Whether propelled by a burgeoning economy or racing to beat a January 2001 postage increase, respondents to Catalog Age’s Benchmark Report on Lists say they are dramatically boosting circulation this year. Seventy-seven percent of respondents are increasing mailings, with nearly half (46%) of these mailers upping circulation more than 4%. Among consumer respondents, the figure is higher, with 53% increasing mailings more than 4%, vs. 37% of business-to-business respondents upping circulation that much (see cover chart).
A large portion of this year’s catalog mailings comes from increased prospecting, especially among b-to-b respondents: 51% plan to increase mailings to outside names vs. 24% planning to decrease outside mailings. Forty-one percent of consumer respondents plan to mail to more outside names this year, but only 19% plan to cut circulation to outside names.
As for next year, while some catalogers have told Catalog Age that a January postal rate increase might force them to mail less (see March 1, cover), survey respondents appear undaunted, as 80% say they expect to increase circulation in 2001. Consumer mailers appear more optimistic than their b-to-b counterparts, as 83% anticipate circulation increases for 2001, and 60% of those plan increases of more than 2.5%. By contrast, 71% of b-to-b mailers anticipate 2001 increases, and of these mailers, only 40% will boost circulation more than 2.5%. But because so many b-to-b catalogs are much larger than the typical consumer book (and more expensive to mail), this more conservative approach to 2001 circulation makes sense.
LIST MANAGEMENT
Overall, respondents are guarding their data more closely than in the past. About half (49%) refused to make their house files available for rental or exchange a year ago; now 60% of respondents report that they don’t make their lists available. Fifty-four percent of consumer catalog respondents do not rent or exchange names, while 79% of b-to-bers refuse to do so.
The percentage of respondents allowing renters to append data to their house files rose steadily from 1995 (21%) to 1998 (30%), but declined to 26% last year and to 18% in this year’s survey. Respondents allowing renters to model their house files also dropped – from 33% last year to 18% this year. As database marketing techniques have become more prevalent and more sophisticated, and as competition increases, catalogers that had rented or exchanged their house files may be warier of their competitors. Respondents are clearly less willing to allow other mailers to use database technology to target and enhance offers to their customers.
But house files aren’t necessarily being locked away. If catalogers are members of a cooperative database, they can usually model and append data to the database’s lists. This year, nearly a third (32%) of respondents report participating in a cooperative database – roughly the same percentage as in 1999. And consumer mailers are jumping into co-ops in a big way: Nearly half (48%) of consumer responders are co-op participants this year, up from 39% in 1999.
Regardless of their position on rental or exchange, respondents unanimously agree on one key list issue: e-mail selects. Not a single respondent offers e-mail selects, compared with 6% that offered them last year. It appears that despite swelling interest in e-mail marketing, concerns about spam and privacy are preventing catalogers from trading their customers’ e-mail addresses.
More respondents than ever before – 69% – manage their lists inhouse. But of those that still turn to outside managers, more are paying less for these services. Last year, 3% paid a management commission of less than 10% – this year, 14% pay less. And while most of last year’s respondents – 61% – paid managers a 10% commission, only 36% pay that much this year. Just one-quarter of respondents say they pay a higher commission than 10%.
LIST ACQUISITION
Although more respondents say they are managing their own lists, they still turn to list brokers to rent or exchange names. But they’re paying brokers far less than they used to. Last year, 41% paid a 20% broker commission and 27% paid a lower rate. This year, only 21% of overall respondents pay 20%, while 57% pay a lower commission. And 30% of last year’s survey respondents arranged fee-based compensation, compared with only 17% this year.
The bottom line: The commission system still dominates, but commission rates are falling. And as more catalogers, particularly consumer mailers with typically higher circulations, turn to cooperative databases for prospecting names, the demand for traditional brokerage services may continue to wane.
Luckily for traditional list brokers, they appear to have little competition yet from the Internet. Only 17% of this year’s respondents report shopping online for lists vs. 14% in 1999.
As for e-mail prospecting, although 26% say they are considering it, only 2% report renting e-mail lists for prospecting. The paucity of viable e-mail lists available for rent may be partly responsible (see “E-lists: Big bucks, few names,” November 1999 issue, pg. 55), as well as mailers’ fears that unsolicited e-mail promotional offers will be considered spam.
LIST MAINTENANCE
This year’s respondents report little change over last year’s in the list maintenance area. Although most of those surveyed (66%) say they are using the U.S. Postal Service’s National Change of Address (NCOA) database to correct addresses, only 27% use the DMA’s Mailers’ Preference Service to update lists. Both percentages are virtually unchanged from 1999.
While most survey respondents keep “do not mail” files (70%), and “do not rent” files (57%), these percentages are also about the same as last year.
The promotion of opt-out policies provides the one area in which response has changed dramatically this year – and not in the right direction. Only 30% of respondents promote opt-out anywhere in their catalogs, the lowest percentage since Catalog Age began tracking opt-out in 1995.