The List Business' Evolving Landscape

By Bob Coles

Direct Marketing News

MARCH 2011 - The list business in 2011 is very different than it was ten or even five years ago. Increasing direct mail costs, declining response rates and the paradigm shift caused by the internet and search engines has created a very different landscape for new customer acquisition.

So what does the second decade of the new millennium hold for the list business? And where does the business fit within the increasingly fragmented media world?

The Changing Face of Direct Mail

Although many companies are using online channels for lead generation, it’s still challenging to get critical mass quickly. So while these important channels slowly generate customers or qualified leads, many marketers are finding that they must continue to employ push strategies to reach their short-term acquisition targets. That’s where direct mail lists provide value as they enable marketers to acquire more customers, faster.

Marketers who use direct mail are finding, as they become more selective about the records they take, that available select universes are declining. In addition, for many years now, some large volume marketers have been moving away from vertical lists towards using large, multi-sourced files. This has been driven by both a need for an ever larger prospect universe and by a desire to reduce acquisition costs. These files are large enough to model which drives significant lift in acquisition campaigns.

So who is having success with direct mail? Demographics play a role. Those marketers who target the 35-54 and the 55+ age categories find that direct mail works well. For Fundraisers, direct mail is still the bread and butter of their fundraising efforts. And many insurance companies, certain types of membership offers and other financial services marketers also find direct mail to be a very effective medium.

Strategic Use of Data Analytics and Modelling Improves ROI

To keep direct mail acquisition affordable, smart marketers are shifting the burden of cost downstream. By applying predictive models, marketers can mail fewer people, reducing printing, lettershop and postage costs while achieving the same number of responders. And for those marketers without the time or money to invest in traditional modeling, software now exists that reduces the complexity, costs and timelines of traditional modeling, yet delivers some of the same benefits. These ‘rapid analytics’ solutions are an improvement over traditional segmentation based tools and allow marketers to gain quick quantitative insights on prospect lists.

Email Finds its Place in the Marketing Mix

The place of third party email lists in the acquisition business is still evolving. While email is a strong performer for B2B lead generation, success has been more elusive for consumer offers. Improvements are being gained through the increasing availability, size and selectivity of email lists. Also, email can be much more effective when postal addresses are combined with email addresses, allowing marketers to use demographic overlays, eliminate duplicates and apply customer suppression files. In addition, downward pressure on email list pricing is creating better ROI, making email – either as a stand-alone or as one in a series of multiple touches – a viable acquisition channel for many marketers.

Emerging Trends

Perhaps more importantly the availability of postal information on email lists has enabled mailers to take a multi-channel approach to acquisition strategies. List owners are increasingly open to allowing both a direct mail and email communication to their lists. Mailers are testing all types of variations – direct mail then email follow-up, email then direct mail, or even two emails bookending a direct mail effort. The result is an evolution in list marketing from a purely direct response channel to a direct response channel with a branding component, as carefully timed messages reach prospects more fluidly.

But it’s not just the availability of email lists that has changed the list marketing landscape. Faced with a shrinking share of marketer’s advertising dollars due to the increase in online strategies, list owners have responded with a few innovations of their own. The more savvy owners have begun to look at their own files to see what enhancements could be added to make them more attractive to marketers. Some of the more notable trends include collecting more behavioural type information and adding it as selection criteria. In addition to the standard selects of geography, recency and source, many list owners are adding specific interests based on survey information. While this may reduce quantities these more targeted lists mean better response for marketers and more continuations for list owners.

Another trend that is beginning to show up more frequently is the use of direct mail as a driver to online properties. As more companies increase their online presence in social media like Facebook and Twitter, they are finding it increasingly difficult to drive relevant traffic to these sites in an ever-competitive marketplace. A targeted direct mail campaign that also includes well illustrated reminders to visit the company on Facebook, is an important building block in creating a relationship that may ultimately result in a sale down the road.

Moving from the List Business to the Acquisition Business

Twenty years ago, Cornerstone was a List Brokerage and List Management company. Today, we are an acquisition services company. Our Clients leverage our expertise to prepare and execute multi-channel marketing strategies that might include all or some of direct mail, email, Google and Bing Search campaigns, Facebook, LinkedIn or Twitter advertising. The best direct response marketers never dismiss or choose a channel based on whether or not it’s hot. They choose a channel based on whether or not it works. Stakeholders in the list business – media owners, brokers, managers and marketers – need to understand how “tried and true” media, such as direct mail, can work together with new media to achieve greater results.

Bob Coles is Chief Operating Officer at the Cornerstone Group of Companies. Bob oversees Cornerstone's Marketing Database Services, Data Products, List Processing Services, List Brokerage and List Management Services units. Bob has more than twenty years' experience in direct and database marketing, and has been closely involved with the Canadian Marketing Association, both as a former vice-chair of its Ethics and Privacy Committee and as a former member of the CMA's board of directors. Bob is a graduate of Concordia University, holding a bachelor of commerce degree with a major in marketing.

He can be contacted at bob@cstonecanada.com, 416-932-9555, Ext. 103.


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