What will be the list industry's most difficult challenge in 20
Edited By Lisa Yorgey Lester
Linda Huntoon, executive vice president, Direct Media, and chair of the DMA List/Database Council
The concern that consumers have about marketing techniques, and the lack of understanding they have of how and why they receive mail—either postal or electronic—is becoming very obvious. I believe the list industry's most difficult challenge in 2005 is to reassure the public that our motives are well founded, and to educate them so they understand that we bring quality to their lives—not clutter.
Consumers want control of all aspects of their lives, and their personal information (only list people call it data) is an important part of that control. Before we can look consumers in the eye and explain their need for our products and services, we need to be certain we are doing everything we can to play by the rules that consumers believe are the 'right' rules. That means we have to set up and abide by rules that may not be easy or necessarily profitable at the start. This is the classic 'pay me now or pay me later' scenario. Another way to think about it: [Just] because we can do something, doesn't mean we should.
The education aspect becomes easier to manage, once we commit to 'doing the right thing,' as the DMA asks of its members. Our future depends on developing lists of people who are responsive to the offers our clients mail to them. We can't build those lists without an informed universe of prospects who are open to our messages.
Andy Ostroy, chairman and CEO, ALC New York
List fatigue and declining response rates continue to be a drag on the industry. Performance, in particular from outside lists, has been steadily declining for years. Over-saturation is the cause. The best buyers
are being repeatedly over-mailed by the same [mailers] due to an over-reliance on list exchanging as well the proliferation of co-op databases.
Mailers need to get back to basics. Testing has to become more diverse and more creative. The playing field has to be leveled in terms of assigning a cost to an exchange list. Only then can all lists be analyzed properly.
Ralph Drybrough, CEO, MeritDirect
Clearly, one of our biggest challenges is being precipitated by the double-digit postal rate increase in 2006.
This rate increase has many of our clients ramping up in 2005 to get some of that 'low-hanging fruit' before the tree grows higher in 2006. It's a prospecting mania we typically see before predictable large increases in mail costs. So why should this be looked at as a 'challenge' for the list industry when the more our clients mail, the more we earn? Here's why:
1. We're coming off two years during which new customer prospect mailing has been at its lowest ebb in over a decade. This has driven typical response list hotline counts down by 10 percent to 20 percent and by as much as half in some cases.
2. Some list owners have become more conservative in their list rental policies toward mailers who are marginally or potentially competitive. This protective stance, common when list owners are mailing their housefiles more aggressively, leads to fewer new list test opportunities.
3. Since new list testing has been soft the past few years, mailers have seen proven continuation list inventories shrink, thus reducing the size of their low-risk core prospecting arsenals.
4. The number of new response lists coming onto the market is negligible.
These conditions have created the 'perfect storm' of a greatly reduced list universe.
Not only that, ramping up prospecting for the mailer with an atrophied core continuation inventory introduces a greater element of risk. This is because a larger percentage of the prospecting increase must come from risk-prone, new list tests rather than from deeper mailing into safer, core continuation lists.
Thus, the challenge of 2005 will be to feed our mailers' increased demand for productive names from a seriously depleted inventory of good prospects at the lowest risk possible. To meet this challenge successfully, the creativity and ingenuity of the list industry will be tested as it has rarely been.