2012 Outlook: Digital Data Will Take Center Stage

The word “flat” is the usual response when list brokers are asked, “How is your business trending this year?” However, flat doesn’t always mean an absence of growth in new markets. An increasing number of list brokers, managers and data services organizations are supporting multichannel marketing campaigns to include one or more digital components.

The new “flat” is diversified revenue, providing greater value and insight to clients in the long run, and resulting in sustainable growth and healthier margins. This diversification does not require list and data marketers to embrace all of the digital channels — sometimes less is better when it’s easier to track performance. Here’s one example provided by Jim Doyle, an industry veteran, practitioner and adjunct professor of direct marketing at American University, Washington, D.C.

“We have found, and confirmed by multiple sources, that leveraging intelligent mail barcodes to time email to before and after postal mail delivery delivers new customers at the lowest cost,” says Doyle. “Customers can further improve this multichannel effort by adding QR codes to the mail pieces and well-positioned links on the emails to landing pages.”

Another factor in the diversification of revenue from list and data providers is the customer type.

“In the old days, only the big companies bought prospect lists, followed by small- to mid-size organizations as the marketplace developed. Today, individuals are buying lists and the volumes are much smaller,” says Vin Gupta, founder of Infofree.com.

Even with the larger organizations, list targeting has gone much deeper, resulting in smaller list rental order volumes. At the same time, digital media channels are taking a larger piece of the pie and will continue to do so, according to industry leaders.

Increased targeting has resulted in the further segmentation of fresh names using overlays and other modeling techniques. For example, Infogroup recently announced a “Gardening Enthusiasts” version of the March of Dimes file last month. There has also been increased activity from international direct marketers, in the U.K. and elsewhere, renting U.S. names in 2011. New-mover databases still rate among the most significant sources of fresh names, with live feeds becoming a standard requirement for data acquisition.

“We are supplying new-mover names and addresses daily to 20 of our clients,” says Valerie DeSalvo, owner, Practical Marketing. “Nothing sparks buyer behavior more than a life event.”

There also seems to be a new “flat” in regard to data acquisition costs. While list pricing and negotiated net-name arrangements may be competitive, there are other fees associated with order handling, selections or modeling that more than offset a reduction in the base. But the benefits of improved targeting should easily offset the incremental costs when you consider that list costs are a fraction of the investment to get your offer delivered.

The Value of Data and Integration

Experienced multichannel marketers appreciate the value of data, but that value is dependent on multiple factors. Fran Green, president, SMART Data Solutions (ALC) reinforces this from the customer’s perspective.

“While some data marketers lament the commoditization of data, I think the value has never been greater. This is only true, however, if the data is truly unique,” Green says.

Life event triggers continue to be effective data attributes. Specialty response titles like Modern Bride or American Baby continue to work well for reaching audiences during life event stages, but more data is now available from aggregators to include “empty nesters” and other segments.

“Data plays a pivotal role in digital marketing. The most effective, highly targeted campaigns need exceptional data quality and sophisticated analytics and modeling to drive performance,” says Clare Hart, president and chief executive officer, Infogroup.

Data is being leveraged in new ways to improve ROI across multiple channels.

“For example, if we know and can identify ‘new moms,’ we can use that postal data to create a much more targeted marketing platform for banner ads or email,” says Ryan Lake, CEO, Lake Group Media.

Bruce Biegel, managing director at Winterberry Group, confirms this trend in stating that “significant progress has been made in making offline data and online intent data segments available for behavioral targeting on ad networks via real time bidding — all in a non-PII approach.”

Personally identifiable information (PII) can be predicted with a high degree of confidence when it is compiled from multiple non-PII data points, such as first name, zip code and date of birth. Therefore, it is important for direct marketers to be aware of how offline data is being used online, and vice versa.

The importance of online display advertising, as noted by its growth, should not overshadow the importance of direct mail for driving web traffic. This has been one of the most significant drivers of online performance.

“Merchants are now able to determine when their catalogs hit the mail box based solely on web traffic. The web pages with the highest traffic are those representing featured products on the catalog cover, or within,” says Doyle.

The greatest challenge is to bring it all together and make sure that the marketing messages are aligned with customer needs and behaviors at the right time — not an easy task.

“This involves tying together data strands, analysis and digital marketing assets to enable real-time marketing,” says Yory Wurmser, Ph.D., director of marketing and media insights, Direct Marketing Association.

Donna Belardi, president at Belardi/Ostroy, agrees. “The challenge will continue to be the measurement and allocation of cost and demands, while managing increased spend that is in line with true incremental revenue.”

Business versus Consumer Data

List managers and brokers need to take ownership of the online media opportunities. This may be even more relevant in the business-to-business space, since the trending of conventional list recommendations is more heavily weighted to consumer lists. In fact, the percentage of b-to-b list recommendations dropped 7 percent compared with consumer list recommendations for January 2011 to October 2011, compared to the same period in 2010. It is expected that more of the business marketing allocation has shifted online. It is time for all offline direct marketers to take ownership of this space, especially in b-to-b.

“This online media is no longer new, and should be viewed as an extension of the services that traditional list brokers and managers represent and recommend to their clients,” says Lee Kroll, president, Kroll Direct Marketing.

The offline data for b-to-b has fewer constraints in regard to terms of use, and is also becoming more segmented. For example, there are 13,000 business email data cards on the market, representing every audience from Active Investors to Zantrio (online investment community). These lists used to be promoted as part of large compiled databases, and the unique segments and selections would be hard to find. The increased demand for targeting professionals, on and offline, has resulted in data marketers creating niche rate cards for nearly every specialty you can imagine.

Business marketers can also expect to see improvements with CRM integration, as sources like Jigsaw and Infofree.com enable their databases to be accessed via Salesforce.com and other leading cloud-based solutions. The nice thing about b-to-b, apart from fiscal budgeting, is that it is less dependent on seasonality. Fresh names are always available, and you don’t need to wait for Christmas to grab a hotline.

“Online and email marketing driven by RFM targeting will move b-to-b merchants from leveraging the Internet as an inexpensive communication vehicle to using it as a more active selling tool,” says Ed Larkin, vice president of the strategic services group at MeritDirect.

Opt-In for Mobility

While not everyone has a smartphone, tomorrow’s consumers will all be digital.

“The smartphone has become the communications device of choice,” says Chicca D’Agostino, president of Focus USA. “As a result, location-specific messaging is growing — and why not, when clickthrough rates are 5- to 10-times greater than email,” she adds.

Tally Maffucci, president at RMI Direct Marketing, noted that “the majority of marketers are still working on creating their mobile marketing initiatives to their own customers.”

This is consistent with the early stage of the mobile list market, due to privacy implications for the channel. Nevertheless, a few list management firms, such as Lake Group Media, are already “developing targeted, opt-in, mobile lists for niche verticals,” says Lake. “Volume is typically smaller, but response and ROI are vastly improved,” he adds.

Chris DeMartine is Director of Business Development at audience marketing firm NextMark. He can be reached at cdemartine@nextmark.com.