DATABASE CO-OPS

Aug 01, 1999 9:30 PM  By

Has Abacus Direct, the Broomfield, CO-based creator of the Abacus Alliance proprietary database, grown too big for its britches? expanded too quickly? contributed to overmailing?

The catalog industry’s answers to these questions are anything but straightforward. An informal survey shows that plenty – most likely the majority – of its 1,100 members feel that Abacus’s nearly decade-old consumer catalog co-op database remains their most effective list. “We’ve found that Abacus is absolutely critical to our future growth,” says Gordon Cooke, president/CEO of The J. Jill Group (formerly DM Management).

But other members, wary of the rapidly growing co-op database provider’s recent dealings with list and database firm Acxiom and its subsequent agreement to merge later this year with Internet ad agency Double-Click (see “Abacus merger draws fire,” right), wonder whether Abacus will be able to continue to satisfy their needs. And several others have recently abandoned the co-op altogether – or are considering it – due to their disappointment in the quality of the database and Abacus’s member disclosure policies.

Take Plow & Hearth, an Abacus member for the past three years. “We are not using Abacus as aggressively as in the past. We’ve had service issues and missed deadlines,” says Peter Rice, vice president of marketing for the Madison, VA-based home and garden cataloger. Rice thinks rapid expansion is to blame. “Abacus is growing so quickly that it has many new salespeople selling a very complicated product; I don’t know that some of them really understand it.”

Some members also say that the results they are getting from the Abacus Alliance database have been disappointing of late. “We suspended our use of the Abacus database four months ago, because results were sagging,” says one former member, who requested anonymity. “The quality of the names hasn’t been improving.”

“There’s absolutely been a dropoff in response over the past several years,” says another longtime Alliance member, who also insists on anonymity.

Overmailing?

Abacus claims that its more than 2 billion consumer catalog transactions represent virtually all U.S. households that buy from catalogs. As a result, some mailers wonder about the effect it may have on response from their house files.

Catalog Age’s Benchmark Reports show that among consumer catalog respondents, there has been nearly a 19% decline in the average house file response rates from 1996 to 1999, dropping from 8% to 6.5%. While this decline cannot be directly attributed to the growth of the Alliance database, it does prompt some to ask whether their customers are receiving too many catalogs.

“One has to ask if so many of the targeting efforts in this industry aren’t simply resulting in more mail to fewer people,” says Jeff Parnell, CEO of Northfield, IL-based gifts cataloger Eximious.

And despite J. Jill Group’s overwhelming success with Abacus (the database makes up 40% of the firm’s prospect mailings), “we’re all concerned about the premium multibuyers and how many catalogs they’re getting, and about the fact that our customers are receiving catalogs from all the other [Alliance] members,” president/CEO Cooke says.

The control issue

Moreover, determining which members are mailing to your customers can be tough. When a cataloger joins the co-op, its list becomes part of the largest proprietary database of consumer buying behavior used for targeted marketing – and unlike in the standard list rental process, an Alliance member is not told who is getting access to its house file names.

This lack of control was the primary reason Woodworker’s Supply president John Wirth Jr., Ph.D., withdrew his company’s namesake catalog of tools and supplies from the Alliance this past spring. “Abacus says I can restrict certain companies from using my list,” he says. “But if there’s a little obscure competitor I’ve failed to identify, he hits me.” The amount of revenue the database was taking away from his catalog by exposing his customers to an onslaught of other offers, he says, “was significantly greater than the benefit of mailing to their lists. I decided the risk was too great.”

(Despite this, Woodworker’s continues to use Abacus for its Leichtung Workshops catalog, Wirth says, because Leichtung has a more clear-cut universe of catalog competitors.)

Abacus’s take

Abacus chairman/CEO Tony White, confronted with some Alliance members’ concerns, says that the few who are unhappy may not be using the entire range of services offered by the co-op. “Those who are taking full advantage of our services couldn’t be happier,” he claims. And several mailers certainly bear this out, including Fred Bell, co-owner of Touch of Class, a Huntingburg, IN-based cataloger of linens and domestics. Bell says he has the “highest regard for Abacus and its ability to work statistical wizardry in order to predict how well a particular list will work for us.”

In regard to any lapses in customer service, White says, “we’ve had a relentless drive over the past three years to provide better customer service. We’re constantly on the lookout to hire good people.” When the company went public three years ago, he notes, “we had four or five frontline account people who dealt directly with clients. Now we have 50. The account loads have gone from each person having about 100 accounts to an average of less than 30.”

What about catalogers that have left the Alliance? White says that although “we’re not infallible, very few catalogers – no more than a handful – have ever left the co-op.” The percentage is so small, he says, “you couldn’t find it on your calculator.” For those that have opted out, White adds, their catalogs “may have been too niched, and we may have had difficulty finding list universes for them.”

As for the control issue, White explains that secrecy has always been an essential element of the co-op. “The early participants insisted that it be a closed alliance, with no one knowing who was participating.” (Catalog Age can attest to this: Getting members to speak on the record is like trying to infiltrate a religious cult.)

Finally, regarding concerns about overmailing the Alliance’s buyer universe, White counters that Abacus’s proprietary modeling techniques pull higher response rates for members – preventing wasted mailings. “It’s finding those names beyond multibuyers that we bring to the table,” he says.

Additional reporting by Moira Pascale.

Co-op database provider Abacus Direct and Internet ad agency DoubleClick have been touting their proposed merger, scheduled to close Sept. 30, as a way of giving Abacus members easier access to Internet shoppers. But the deal has drawn the ire not only of privacy advocates (worried about so much data being controlled by a single entity), but also of some Abacus Alliance database members.

The sale, says Gary Johnson, marketing director for reading accessories cataloger Levenger, “introduces a high level of uncertainty [as to what Abacus will do with its database] when [members are] more sensitive than ever about giving Abacus detailed buyer behavior information. I can’t imagine this will improve the database.”

But Abacus chairman/CEO Tony White says he pursued the deal with DoubleClick based on results of a member survey the Broomfield, CO-based Abacus conducted earlier this year. “The big thing we found among members was concern about getting people to their Websites. …So we’re going to put together programs now where we can use things like opt-in e-mail to get people to our participants’ sites.”

The deal will also allow New York-based DoubleClick, which claims to be the leading banner ad placement agency for marketers and Web publishers, to use its targeting technology to deliver advertising from its central server to Websites. “If Abacus members want to target geographically or at particular times of the day,” says DoubleClick general counsel Elizabeth Wang, “we have the technology to get them there.”

What’s in it for me?

Several other Alliance members are concerned about how the deal might affect them. “On paper, it makes sense for Abacus to offer its Alliance members any sort of link to e-commerce,” says Jeff Parnell, CEO of gifts cataloger Eximious. “But there’s a great deal of confusion as to any specific benefits we’ll receive, how we’ll be able to supercharge our Websites. When you’re as small as we are – less than $10 million in sales – it’s very difficult to get in the doors of larger e-commerce organizations.”

And not all Alliance members are eager to share their customer data with Internet marketers. “As a print-only cataloger, we contribute data to the database to share in return for names, selects, and model information from other similar companies,” says Fred Bell, co-owner of domestics catalog Touch of Class. Bell says that when he signed on with Abacus, he never intended for his house file data to be shared with Internet catalogers.

On the other hand, Bill Nicolai, vice president of marketing for Portland, OR-based gift and home goods cataloger and Abacus Alliance member Good Catalog Co., believes the deal will “give us access to data of online shoppers’ buying habits that we otherwise wouldn’t have known about.”