List Leaders Debate InfoUSA

Donnelley Group president Ed Mallin was unable to attend a panel discussion at last week’s List Vision conference in New York, but that didn’t stop his colleagues from discussing Donnelley and its parent company, infoUSA.

Mallin’s boss, infoUSA chairman Vin Gupta, has been buying smaller list firms in hopes of consolidating what he sees as a fragmented industry. (See “Is infoUSA Taking over the World?”) But list business leaders on the panel–moderated by Ray Schultz, editorial director of MULTICHANNEL MERCHANT sister publication “Direct”—said that Gupta’s shopping spree doesn’t seem to be changing much about the industry.

On June 1, infoUSA acquired Hackensack, NJ-based list services firm Mokrynskidirect $6.6 million. In November 2005 it had purchased another list firm, Peterborough, NH-based Millard Group, for $14.2 million. These two firms, along with Edith Roman Associates (acquired in June 2004) and Walter Karl (acquired in March 1998), are now part of infoUSA’s Donnelley Group subsidiary.

“I’m looking at this from an outsider’s perspective, but it seems to me that not a lot has changed,” said Larry May, CEO of Greenwich, CT-based list services firm Direct Media. “The companies they have purchased are still running as independent companies, so I don’t see how that is saving a fragmented industry.”

Lon Mandel, president/CEO of Specialists Marketing Services, added that if you consolidate without integrating the companies, you still have a fragmented industry. But any sort of true consolidation results in a loss of jobs, and a loss of choices for mailers.

“You ultimately lose people when you consolidate, and people are your biggest asset in this business,” Mandel said.

Ralph Drybrough, CEO of White Plains, NY-based list firm Merit Direct, said that infoUSA’s two most recent acquisitions didn’t affect his company, as Merit Direct specializes in business-to-business accounts while Mokrynskidirect and Millard handle consumer accounts primarily. But he did admit that infoUSA’s previous purchases of Edith Roman and Walter Karl, both of which also specialize in b-to-b lists, had a mixed impact.

“Things were fine until we found out our clients were being seduced with things like free lists and additional overlays,” Drybrough said. “But consolidation also brought some free agents and a nice opportunity to pick up some fine people who’d worked for Walter Karl and Edith Roman.”

Drybrough also mentioned the “C” word–co-ops–and added that companies such as Mokrynskidirect and Millard may still have been independent today if it weren’t for competition from those databases.

Looking ahead, Drybrough said he didn’t see Merit Direct as a possible acquisition target, based on its succession plan. The 92-employee company has 11 partners and a commitment to add new partners as current ones retire.

May said Direct Media, as an employee-owned company, would need to take a huge shift in direction to agree to a buyout by infoUSA or another outside firm.

Mandel added he’d rather have his employees buy Specialists from him than have it be sold to a larger company.

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