Broker Roundtable: What’s the Outlook for Cooperative Databases?

This week's question: What's the Outlook for Cooperative Databases?

Our current panel features: Jeremy Johnson of Specialists Marketing Services; Wendy McLaughlin of DSA Direct; Al Schonwald of Chilcutt Direct Marketing and Paul Theriot of Alesco Data Group. (Would you like to be considered to be a member of our roundtable? Contact Larry Riggs at [email protected].)

Jeremy Johnson, vice president of brokerage at Specialists Marketing Services Inc.:

Universes on core files have shrunk and there is a lack of qualified lists coming to the market. Cooperative databases have picked up a significant amount of the slack and have done so quite effectively. Cooperative database firms are adding members from all categories. They're no longer a tool used only by consumer catalogers and business-to-business marketers. Now, we have seen immense success by consumer publishers as well as continuity marketers. With hundreds of data points and purchase transactions being provided by participants, the co-ops are able to develop refined models and uncover a prospect pool that only they can.

Cooperative databases will continue to play a significant role in marketers' plans. They will be used not only for prospecting, but for house and outside list optimization as well. With participants across industries, we will see more innovative approaches and uses of the cooperative databases in the months and years to come.

Wendy McLaughlin, vice president, list brokerage, DSA Direct:

Cooperative databases continue to dominate the prospecting and buyer reactivation portion of most mail plans. How many cooperative databases a mailer continues to use however, seems to be varying. Where mailers used to use all cooperative databases, now it really depends on how well the cooperative database models are performing and how willing and innovative the cooperative folks are with providing new insights and models that find responsive, profitable results. Since overall prospecting is down, mailers need well-priced prospecting names that perform. By spreading themselves too thin across all the cooperative databases, they end up with the names of mega-multiple buyers that don't really perform like traditional list-generated multiple buyers. Therefore, they cannot always be mailed and this increases the costs of the cooperative database names.

Al Schonwald, vice president, Chilcutt Direct Marketing:

We expect that the purchase of Abacus by Alliance Data will be a model that several other co-ops will follow. About 25% of the Abacus data is now integrated into Epsilon's TargetPlus master database. It makes sense for other large consumer databases to purchase or create alliances with the other co-ops. Another trend that will accelerate is for the co-ops to rent their data to out-of-category mailers that are not co-op members. A third trend which DataLogix is already pioneered is to use co-op transactional data as an additional data source to improve online behavioral predictive models. A fourth trend is that co-ops increasingly will more fully accept list brokers as sales partners.

Paul Theriot, president, Alesco Data Group:

Starting with Abacus in the late 90's, we've seen a steady increase in the number of cooperative databases available. Each has a slightly different and unique method of selecting prospect names.

With the maturation of co-ops, along with direct mail in general, I don't see any significant growth opportunities in the segment unless someone can come up with a new and significantly better way of predicting response behavior. Plus, most of the larger mailers (particularly business-to-consumer) already participate in two or three co-ops. Adding another one to the mix would yield little incremental value.

That said, cooperative databases provide a unique and valuable service to their members. They provide access to names that might not otherwise be available due to competitive restrictions. Cooperative databases give their clients access to a larger universe of names to model and, therefore, greater numbers of prospect records. They also provide services to help with client reactivation and churn reduction. Based on these factors, the outlook for the continued viability of the co-op model is extremely positive.