List leaders discuss today's Challenging market (2,023 words)
By Kate Mason
If mailers look to the list industry as a barometer of direct marketing's overall health, they need not pull on their rainhats just yet! Even as uncertainty grips most markets—from catalogs to publishing—list companies are still expressing optimism about the future. John Papalia, president and CEO of Statlistics, poses a common attitude: "We may head into a long and difficult period of time and direct marketing has never known such a period or experienced a prolonged war time economy. I'm optimistic that America will flourish, but I'm hesitant to make any predictions right now."
Despite the effects of a staggering economy, direct marketers have every reason to believe that business will continue to hold strong, at least until the much-anticipated economic recovery rolls around. New lists, new enhancements and price negotiations appear promising. Overall, list managers express encouragement over growth in new areas. Missy Root, vice president of data management, optimistically says, "New lists still generate a high level of excitement." Adds Jeff Moriarty, director of sales and marketing for Cahners Lists,"Lists focused in the wireless communications and fiber optic areas are experiencing tremendous revenue growth rates versus those from previous years."
As for trends arising from the sense of economic insecurity, recently compounded by the terrorist attacks on America, Moriarty adds this observation: "Traditional mailers look to e-mail marketing as a cost-effective supplement or alternative to their direct marketing strategy in times of domestic economic uncertainty such as the recent conditions we are experiencing today."
But with mailers looking to keep costs down , which lists are most frequently rented and which lists are being ignored? And how are e-list rentals stacking up against traditional direct mailing lists? For answers and insights, read on as the following industry leaders discuss the current state of (list)affairs:
*Ed Bocknik, director/list management, Direct Media, Inc.(NP)
*Henry M. DiSciullo, executive vice president VentureDirect List Services Group
*Chris Montana, senior vice president, List Management Division, Mokrynski & Associates
*Jeff Moriarty, director of sales & marketing, Cahners Business Lists (NP)
*John Papalia, president/CEO, Statlistics
*Missy Root, vice president/data management, American List Counsel
Target Marketing: How has the economic slowdown impacted your clients' businesses?
Montana: The economic slowdown has impacted the majority of mailers. From discussions with a broad range of traditional and non-traditional mailers alike, the sentiment has been the same: "business is down." Please keep in mind however, that not everyone's business is down; lower ticket mailers, high-ticket niche/specialty mailers and gadget/electronic marketers seem to be holding their own.
DiSciullo: The consumer mailers, such as insurance, sweepstakes and self-improvement, are staying strong. The business mailers have cut back mailing, however, many of them are maintaining profitability.
Moriarty: The business-to-business list rental market as a whole is flat regarding traditional postal revenues versus 2000 (YTD). Companies offering b-to-b related e-lists however, are most likely experiencing growth over 2000. B-to-b permission-based e-lists that offer detailed demographic information (job function, employee size, buying authority) are in great demand, as there are not many lists on the market offering such detailed selects to niche marketers. Overall, the small to medium-sized companies seem to be more aggressive at this time versus the traditionally larger companies regarding e-mail marketing.
Papalia: Our catalog lists sales are flat. Quantities are down and new lists are difficult to find, but we are very aggressively marketing all our products so we are maintaining a modest increase in sales. Everyone is more cautious in what they do. Less money is being put toward research and development, but clients are more willing to try new and different marketing strategies in hope of increasing list rental revenue.
Root: The economic slowdown has hit the business service market (wireless communication, dot-com services)—not surprising since these types of mailers were just so aggressive last year in their prospecting efforts. Negotiating also has become a much greater role of the account managers at ALC. Mailers are requesting deals more often than they were last year—often crying out the need for the deal being a result of the soft economy.
TM: Have any new lists come on the market in the past year that have had a major impact? Have they had much success?
Montana: There have been a number of new lists that have come on the market this year. These lists range from the traditional including Basil Street Gallery and The Cashmere Company, to the non-traditional such as Proflowers and Snapfish.com. Over the last 12 months, we have seen more e-commerce companies looking to launch their lists than any other list segment.
Moriarty: Lists focused in the wireless communications and fiber optic areas are experiencing tremendous revenue growth rates versus those experienced in previous years. As professionals become more accustomed to working online, wireless communications (PDAs, cell phones, etc.) products will be in great demand. Those who manufacture or use such devices/networks will experience a spike in buying activity.
TM: Are there any not-so-obvious list categories mailers should consider mailing now?
DiSciullo: Web-derived postal lists can be a source of "remote responders," though their success depends on the accuracy with which they are maintained and targeted. If they are not repleat with selectivity of their own, they require enhancement data to make them so.
Montana: We believe mailers and brokers should be looking at every list segment as a testing opportunity. Clearly there are going to be obvious opportunities that are "must-test lists" however, do not overlook lists that do not appear to be a perfect fit on the surface. Many times demographics, lifestyle and product selects can help you pinpoint your audience. If you don't see this on the data card … ask!
Moriarty: Some of the not-so-obvious categories that may not get adequate coverage on datacards are those of buying authority. Many mailers focus primarily on the title or job function of an individual as the determining factor of whether or not one will buy their product. In small- to medium-sized companies, however, there are certain professionals who wear several hats. If you have an human resources-related software offer that you would like to mail into a small- to medium- sized business, you may have difficulty finding someone with an HR title. If you can find a list category of buying authority, you may be able to find someone who is responsible for purchasing HR/Personnel software within a company—and has the title/job function of corporate manager.
TM: Are there any new enhancements, models, or other tools mailers should consider using?
DiSciullo: We enhance all lists—business and consumer—which come under our management to determine what, if any, segments of the files are worth targeting. Lists need to be large enough to sustain this type of segmentation. Custom modeling to determine responsive sub-sets is more practical than it once was. Improvements in technology and software have cut down time frames and improved analytical quality.
Montana: More and more, we are seeing our list owners follow through on our recommendation to add demographic, lifestyle and product selects to their list rental files. These recommendations are based on the feedback we are getting from brokers in response to our sales calls. Although enhancing your list is not perfect for everyone, it is a proven technique that increases rental usage from non-traditional mailers. It allows more traditional mailers, who have not had luck with your list before, better target their audience.
Moriarty: Regarding e-mail marketing, there is a void in the marketplace now for a true merge-purge solution. I recommend that mailers request their e-mail housefile be suppressed from the lists they are ordering externally, as anything they can do to eliminate duplicate e-mail addresses will save them money—as well as not offend individuals who may opt-out from receiving messages in the future due to duplicate messages hitting them on a daily basis.
Papalia: We are in favor of utilizing enhancement and models, but always advise our clients to keep the big picture in mind, that is … make sure everything you do is not only cost effective now , but will continue to be as you continue to update your file.
Root: The more data the better! On the b-to-b side, controlled titles continue to fare well in the soft economy. On the consumer side, mailers are much more tuned into modeling than they have been in recent years. Our larger clients like Bookspan, Meredith and Reader's Digest are all continuing to develop better modeling tools to maximize usage.
TM: Have you witnessed any pricing trends? Are owners willing to negotiate pricing?
Bocknik: The inclination has been to hold prices steady during these tough times. However, list owners should continue to charge premium prices to their core markets. After all, they have invested quite a bit of money into building a very valuable asset, and a good list will still provide tremendous return to similar mailers. On the other hand, if an owner expects any revenue of substance from secondary markets, discounting is absolutely necessary.
Montana: Special price requests have been on the rise for the last three years and for 2001 these requests have sky-rocketed. List owners are working more closely with their managers to accommodate these requests. Traditionally rigid list owners are becoming more flexible, however, they are not "giving away the farm." Smart list owners are working closely with their managers to determine the right discount for the right offer. It really needs to be a win-win for the mailer/list owner when negotiating price. The list owner must establish a base-line value for their names within specific markets and should try to hold the line as best they can.
As always, the broker who negotiates the best deal always provides sound rationale as to why the discount is needed. Brokers who generally supply computer verification, or other documentation supporting the request, quickly get a favorable answer.
DiSciullo: There is definitely an increase in the availability of incentives offered by list owners and managers to aggressively compete for a greater share of a decreasing market. However, good lists that are properly used have continued to produce results for mailers. Pricing incentives are primarily focused on volume commitments or to attract new mailers to test. Negotiation, now a "given" in the every day transaction of lists, largely depends on the list owner's perception of the list product and its popularity in the marketplace.
Moriarty: Over the summer, some list companies offered free tests, or better broker discounts in hopes of helping mailers meet their margins in tough economic times. It seems of late that most list owners/managers are willing to negotiate on the transmission fee regarding e-mail list orders
Papalia: A fair price is when both seller and buyer agree. In our current economy we find both sides more negotiable. Discounts are becoming more common but we try to maintain a consistent rate card price at the onset.
TM: What impact has the Internet had on list research/sales?
DiSciullo: Internet communication has provided a new dimension to the list business which has greatly enhanced, but not essentially changed, the basics of the business. This new channel has been both an improvement in the way lists are transacted and delivered as well as a complementary medium to be used with direct mail lists. The businesses that have become successfully involved with the Internet realize the importance of using all forms of direct response media to achieve an integrated approach.
Montana: The Internet has helped expand sales into the e-commerce arena. Many dot-com companies have created catalogs and direct mail pieces to drive traffic to their Web site, using traditional consumer lists.
Moriarty: List company Web sites are much more interactive than in the past. List companies with compiled list offerings are allowing mailers to order online these days. Downloadable datacards from Web sites allow for 24- hour-a-day access to managed list information, and it's only a matter of time before many list owners/managers will be posting shipping information, order status, etc.
Root: We are hearing much less this year about mailers devoting marketing money to the Internet when we contact them to discuss upcoming mail plans. If anything, the softness on the Internet is driving mailers back to more traditional direct mail!