Specific needs spur demand for private databases

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For marketers seeking a more sophisticated approach to prospecting than the traditional list rental market offers, there are two basic choices: public cooperative databases and custom-built private prospecting databases.

Within the large public cooperatives, such as Merit Direct's MeritBase and Direct Media's DataWarehouse, marketers benefit from low or no cost of entry, and they can access hundreds of lists that have been overlaid with "firmagraphic" data and enhanced with information from specialized compilers.

The trade-off is that they cede control. These databases are designed to meet the needs of the majority-primarily, marketers of commodities, such as office supplies, and back-office services. So they may not work as well for organizations that don't fit that mold. That's where private databases may be a better option.

"Private databases allow for custom data sets to be assembled and utilized specific to the marketer's needs," said Jay Schwedelson, corporate VP, Worldata. "The migration away from co-ops and towards private databases is already very apparent."

'Power users' go private

Among the companies turning to private prospecting databases are those that Denise Hopkins, senior director of business marketing solutions for Experian, calls "power users"-b-to-b companies with a large retail presence or those in financial services and insurance.

"They tend to be high-volume ... and have more sophisticated modeling capabilities. They use a lot of different lists and a lot of business intelligence," she said.

Schwedelson added that "major technology marketers, seminar marketers and category leaders looking to reach influencers and not just decision-makers" are also using private databases.

Bernice Grossman, president of database marketing consultancy DMRS Group, said that while most private prospecting database users are large business mailers, a lack of opportunity for certain categories within existing public cooperatives may prompt others to follow suit. "I think you'll find that high-tech companies or companies that market to a very vertical set of [Standard Industry Classifications] are probably going to have to build their own as opposed to finding a co-op that works for them," she said.

Building vs. buying

There are both advantages and disadvantages to building a private prospecting database.

Technology retailer CDW, which moved to a private prospecting database several years ago, found the most important benefit was the ability to append incremental firmagraphic data to the input files.

"We were able to append specific IT demand information, which provides better views of prospect sites," said Frederick K. Neil, VP-strategic marketing & decision support at CDW.

A private prospecting database may also provide access to more timely data. "While many list rental files update monthly, most co-ops update and report only quarterly," Schwedelson said. "Those that do update monthly often are not given hot line or active name files for use within the base by the list owners. This causes an issue as the mailer believes they may be using a particular file ... but may not be using the best names possible from that list owner."

Scheduling conflict

Merit Direct VP Chris Pickering said mailers with specific scheduling needs may not thrive in a public cooperative environment. "We balance the needs of everybody as much as we can, but it is a shared environment so the schedule cannot be changed for any one mailer," he said.

Of course, the flexibility of private databases comes at a cost-one that may be up to double that of a public cooperative. And overseeing data management and hygiene for a private database can be burdensome to an already busy marketing staff.

"In the co-op environment, the builders of the database take on that responsibility and they really understand the nature of b-to-b data," Hopkins said. "In the private arena it is an ongoing challenge."

There are numerous potential pitfalls that can prevent marketers from achieving what was intended with a private prospecting database, from underestimating the information needed to overestimating it.

Eric Snider, SkillPath senior VP-marketing, said that when building a private prospecting database, it's essential to keep the list owners happy. "A key question marketers need to ask is whether they will be able to use enough data that list owners will agree to keep their data in on an ongoing basis. You need to be able to mail the majority of list names or mail some names multiple times."

As such, it is difficult to match the depth and breadth of data available through a public co-op in a private prospecting database.

Pickering said public cooperatives offer far more in list universe size and data enhancements. "Most private solutions can't afford one source of firmagraphic data. In MeritBase, we have two large and many specialized sources of data," he said. "The same applies to many other public cooperatives."

'Best of both worlds'

Still, the consensus is that there is a place in the market for both public cooperatives and private database solutions. Some marketers are finding ways to leverage the strengths of both.

Pickering said that a "public cooperative-enabled private base solution"-essentially, a private data-base that combines data unique to the mailer's market with lists that have come out of a public cooperative-offers the best of both worlds.

"In the future, a lot of mailers will continue to work in a public cooperative prospecting environment but will use it more to gather business intelligence on their house files and execute house file mailings from there," he said. "For the segment that a private base environment works, more of those data-bases will be closely linked to a large public cooperative database."

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