Libey on Lists—Predictions for 2006 and Beyond
It’s Wednesday, August 16, at 9:30 in the morning, and all eyes in the room of List Vision attendees are glued on speaker Don Libey, partly because he’s sweating like a glass of iced tea on a hot Iowa afternoon and mostly because he’s systematically laying out the direction this industry will take over the next decade. Libey, who is principal of direct marketing consultancy Libey Incorporated, does not believe in mincing his words, and so he’s earned a reputation as being an extremist. What that means, in truth, is that most people don’t want to fully accept that his theories might be true because then they would have to make some tough decisions about how to adapt their own business strategies.
So, take the following five trends that Libey defined for the direct marketing industry with whatever size grain of salt feels right for you. Just don’t complain to him five or 10 years from now about how you wished you had given his predictions more serious consideration.
Trend No. 1: Consolidation in the list industry is only about half finished. As more and more list services firms become part of large public and private equity owned corporations, the focus will swing from being customer-driven to earnings-driven. This same priorities shift is occurring within American business in general, resulting in fewer and fewer people within companies who truly understand circulation and lists. This lack of knowledge makes it easier for marketers to rely on big data corporations who control these firms’ direct marketing process. Marketers must regain control of their business’ growth by investing in training on RFM, lifetime value and other direct marketing cost metrics.
Trend No. 2: Telecommunications and cable companies are making a play to grab control of the Internet. If Congress allows this to happen, these tech giants very easily will be able to determine, through pricing, which marketers’ sites get into the fast lane on the Web and which are relegated to the slow lane—thus damaging these organizations’ ability to provide a level of service sufficient to compete with better funded competitors.
And this new Internet environment will make the Web like a television, where the message will be more visual than lingual. Get ready for more video, audio and graphics, but much less text.
Trend No. 3: A GAAP standard of accounting is about to emerge for the direct marketing industry, where this type of business activity for once will be on an apples-to-apples basis across all companies. Wall Street will better be able to understand value of what direct marketing brings to an organization, and management of these firms will be able to push for specific results. The danger to watch out for is that often “interpretation becomes protocol,” so direct marketing professionals must be involved in these metrics that are established if they want their activities to be counted fairly in the business plan.
Trend No. 4: There is no such thing as “lists” anymore; today’s business environment now consists of databases. List firms must adapt to be part of this new way of looking at circulation, because within the next 10 years half of their income will be generated by managing customer research and maintaining a large variety of customer databases for clients. List firms also must be prepared for a European invasion: International data firms have invested in database technology and research processes, and will bring this knowledge to U.S. marketplace to start winning new business.
Trend No. 5: The dominance of so-called “black box” cooperative databases will decline. Too many marketers rely on these co-op databases for all of their list activity, to their detriment. While there are quite a few benefits in using either or both of the two types of co-ops—membership and list-specific—neither one provides sufficient value to be used without independent list selection and data processing activity. Libey’s main concerns about co-ops are:
• The more people in the “pool,” the more fatigued the pool becomes.
• Quality and pricing control is given up to the pool operator and removed from the individual mailer.
• Loss of testing knowledge.
To be of better value to mailers in the long run, co-op databases must be a “productive addition to core continuation prospecting,” provide mailers with the ability to run comparative lifetime value and other analytics, and offer insight on how the models are built, the goal and the potential rollout universe.
Learn more about Libey Incorporated, and contact Libey, by visiting www.libey.com