"The database management companies have a tremendous asset in that they are hosting the customer data, which answer a lot of the questions of where and how to advertise. I think that's why this industry is growing as quickly as it is," said Eric Schmitt, an analyst with Forrester Research.
Schmitt is the author of a report published this month that evaluated 10 database marketing services providers that Forrester considers the best in the business. The study concluded that analytics is the key ingredient that propelled these companies to the front of the pack.
Eight of the companies have a significant number of b-to-b clients: Acxiom Corp., Allant Group, BeNOW, Donnelley Group, Experian, Harte-Hanks, KnowledgeBase Marketing and Targetbase. The others, Epsilon and Merkle, do not have significant b-to-b client rosters.
Three categories of the best
Forrester broke the 10 into three categories: leaders, strong performers and contenders. Allant, Epsilon and Merkle were rated as leaders. Acxiom, BeNOW, Harte-Hanks, KnowledgeBase and Targetbase were called strong performers. Experian and Donnelley Group were listed as contenders.
"Whether [marketers] are considering a new [database marketing] outsourcing contract or just adding to their existing relationship, analytical capabilities are critical," the report said. "Demand is also becoming more strategic. For every buyer that wants a simple bolt-on response model, another is looking for long-term solutions based on notions like lifetime value, multichannel testing and online-offline data integration."
Whatever their level of sophistication, Schmitt said, all marketers have raised their expectations of database marketing providers.
"In general, buyers are looking for more value-added [services] and more relevance to their business," Schmitt said in an interview. "They're saying, `I'm not buying technology services from you if you aren't going to help me move my business.' "
Some b-to-b database providers excel in this arena, while some have room to improve, according to Forrester. For example, Schmitt called Donnelley Group a "low-cost contender," giving it high marks for low-cost data processing services and b-to-b expertise. The report said, however, that the company's "self-service approach to database solutions won't appeal to clients looking for a more `agencylike' experience."
Strategy and Analytics focus
Ed Mallin, president of Donnelley Group, said strategy and analytics have become areas of increased focus for the company. "We recognize having a strong professional services staff is an important part of the process, especially in the marketing database world," he said. "We've made a significant investment in the past six months to shore up that piece of our delivery set."
Mallin said Donnelley has added staff to boost its analytics expertise. "It's a significant upgrade in terms of commitment of resources," he said, declining to say how many people had been hired.
Schmitt described Harte-Hanks as "the Swiss Army knife of database marketing service providers."
"They have so many different services, particularly operations and fulfillment, call center, direct mail, e-mail, list services and analytics," he said. "They do a little bit of everything, and in some cases more than a little bit."
Schmitt said clients give Harte-Hanks high marks for industry knowledge and capable execution but fault it for what they see as a lack of integration among the services it offers and its high cost relative to the level of service delivered.
The focus on strategy is a priority at Harte-Hanks, said Kathy Calta, a corporate officer and senior VP at the company. "In the marketing service provider space, the ability to help our clients leverage investments is going to become increasingly important," she said.
Multichannel targeting is a key component of that effort, Calta said. "In the b-to-b space, especially high technology, there is a need to market goods and services through new channels beyond sales force channels and third parties," she said. "[Clients] are trying to be more thoughtful in how they segment the buyers," she said.
Allant, which received the highest marks among b-to-b companies in the Forrester study, began as a telemarketing services provider but now focuses primarily on database marketing.
"The company's analytically driven philosophy and business-friendly delivery have earned it exceptional marks from clients: above or far above industry average scores in each of the four areas we measured, including an industry-high satisfaction rating," according to the report. The few complaints from clients centered on the pricing for its services.