If you haven’t been negotiating net-name arrangements for the lists you rent, you’re in the minority.
Among participants in the Catalog Age Benchmark Report on Lists (March 1 issue), 58% negotiate net-name deals, at least some of the time. That’s a significant increase from two years earlier. Only 29% of participants in the 2000 Benchmark Report said that they negotiated net-name arrangements.
As mailers tighten up their circulation plans, “each list is being scrutinized even closer, whether it is response rate, average order, or list cost,” says Tom Fleming, vice president, account management for Minneapolis list and media firm ParadyszMatera. “Net-name arrangements are often the biggest variable in lowering the overall list cost, enabling a list to stay in the circulation plan.” For their part, he adds, “list owners being more accommodating to get their lists rented.”
Jim Hall, vice president of brokerage for Oklahoma City-based list firm Chilcutt Direct Marketing, agrees that in their eagerness to reap more list revenue, list owners are increasingly willing to negotiate net-name arrangements. But he adds that renters are more likely to strike a favorable deal “when they use a lot of names from a single list and a single list manager.”
Striking a net-name deal benefits the renter and sometimes, if it means making rather than breaking a deal, the list owner. But not all list managers are pleased with the increased demand for such arrangements, however. “Every broker calling me now looks for a deal more so than in the past,” grumbles one manager, who requests anonymity. “People are trying to look for things they didn’t used to before.”
Netting a favorable arrangement
Golf equipment cataloger/retailer Golfsmith, which has increased prospecting 20% this year, has been pressing list owners for net-name arrangements more that it used to. “We’re doing a lot of merge/purge up front on a rental list and doing net-name relative to that,” says Jim Thompson, senior vice president of merchandising and store operations for the Austin, TX-based marketer.
Greenville, NC-based boating supplies marketer Overton’s pursues net-name arrangements on a case-by-case basis. “We look at every deal differently,” says director of marketing Brian Moen. “If we can say that historically a particular list has proven itself, we won’t pursue a net-name agreement. But otherwise with newer lists, we may hold out for the best rate possible in a net-name arrangement.”
In fact, Moen says he’s seeking more net-name arrangements this year because fewer names are on the market. “Some of these lists we’ve hit several times already, and we’re achieving fewer net names out of our merge results.”
Gadgets cataloger TechnoBrands seeks net-name deals “if I see a huge drop in the merge output and if I’m losing big percentages of names — 30% or so in the merge,” says catalog director Shardul Pandya. But the Colonial Heights, VA-based mailer relies mostly on list exchanges for prospecting, “so there are no nets on either end,” Pandya says.
What’s in a Net-Name Deal?
Under a net-name arrangement, the list renter doesn’t have to pay for names on the rental list that are already in its own house file. In other words, the renter pays only for the names “netted” after a merge/purge with its own house file weeds out the redundant records. (The renter will typically have to pay running charges for 100% of the names, however.)
Generally the list owner places a cap on the percentage of names that it will allow the renter to not pay for. A typical net-name arrangement is 75%. So let’s say Joe’s Catalog rents 100,000 names from the Widgets Catalog, and 30,000 of those names are already on Joe’s house file. Although only 70% of the Widgets names are unique, Joe’s would still have to pay for 75%.
Net-name arrangements also come into play when a cataloger is renting multiple lists. If the same record appeared on three lists, the cataloger renting the lists might want to rent it all three times, so that if it didn’t convert the prospect with the first mailing, it could mail to the name again in the future. But the cataloger could also have that multihit name under a net-name arrangement.