentals at the Direct Marketing Association's (DMA) 87th Annual Conference and Exhibition this past October. Tancredi, the director of list sales and services at music and video continuity marketer Columbia House, pointed out that list owners and managers must think of themselves more as data consultants than list purveyors in this new rental environment.
Mulligan agrees, adding that 90 percent of her client meetings during the DMA conference involved discussions with marketers about how her firm could help them not only find new list rental opportunities but come up with ways to make out-of-category files work.
For list owners such as Columbia House and magazine/book publishing firm Meredith Corp., meeting these
demands mainly involves the upfront work of list segmentation, data enhancement and modeling.
Getting Specific With Segments
How do you offer marketers more than just a random list, especially if your file doesn't suggest an obvious affinitye.g., you're a nonprofit and the potential renter is a cataloger?
According to Mulligan and Tancredi, the key is making sure list owners and prospective renters are talking in the same language about list data to create the kinds of segments that will be of value.
For example, Mulligan explains, catalogers want to know about the customer's last purchase date and last purchase amount to ascertain a buying trend. This information might not be as predictive for other types of marketers, such as an auto insurance company that would have a stronger interest in household composition and life stage.
Cheryl Dahlquist, director of database marketing services at Meredith Corp., in Des Moines, Iowa, says her firm has addressed this market demand by identifying pockets of specific customers and then developing datacards just for these segments. For example, an overlay of outside data helped Meredith determine that the women homeowners on its database 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 to special list segments, Dahlquist notes that her company also has invested effort in offering more
selects, even on the segmented files.
Of course, heavy segmentation is more easily performed on large corporate files, such as Meredith's 11 million-plus database. But that doesn't mean owners with smaller counts are out of luck.
Both smaller files and "sleeper files," as Mulligan calls lists that can't attract a wide variety of renters, can be incorporated into larger lists and made more usable. Web-generated files, she explains, 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
Sure, marketers could rent, merge and dedupe these different lists themselves, but list owners and managers are finding that it pays to be proactive and create these special multisource databases to make it easy for mailers to orderone rental process, one paymentand to find the names they need.
Mulligan predicts that 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 that 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.
Extra Data for Extra Insight
Data enhancement is a given for marketers with customer and prospect files of 1 million names or more, says Mulligan. Standard overlays include age, income, presence of children, lifestyle information, SIC codes, number of employees and other demographic and firmographic data.
What is driving aggressive list segmentation, however, is the appending of less traditional data elements as well as the effort by list owners to pull in more self-reported information from customers.
As would be expected, Meredith Corp. works with several big data overlay companies to enhance its lists. But to offer prospective renters more predictive information, for the last year, it has been including surveys in its billing series to capture customers' out-of-category activities, such as catalog purchases. This information is used not only to cross-sell other Meredith products, but to create niche lists for rent.
Dahlquist, who spoke with Tancredi in a list rental session at the DMA conference, told attendees that these surveys generate a 30 percent response rate, and that's without a postage-paid envelope.
Again, companies with smaller lists face more challenges; they just don't get a good match rate on data appends, says Mulligan. Participation in a multisource file can open up opportunities here, too, by providing the volume that improves match rates.
Modeling Heats Up
List owners who have had success in using response and best customer models to find strong prospecting names for their own efforts are offering to help other marketers take advantage of this analytical tool.
In turn, the lack of new files for rent is pushing more marketers to make the investment in modeling to tease better response from the current rental market, says Mulligan.
Just as Meredith Corp. has created special datacards for specific list segments, it also has worked with its list manager American List Counsel to develop datacards that promote its modeling and analytic services.
Dahlquist reports rental clients have been showing increasing interest in list models, especially those that have
experienced success with a Meredith list in the past. A model can open up more files from the Meredith family of lists that might perform well, she explains.
While Dahlquist has worked with various size files when building models for clients, she feels most confident in the results generated by matching against 100,000 of a mailer's best customer names.
List modeling as a trend is at the beginning of its upward curve. The larger list managers are making major investments in modeling services, but list owners are warming up at their own pace. Tancredi told DMA session attendees that her company is in its infancy in developing models for clients. Instead of the in-house analytical teams employed by Meredith Corp. and Reader's Digest Association, Columbia House currently relies on a service bureau for its own models and those created for a select few clients.
One of the hurdles that list owners 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 has been encouraging mailers to try modeling by offering test quantities; when mailers see how a model can perform, she knows she's more likely to get extra volume from them in the rollout stage.
Multichannel Names Equal More Sales Options
Rounding out the full complement of transaction, lifestyle, demographic and geographic data one could hope to know about a prospective customer are the available contact methods. Multi-channel lists have garnered increased interest, if only because multichannel shoppers have been considered more valuable than single-channel buyers. They're almost as coveted as multibuyer names.
A real challenge for list owners, however, is tracking customers' offline and online activity to create multichannel lists. Mulligan continues to find marketing firms in which different groups handle the online and offline channels, each with a separate customer database. Often, she notes, it's the list manager that brings the two groups into contact by demonstrating the opportunities wasted without an integrated picture of the firm's customers.
Since 2003's do-not-call legislation has put a damper on phone number rentals, marketers are much more
focused on collecting postal and e-mail addresses.
Dahlquist states that Meredith Corp.'s customer e-mail addresses are not for rent. But, it is experimenting with creating some Web registration lists that collect e-mail addresses with an opt-in to receive third-party offers. Currently, the Better Homes and Gardens and the American Baby Web sites are in testing mode.
Another channel it tries to track is that of retail book sales. Since it can't glean any customer information from the sales transaction process, Meredith puts surveys in the front of the books to collect buyers' names and other
details that will help it understand its retail customers as well as sell to them via additional channels, says Dahlquist.
Balancing Revenue and Results
The list industry has been under more intense scrutiny from the Federal Trade Commission of late. After fines were levied against three list companies that sold lists to an organization that violated the Telemarketing Sales Rule, the specter of a federally mandated opt-in postal list has list owners like Dahlquist nervous.
She reports that Meredith has been working hard to make the opt-out option in its promotions and other communications more visible to customers.
While she does not limit the number of third-party offers sent to postal addresses, Dahlquist notes that Meredith does keep an eye on its internal promotions to avoid clobbering the same people with magazine offers.
Tancredi reported at the DMA conference that Columbia House had conducted tests to see if unlimited third-party offers hurt response to its house promotions; no such link was found.
Still, Dahlquist states that no list owner should aim to mail indiscriminately. The goal behind improved segmentation, modeling and other analytical services is to be more effective in targeting prospects and customers. "It's not about sending less junk mail," she says, but about sending offers that make sense so people are engaged by what they receive.