Several media companiesâincluding Horizon House Publications Inc., Penton Media Inc., Thomson Corp. and Ziff Davis Media Inc.âhave moved their lists to new managers in recent months in hopes of generating greater revenue.
Marketers are mailing dramatically fewer promotional pieces than before Sept. 11, and consequently theyâre renting fewer lists from list companies. Various industry sources estimate list revenues are down anywhere from 15% to 40% for many companies, and technology publishers in particular are under tremendous pressure to generate revenue from renting subscriber files.
"Business stinks," said Barbara Gill, president of Chessie Lists Inc., echoing the common refrain of list managers.
"Revenue is down double-digits," agreed Ben Perez, chairman of Millard Group Inc., speaking at a Direct Marketing Association list conference last month. Perez later said in an interview, "Thereâs been greater movement [from one vendor to another] because of a lack of growth in the marketplace and uncertainty about the future."
Another panelist at the conference, Dave Florence, chairman of Direct Media Inc., said his business began to decline in early 2001 and "itâs been down ever since then."
The urge to shop for a new list manager is understandable, considering the state of the economy.
"When the economyâs weak, itâs natural for list owners to get antsy and look around for a better deal or a new list manager," said NetCreations Inc. President Michael Mayor. NetCreationsâ PostMasterDirect last month won the WebPromote.com e-mail business from MetaResponse Group.
Looking for revenue growth
Changing list managers is one way to try to boost revenues. Ziff Davis shifted 11 magazine subscriber files, including those of eWeek, Baseline, CIO Insight, Interactive Week and Smart Partner, to Worldata Inc. in August. Prior to that, Direct Media managed them. Worldata also won four Horizon House lists from Edith Roman Associates Inc. and eight Penton Media lists, which were formerly managed by both Lake Group Media Inc. and Pentonâs in-house list management unit.
"Publishing has suffered dramatically because of the downturn, so [media companies] are more conscious of the fact that list rental is a very important part of their profit," said Deb Goldstein, president, IDG List Services.
"List owners are looking for managers who will provide services and attention," said Denise Moser, director of data product development for Cahners Business Lists. "List management is a very low-margin business, so when things are tough, it makes it that much harder for everyone." Cahners owns several hundred postal lists and 300 e-mail lists, and handles list management and list rental.
Ziff Davis was pleased with its relationship with Direct Media, said Charles Mast, senior VP-circulation, but it decided to make a change anyway. "Change can be good, and it doesnât hurt to get new blood working on [lists]." He added that Worldata is a better fit with his organization.
Ziff Davis moved all of its paid circulation titles to Worldata a year ago. Based on the success of that move, the publisher decided to transfer its b-to-b controlled circulation magazines in August.
"Itâs certainly an opportunity to increase revenue," Mast said. That opportunity takes on increased significance, given Ziff Davisâ financial woes.
Industry watchers say many companies are cutting back on big campaigns and mailing smaller quantities of marketing messages to targeted lists. "The order size has gone down," Chessieâs Gill said.
In response to lower demand, there is rampant discounting under way.
"This is the first year in the 23 years Iâve been involved in the industry that there have been so many promotions, like a free test mailing or order 5,000 names, get 5,000 names," said Lee Kroll, president of Kroll Direct Marketing Inc. Kroll referred to such deals as "blue light specials," and said that "unless the market is there, we find a lot of specials go unheeded."
Kroll added that basic b-to-b list prices, which average $100 to $150 per thousand, seem to be holding steady despite the problems plaguing the industry.
E-mail b-to-b pricing has held up, agreed NetCreationsâ Moyer. Aside from introductory offers or occasional specials, the company charges $200 to $350 per thousand.
Moser said Cahners has not resorted to discounting. "We know the value of the names weâve got," she said.