Naming names. (list rental)(Cover Story)

Gut-wrenching postage and paper prices have increased the cost to mail so greatly that mailers are looking to cut the fat out of their mailings. One of the hardest hit areas: list rental.

"People are mailing fewer total names and trying to target even further," explains John Baldwin, vice president of list marketing at Phillips Publishing.

Ed Burnett of Database America agrees, "Everyone is trying to mail smarter--which means less mailings for the same or higher response." This trend has made list selects more appealing.

List selects allow marketers to fine-tune their mailings by whittling down a list to target a very specific audience. Thus, lists that offer a high number of selects have become some of the hottest lists on the market. And many list managers have become more willing to negotiate because they gain maneuverability with more on the bargaining table.

NEGOTIATING THE DEAL

Negotiation has become the name of the game. "Because of the rising costs to mailers, the list industry is getting squeezed into being more open to negotiation," says Tobias Schremmer of 21st Century List Marketing. "You not only have to make smarter recommendations, you have to demonstrate--through free tests, lower net and better terms--that you want the business."

"Almost every list order today has some sort of negotiation attached to it--whether waiving a mag tape charge or allowing volume discounts," says Alan Zamchick, director of list management at Hachette Filipacchi.

In fact, negotiating has become so much a part of list rentals that managers must face the reality that set pricing is a thing of the past or they risk losing list rental revenue. "Plain vanilla pricing is obsolete--all deals are done at the table," claims Baldwin.

Target Marketing's informal survey of list brokers and managers revealed the majority of list managers seem to be willing to negotiate; however, any agreement reached must bring some type of benefit to both parties. For example, "A mailer generally has to commit to a certain volume in order to get a better net or [charges for] selections waived," says Barbara Damon, vice president at Walter Karl.

FINDING A NICHE

As competition in the list industry grows, increasing numbers of mailers are using data enhancement to procure narrow segments. "More segmentation is necessary on each list to help sell," attests Fran Golub, director of list management at Jami Marketing.

According to Rose Harper, chairman emerita of the Kleid Co., if you segment 20,000 lists, you are looking at more like 200,000 separate and distinct lists (See "Rose Harper On Lists").

In addition to segmentation, "today, you are seeing more and more mailers using databases and modeling than ever before," explains Karen Mayhew, vice president of consumer list management at Direct Media.

John Ganis of Edith Roman Associates agrees, noting that he has seen an increase in both private and semi-private database requests.

Another tool being used more frequently is regression analysis--a method to improve response predictions by analyzing relationships within a file. Regression analysis, according to Zamchick, is fast gaining popularity among large mailers who want to identify new segments.

WHAT'S HOT

So what types of lists are renting like hotcakes now? We talked to the people in the know: the list managers and brokers themselves. Here's how they mapped it out.

TECHNOLOGY LISTS are doing a lot of turns due to the huge growth in the high-tech market caused by many new products, the Internet, upgrades to Windows and CD-ROM, according to Mark Smith, vice president of list management at ListLine.

"High technology lists are popular because they have large counts, good segmentation and are highly responsive," adds Rick Buck, vice president of list brokerage at ListLine.

CATALOGS. "Catalog lists that are the most selective are getting a tremendous amount of turns because they offer something to virtually every mailer category," explains Direct Media's Mayhew. "These lists continue to bring something new to the mailer's plate, like new products and selections." For example, Spiegel offers nearly 100 different product categories, and Eddie Bauer alone has up to nearly 40 product selections.

The most popular catalog lists: gift and general merchandise catalogs--garnering the overall highest percentage of the market share in the direct mail business. "These lists drive a high performance," says Susan Zuniga of Mokrynski & Associates.

EDUCATION. "Direct response lists and active association lists are a new source of names of teachers and administrators who buy via mail," points out ListLine's Mark Smith. Another hot market: special education--due to limited school budgets and an emphasis on mainstreaming exceptional individuals.

Also, response lists--of teachers who have responded to direct mail offers--are pulling higher rates than compiled lists in the education market, notes Bill McMillan, national sales manager for CMG Lists.

FUND RAISING. "The belief that `once a donor always a donor' is standard," says Carly Marshall of National List Exchange. "But [when dealing with] people who are known donors to certain types of causes, clean updated names and phone numbers are the most important factors."

HEALTH AND HEALTHCARE are hot markets today. The reason: "People want to take control of this aspect of their lives," states Dave Sokoloff of Phillips Publishing.

"Our health lists have a huge subscriber base with new names being added monthly," Phillips' Phillipe Maman adds.

CONSUMER/LIFESTYLE. A general trend in the consumer arena: recency coupled with selectivity. "Marketers are realizing the power of marketing to consumers at the `time' when they are experiencing a lifestyle change," notes Tracy Finley, director of marketing at Lifestyle Change Communications.

Another trend: `We have seen increased interest in mailing to business addresses from consumer mailers who realize the customer is making more purchasing decisions in the office, rather than at home," observes Libby Kelly, marketing analyst at American List Counsel.

 What You Might Pay  Here are some ballpark figures on what you might pay per thousand names in the following list categories.     Category             Base Price  Business-to-Business     $95/M Catalogs                 $80/M - $100/M Children                 $90/M Education                $80/M - $90/M Financial               $125/M - $195/M Fund Raising             $50/M - $75/M Health                  $100/M - $125/M High-Tech               $100/M - $125/M Lifestyle                $75/M Publishing               $65/M - $100/M 

NOTE THIS INFORMATION WAS COMPILED THROUGH AN INFORMAL SURVEY OF LIST MANAGERS AND BROKERS THESE FIGURES DO NOT INCLUDE SELECT CHARGES WHICH CAN AVERAGE $5 TO $15 PRICES FOR RESPONSE VS. COMPILED LISTS WILL VARY.