How many incidents within the list industry does it take to make a trend? Three months ago, Clare Hart, Infogroup’s new CEO, revealed plans to rebalance the company away from providing list information and more toward services. Late last month, Infogroup announced Ed Mallin, who was instrumental in Infogroup’s list management firm acquisition activities, was stepping down.
All of which gives rise to a question: What is the perceived value of list management operations within the information community?
Lessening, if by no other reason than ancillary marketing services are making up an increasing percentage of list companies’ revenue.
“Services and things we didn’t provide five years ago now make up half our revenue,” says Jay Schwedelson, president and CEO of Worldata. “We don’t refer to ourselves as a list company. We call ourselves a data agency. My organization has limited interest in being your list manager. If we can’t not only be your list manager, but help define you prospecting initiatives, be your partner in terms of data hygiene, appending and overall strategic plans, we are not interested in working with you.”
For Worldata, the broadening strategy appears to be working: 50% of the company’s revenue comes from offerings the company didn’t provide five years ago.
There will come a balancing point, however. “The list management industry will be very important in niche categories,” Schwedelson says, adding that it will provide its highest value to marketers targeting very niche job functions, titles, or very high subscription value individuals or high purchase value behavior. “The middle-ground players, people who subscribe to general interest readers…those will be commoditized and will provide far less value – we’ve already seen it happen – than they are today.”
Schwedelson offers a cautionary note for diversification. “If list management is 80-90% of what your company does, then you will have a problem five years down in the future. People will not be going through the list management channel, targeting general audiences in the same way. There will continue to be more and now channels and options available, and your data won’t as valuable.”
Worldata isn’t alone in this sentiment. “A growing amount of time, effort and services are given to ancillary services such as lead generation, mobile services and Internet offerings,” says John Papalia, president and CEO of Statlistics. “However, postal [lists are] showing something of a resurgence possibly due to a decline in the volume of mail. People are noticing mail more than before.”
That said, services are making up an increasing portion of his firm’s revenue when compared with list revenue. “All universes have shrunk, so have to be more innovative in how we package our products, our lists,” Papalia says, adding that while the portion might exceed 50% for some verticals, but for others it isn’t necessarily that high.
“Brokerage and management represents about 60% of our fees,” says Lon Mandel, president and CEO of Specialists Marketing Services. “Now, if you’d asked me that two years ago, I would have said we get 90% from list management and brokerage.”
That said “We are a marketing services company with a foundation in list brokerage and management,” he asserts. “We are very much entrenched in the list management and brokerage business,” he says. “We have done some acquisitions, and we integrated under one brand, and it has worked well for us.”
This reflects what Infogroup has done with its list holdings: Over time, the list companies it acquired have seen their names fade to the background, with the Infogroup moniker coming to the fore.
One newcomer to the services arena is MeritDirect, which announced the launch of its marketing services group last week. (Disclosure: MeritDirect currently manages the Penton list files. Penton is the parent company of Direct Newsline.) The company’s services group rolls up transactional business database, which it has had for seven years but hasn’t been flogging, its digital and strategic services offerings, which are relatively new, and its brand-new insert media business.
“Today [their contribution to revenue is] minimal,” says president and CEO Mark Joyce. “The status is that they are in growth mode. They don’t represent a significant portion of our business at all.”
MeritDirect’s list operations have been divided roughly 60%/40% between its brokerage and management activities. The new services offerings, says Joyce, should enhance total revenue, but not draw resources or focus from the list operations.
“We don’t see this as robbing Peter to pay Paul,” he says. “The proportion will change, but not at the expense of list management [revenue]”.
While MeritDirect’s offerings have been generated in-house, ALC has chosen to acquire stakes in a number of external companies, such as digital strategy firm Empathy Lab. Future acquisitions, according to president and CEO Susan Rappaport, would likely be in the traffic generation area.
Rappaport didn’t indicate the mix list management and brokerage services played to other marketing services, but did say she felt the list management industry would still be a very viable, very profitable business.