Thanks to the recession and several company closings, the list industry’s reputation has taken a beating in recent years. For instance, Uni-Mail List Corp., located just four blocks from the World Trade Center, closed less than two months after the Sept. 11 attacks. American List Counsel list management spin-off Impower emerged in June from 10 months of Chapter 11 bankruptcy protection, settling to pay creditors just 30% of what they were owed. In August, Chicago-based brokerage Alan Drey Co. shut down after 52 years.
To boost the industry’s image, Greenwich, CT-based list firm Direct Media in October began promoting a “Pledge of Financial Integrity” to other list brokers and managers. This code of ethics recommends, among other points, that list firms keep separate accounts for list owner revenue, give list owners their proceeds from rentals within a month that the list firm receives the fees, and conduct thorough credit checks on orders placed by new mailers.
The pledge seems noble effort, but is it necessary? All the list companies contacted by Catalog Age profess to be already practicing what the ethics code preaches.
“The firms that have been around a long time have in essence been doing what Direct Media is saying and will continue to do so, because that’s the way to do business properly,” says Roy Schwedelson, president/CEO of Boca Raton, FL-based Worldata/WebConnect.
Kathy Duggan-Josephs, president of Ridgefield, CT-based list firm D-J Associates, agrees. “I suppose there may be some people concerned now that another list company [Alan Drey Co.] went out of business,” she says. “But everything Direct Media proposes is the minimum of what we do — and always have done.”
Further, companies not adhering to ethical standards aren’t likely to change their ways because of the pledge, say some. Direct Media’s statement is not only “unnecessary for the vast majority of well-capitalized and well-managed brokerages,” says Geoff Batrouney, executive vice president of New Rochelle, NY-based Estee Marketing Group, “but it will fall on deaf ears of those not well managed or undercapitalized.”
But Direct Media chairman/CEO/founder Dave Florence contends that undercapitalized firms, and the dismal economy in general, make the pledge necessary. “The bad economy has put a lot of list companies in danger of going down and taking list owner money with them,” he says, though he would not divulge the names of the struggling companies. The code of ethics could at least give list owners a checklist of items to discuss with their brokers and managers, especially if the owners are shopping around for a new list company.
And in fact, catalogers applaud Direct Media’s pledge. “This sets a clear industry standard, thereby preventing disputes between brokers and their clients,” says Frank Foster, president of Fountain Inn, SC-based military gifts cataloger Medals of America. “Most mature catalogs budget their anticipated list revenue on a monthly basis and need to know payment will be there at a certain time.” And the statement will help put new catalogers at ease when dealing with list managers, he adds.
Tracy Lamb, director of marketing for Delray Beach, FL-based reading tools cataloger Levenger, finds one aspect of the ethics code especially attractive: “the part about no orders placed for new mailers without a thorough credit check.”