12 Trends That Are Shaping The List Industry
By Barbara Love
The boundary lines between publisher, list manager, list broker, mailer and database marketer are a moving target; and by the way, who said that prices were supposed to be negotiable?
Looking to buy productive new names?
The trend toward diminishing lists is accelerating. But the trends reported by publishers, list brokers, list managers and list renters in the magazine business are not all downward. Upward trends reflect different creative approaches to filling the name drain.
The low hanging fruit is no longer there. It now takes more smarts and more work to secure new names. That has resulted in more modeling, more testing, participatory databases, co-registration on the Internet, and a whole lot more.
However, alternative sources can't make up for shrinking lists.
TREND NO. 1: MAGAZINE LISTS ARE SHRINKING
"There is always a fair amount of attrition, but where we run into a problem now is there are not enough new entries into the arena to make up for the attrition," points out Linda Huntoon, executive VP at Direct Media and co-chair of the Direct Marketing Association List Database Council.
"If some of the large circulation magazines are cutting back rate base, the few new entries won't make up the difference. As much as we've tried, we haven't been successful in making alternative sources work," Huntoon says.
"Another reason there is a diminishing universe is consolidation of titles. That's not to say there aren't new titles out there, but they can hardly make up for the dramatic reduction we've seen literally across the board. The trend continues, but now the situation is critical. "
Huntoon points out that three years ago everyone thought partnerships would work out well to produce new names, but the renewal rates have not been good enough.
What's more, those names that resulted from partnerships reduced productivity of the lists and hurt list rental values, she says. So there is a trend away from partnerships.
TREND NO. 2: PUBLISHERS ARE OUTSOURCING MORE
More brokers are doing circulation planning for mailers, including publishers, says Huntoon. Many publishers are short staffed and are outsourcing whatever they can. In exchange for this service, the broker may ask for exclusivity.
One result of this arrangement is that more publishers are sharing response data and pay-up data with their brokers, which gives the broker more negotiating power.
"It's a much easier thing to call a list owner or manager and say, ļ¾This is the deal I need to include your list in my circulation plan," when you have the data right in front of you, says Huntoon.
TREND NO. 3: LISTS MORE CLOSELY GUARDED
Mailers are more careful about list rentals. Publishers used to rent to make revenue, says circulation consultant Nicole Bowman, who is chair of the DMA Circulation Council and president of the Fulfillment Management Association. But now they see agents getting a hold of their lists and renewing their subscribers directly.
The thought is that these agents are getting these lists through list rentals. So now publishers are asking more questions. They want live samples of the mailing.
They are asking where the lists are going, the mailer's corporate address. They look at the mailer's web site. "Publishers prefer doing list trades," says Bowman. "Reciprocity is the big thing."
Alan Zamchick, list director, Hachette Filippachi Media, agrees. "There certainly has been a terrific amount of list piracy in the past. People have been arrested and put in jail for it. Due diligence must be made on every new test, researching everything, at a level heretofore not seen."
TREND NO. 4: USE OF MODELS AND TESTS INCREASING
Publishers are doing more modeling and more testing in an effort to be more targeted. Modeling has increased as a result of the diminishing universe, forcing publishers to test alternative lists. The postal rate increase coming in January has accelerated this trend.
Lori Magill-Cook, executive VP, ALC, reports that a lot more mailers are moving into modeling with rental lists. The majority are venturing into good customer matches; the balance are doing mail regression or mail campaign regression analysis.
"If you look back three years, the number of publishers relying on models to carve out profitable segments to acquire new subscribers has probably tripled," says Cook.
The same is true of testing. "Over the last 9 or 10 months, we see mailers testing more," says Cook. "Mailers are saying we have to do testing, testing, testing. Our testing orders are up by high double digits, which is a good thing.
"I think what is happening is that publishers are starting to make an investment in outside lists," Cook says. "The buzz in the marketplace is that dupe rates are high and response rates are declining and publishers need to venture outside to find good quality names to build subscriber files."
TREND NO. 5: CHANGING FACE OF DTP
Everyone knows that direct to publisher lists are gold. But the traditional direct to publisher source from a rental standpoint is shrinking, so, Cook says, folks are rolling other sources into what used to be called direct to publisher lists. Cook contends publishers are "looser and more creative" about what constitutes a DTP list now to build the size of their databases.
Zamchick sees no problem with the expansion of sources called DTP. He points out that every company defines DTP differently. "Brokers and mailers must carefully define exactly which sources are included.
"A true DTP subscriber for one company could be strictly those that have responded to a new direct to publisher mailing piece," Zamchick says. "Then you can add direct mail sold renewals to that list and inserts or blow-ins; then add internet-sold. In my opinion, anything that is direct sold and comes directly to you as publisher, is direct to publisher."
TREND NO. 6: COMPILED LISTS ON THE RISE
There is a larger role for compiled lists, according to Huntoon. "Data we're getting from compiled lists are much better today and the costs are lower," she says. "The technology is better and the data hygiene is much better. There is more potential than ever before in using compiled lists."
TREND NO. 7: DOUBLE DUTY LISTS
Co-registration is working for some. Shannon Aronson, who recently moved from CMP to Venture Direct, where she is VP of list services, points out that there is more interest in and use of co-registration, at least among b-to-b publishers.
She explains that when you register for one web site, IBM for example, you may be registering at the same time for CMP technology magazines. Both sites ask for information and it is clear to the customer that the information is being shared.
"It's been around but it's been catching on a lot more," says Aronson.
TREND NO. 8: DATA LICENSING
Most of the time, lists are customized and then sent to the user. But, according to Aronson, b-to-b publishers are trying to license data. "If they license the data from you they can customize the list themselves and sell at a higher level," she points out.
Michele Wiesner, list rental manager at VNU Business Media, says VNU started licensing its list through Edith Roman, the list management company, at the end of 2004. "It's a new stream of revenue," she says. "We're coming up on a full year of history and we'll be evaluating it. Because the mailer is entitled to use the list more than once, I would look at whether it is cannibalizing list sales, among other things."
TREND NO. 9: INTEGRATED DATABASES
Lists are coming together. Yes, there has been talk and action on this front for some years. Now it is expected that you have available to a list buyer mailing lists that include email addresses and phone numbers. The more touches a list user has with a customer, the more productive the list.
There were problems with multi-channel marketing, Aronson points out, but it's so much more mainstream now.
"Reading multi-channel results must be a part of any list analysis these days," says Zamchick.
TREND NO. 10: SEGMENTED AND ENHANCED LISTS
People are information hungry. A hearty list is what is wanted for rental and for purchase. For personalization, customization and segmentation, more information is needed.
Zamchick says, "You must be able to offer segmentation to sell adequately. In order to do that you need an adequate source;demographic and lifestyle mix.
Huntoon puts it this way: "People are looking for specificity. They are not looking for all women apparel buyers, but perhaps buyers of business apparel, as opposed to leisure apparel buyers."
For b-to-b, this might be as simple as an organizational chart on Microsoft;who influences a buy by product category, says Aronson.
TREND NO. 11: DATABASE SHARING
People call it different names;participatory database, a partnership with databases, a private promotional database. "We call them private promotional databases," says Huntoon. "This is when you bring in a number of your core lists, merge and purge them, overlay them with licensed data, and mail them according to your offer. The service bureau keeps track of how many times you mail and you pay based on those records."
TREND NO. 12: EVERYTHING IS NEGOTIABLE?
"Just as calendarization of the seasons has gone out the window, so have trends," says Zamchick. From his position as list director, he sees the only trend as negotiation. "Everything is negotiated from base rate, selection charges, net name arrangements, running charges, modeling costs, fees and expenses right down to what you order for lunch," he says with tongue and cheek. "It's a very volatile market. All the rules of the past no longer apply, other than the need to merge-purge and use file maintenance."
According to Zamchick, people are raising their base rates just so they have room for negotiation. Selection prices have never been higher than they are today, for the same reason.
"Negotiation saps you of energy," he says, "because you tend to spend your day on the phone negotiating rather than selling. It is expected that everything can be negotiated."
SPECIAL REPORT INDEX
12 TRENDS THAT ARE SHAPING THE LIST INDUSTRY
6 SOLUTIONS TO THE TOUGHEST LIST CHALLENGES
OUTLOOK & STRATEGIES: ALC
OUTLOOK & STRATEGIES: CLIENTLOGIC
OUTLOOK & STRATEGIES: LAKE GROUP MEDIA
OUTLOOK & STRATEGIES: STATLISTICS