As database marketing shifts to alternate forms of list building using cooperative databases and crowd-sourced lists, the world of the list broker is also changing.
List brokers are transitioning from purveyors of response databases, tailoring a handful of subscriber lists to marketers' broad needs and taking a 20% cut of proceeds, to more full-service marketing consultancies where list rentals are only part of their offerings.
“When new sources of data, such as co-op databases [collections of customer profiles gathered from real transactions] first began to take root, the initial concern from the list brokerage community was, "Who's going to need us to get the right list for them?' ” said Chris DeMartine, director-business development with NextMark Inc., a provider of tools and resources for buying and selling mailing lists.
With large database marketing companies such as Infogroup, Salesforce.com's Data.com and Hoover's aggregating and promoting 12 million, 30 million and 85 million business contacts and sales leads, respectively, DeMartine said, “none of this replaces the direct marketing campaigns a list broker can put together.”
He said brokers are beginning to add such services as response and lifetime value analysis.
“This transformation has been going on for a year,” said Peter Candito, exec VP at Specialists Marketing Services, a list brokerage and management company. “The term "list broker' is probably not correct anymore. We talk of the "data broker' or "media information broker.' It's about the new sources that they bring to the client.”
Candito said list brokers are becoming more like media buyers within the traditional ad agency and, with the amount of data sources and types of media, the expertise that list brokers have is valuable.
“It's the consultancy part of the job, which brokers don't necessarily get paid for, in guiding you toward or away from sorts of media that is even more valuable now,” Candito said.
It isn't helping the traditional approach that rental prices for subscriber lists are falling. According to the “Winter 2012 List Price Index” from list brokerage and management company Worldata, small-business email databases averaged $143 per thousand contacts, a 12.3% drop from the year-earlier period. Email lists of contacts at midsize and large companies fell 10.4%, to $251 per thousand names. Aggregated business postal databases were off overall by 14.9%, to $80.
One interesting recent development was the announcement last month by Infogroup that it will expand the management and broker team of its list services business. The move signals a shift to the kind of careful list-building consultancy that list brokers have always specialized in which complements the big databases Infogroup compiles.
“There will be elements of old school but also current initiatives in ways that data is manipulated, added to and used,” said Ben Perez, senior VP-business development at Infogroup. “I think you're looking at less a revolution than an evolution in the way the industry is handling data.”
Perez said the list brokerage business will always be grounded in response lists as a foundation for large data aggregation.
“The brokerage piece is still a deep part of our organization,” Perez said.
“The traditional model was, a marketer would hire a broker who would scour the list universe and make recommendations about what to mail, phone or email,” said Ruth P. Stevens, president of b-to-b marketing consultancy eMarketing Strategy and professor of marketing at Columbia University's Graduate School of Business.
“List brokers are under commission pressure, since online access to databases can be sifted, sorted and selected,” Stevens said. “But we know that response lists respond better than compiled lists. And those aren't the ones people access when they're running CRM systems that funnel thousands of names into the equation.”