List companies continue to face so much pressure from marketers for services that go far beyond renting postal lists that some say it has become an adapt or die situation. In an increasingly fragmented, multichannel environment, marketers demand more comprehensive solutions that center on data intelligence. That's the reality of the list business today, and it is making the job of the list company increasingly complex.

As Andrew Sambrook, general manager of IDG List Services, put it, "A lot of [list management] companies are still traditional list companies. You just can't survive on that. There's a lot of old guard, and if you continue to operate like that, you're in trouble."

Current demands are also driving consolidation in the list industry as larger companies with broad resources acquire smaller shops (see story, page 3).

Rob Sanchez, president of list management and interactive services at MeritDirect, said that once upon a time a marketer would draw up a direct marketing plan, rent a list and send out a mailing; but that model is disappearing. In its place: a more complex process that involves the pursuit of deeper data intelligence.

"We see an increase in using data for analytics and lead generation, so the traditional list rental model, more and more, is being chipped away," Sanchez said. "There's a lot more drill-down [today]."

For example, many customers want custom databases built for them to help them target customers with more precision, he said.

"There's a lot more multichannel going on, where you're connecting the data sources between postal and email," Sanchez said. "There's a lot of data licensing as well, where people take the data and match customer data to appended data. That has become more prevalent in the list management area."

Data increasingly are being sold and licensed.

"More data is being sold compared to [being] rented than ever before," said Glenn Freedman, president-CEO of L.I.S.T. Inc., "but quality is sacrificed by the buyers." He said more cooperative databases are being used, replacing much of the list testing of the past.

Shift toward databases

Other list managers see similar trends.

Jim Scova, VP-list services at Venture Direct, said databases, along with closer data analysis, are more prevalent in the list industry.

"There's been a big shift towards databases in the last year. Mailers are ordering from databases rather than [ordering] straight lists," he said. "Certain mailers used to rent lists and have migrated to only renting from databases. They may model the data in some way, shape or form to determine which names in the database are the most likely customers."

Scova said list managers have created many databases that contain information on people with similar interests. Venture is currently in the process of creating a "business buyer database" with information on 25 million to 30 million buyers of business products.

Scova said the shift of marketing to online venues also affects the list business. "It's been somewhat of a challenge on the postal side. Postal used to have a certain place in the market," he said. "Advertisers have shifted budget to online, and we're fighting with more people for the same slice of the pie."

Like his peers, IDG's Sambrook said data intelligence is the name of the game. "It's not just about having a name in the database," he said. "It's what you know about that person, what types of events they attended, what kinds of content they have viewed—that sort of thing."

That puts behavioral data front and center. "It's an educational-based sell. If you know John Doe downloaded a white paper, the next thing you do is invite him to an event," Sambrook said. "It's going to be looking at activity levels of individuals and positioning content in front of them."

Email in vogue

Email continues to be an effective means for marketers to speak with customers and prospects as they move through the sales cycle. "Email is very much in vogue for 2008," Sambrook said.

"What we hear is it's another positive touch point," Sambrook said. "A lot of companies have changed the way they market; it's a lot more respectful. Email has become a way to move and nurture people through the sales cycle."

Larry May, CEO of Direct Media, said email plays a big role in CRM for most of his clients. "It's an important part of their contact with their own customers. Email as an acquisition tool is definitely improving, but it's still in its early stages," he said. "Most b2b marketers today still rely more on direct mail than email, but email is becoming an increasingly important part of the media mix."

Direct Media was acquired last month by infoUSA. The sale was motivated in part by a desire to offer a wider set of services to clients. The deal means Direct Media has infoUSA's deep resources at its disposal.

"One of our immediate goals—and one of the things we believe we gain through our alliance with

infoUSA—is to begin to develop products to offer our clients the ability to contact prospects in both email and direct mail in a streamlined way," May said.

He said he doesn't want to be behind the eight ball as the business evolves. "The whole industry is changing," May said. "We prefer to always be ahead of those changes rather than play catch-up."

Other list managers who want to stay ahead of the curve are branching out even further into areas such as circulation services.

Stick to one's knitting

MeritDirect in January began offering circulation services and campaign planning to a few of its catalog and publisher clients. Sanchez said the company is also doing a lot of database segmentation and analytics work alongside the marketing departments of many of its clients. While he said it is important for list companies to expand and diversify services in order to grow and evolve as the marketing world changes, he added it is equally important to stick to one's knitting.

"You can get into new businesses and services, but they have to be close to the core of what you are doing," Sanchez said. "How do you define the core of your business? Is it direct marketing services? You have to be careful not to overextend.

"We've been more into email than banner ads and search. The reason is that the skill set for email can be adapted easily from the postal world. We've tried to stay relatively focused. We've added to our core brokerage and management expertise, but you have to be careful to not get too far-flung. We saw email as an area where you are still dealing with databases, and you are dealing with basic list rentals and campaigns; so we placed more of our eggs in that basket. I think it's paid off."