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• Dennis Bissig, president, Mokrynski & Associates

• Bob Castle, marketing consultant

• Kathy Duggan-Josephs, president, D-J Associates

• Fran Golub, senior vice president, list management, Walter Karl

• Joel W. Mark Katz, senior account executive, Leon Henry

• Ryan Lake, chief executive officer, Lake Group Media

• Lori Magill Cook, senior vice president, American List Counsel

• Lon Mandel, marketing services officer, Clientlogic Specialists Marketing Services

• Rosemarie Montroy, chief marketing officer, Direct Media

• Chris Morgan, vice president, list management, Millard Group

• Pam Mulligan, vice president, list management, MKTG Services

Participants in Direct's consumer list roundtable expressed optimism for the future, citing growth in areas such as fundraising, testing and compiled files. All noticed some major problems, like the dearth of new names on the market and some marketers' inability to accurately measure and account for their Internet business. Most importantly, our consumer pros recognized one big thing they have to contribute to the direct marketing tribe: a wealth of experience that goes far beyond simply suggesting an appropriate mailing list.

CASTLE: So, how's business?

LAKE: In general, business has definitely started to pick up. People seem to be cautious but very optimistic about this year and next year.

MORGAN: We've seen a slight pickup but not as much as expected. The catalogers had a good holiday season but not as good as anticipated. Based on that, [and the fact] that the economy is improving, I think our business will improve — but at a very slow pace.

MAGILL COOK: [During] the last three months we've grown double digits on the core business, which is a good sign. When I talk about core, that's business we've had for two full years. The other thing we're seeing is a huge rebound in the fundraising market, which is fueling revenue. And testing has increased across the board about 15%.

BISSIG: Our business is on target, but it's not growing the way we thought it would. Obviously, the mailers dictate how we do and they continue to have that roller coaster of good and bad. So while we expected some really good things [in] March [and] April, May was not the month it was hoped it to be.

GOLUB: [For us,] it's not brand new business coming on the market. In our [case], it's growth within the companies and growing [our] clients. In our company, it's acquiring other companies and offering those clients those services. That's a great way to grow your business, because they didn't have those services before.

DUGGAN-JOSEPHS: The year started off slow, but it's certainly picking up now. We do an awful lot in the catalog business and printers are severely booked for holiday season. So that bodes well. And we've seen a tremendous increase in testing on our management side. If people are testing, they're planning on growing.

MAGILL COOK: After 9/11, everyone was going to their house file, and now they're saying ‘OK, that was a part-time strategy and [now we] have to bring new customers in or we're not going to survive.’

MULLIGAN: The house files are starting to wilt because they've basically been beaten. They're wilting not only from an internal perspective but from a rental perspective as well.

DUGGAN-JOSEPHS: That's one of the biggest problems for the clients who do want to grow. The names aren't there. When we take all that's available, they've got 75% of what they used to have.

MULLIGAN: That's right.

KATZ: We're finding increased business in insert media because people are looking for venues other than mailing lists to increase revenue. Also, we're finding that major catalogers are opening up their catalogs for programs and accepting inserts in various ways, looking for greater revenue. Business has been steady with last year, with a slight increase. Hopefully, by 2005 we'll really be on track.

MANDEL: There are certain categories that are doing very well and others that aren't. The upscale catalog clients are doing well, the continuity clients are starting to go up, publishing clients are going up. When you put that all together we're basically flat or slightly ahead of last year. We budgeted that way because we were [being] conservative. For the balance of this year and next, I think we're cautiously optimistic.

MONTROY: I would mirror that. And you see the different pockets. The fundraisers certainly are fueling a lot of the increased side of the business. I think the optimism [people speak of] is finally based in reality, because for the last three years or so, we were all looking at the '90s as our baseline, and the truth of the matter is that the 1990s are never going to occur again. I think people have finally come to that realization and we can be optimistic now because we have a different threshold.

MULLIGAN: I think what everyone is saying is that mailers are realizing they have to be back in the mail again. That's key. We work with a lot of fundraisers and fundraising season is going quite well this year, particularly political fundraisers, which we talked about. We're seeing a lot of new business from midrange mailers, midrange publishers and also our compiled files are doing well, and that's kind of filling the void where there aren't new response lists on the market.

MANDEL: A lot of companies aren't able to measure [their Internet business] real well, especially when they're mailing outside lists and not fully understanding if that customer is coming in from the Internet and not being able to match back to the list they're ordering. So I think over the next 12 months, as that process gets fine-tuned, we're going to see an uptick in our business because lists might be performing much better than some mailers see them performing right now.

MORGAN: I'd have to agree. I've seen a couple of mailers who have the analytics in place to trace back those mailings and catalogs that are directly affecting their Web business and their retail business. So as more and more mailers get that technology and do that analysis, I think it does bode well.

MONTROY: People have gotten so used to ordering over the Internet. Because [companies] couldn't measure anything they were allocating, in some cases 50% of a response was coming in on the Internet, if not higher. But the allocation was done on almost an equal basis, so you could get a list that was a dog and it looked just like a list that was doing great.

DUGGAN-JOSEPHS: And that had a big effect on all the mailers involved. They were continuing to mail the wrong list, so it just went right to the bottom line. I'm sure we've all seen it with the clients who've done match-backs.

MORGAN: I've seen that too. [Sometimes] its brought some very lower-tiered lists up to the top 10 because we've been able to identify them.

DUGGAN-JOSEPHS: There are some lists where the results double and more.

GOLUB: There are a lot of upscale catalogs that are doing a lot of search-engine placement and other advertising, and a lot of their buyers are coming in without receiving a catalog first. The twist is always getting the brokers to say, ‘OK, they're different, but they're an expanding market.’ We know they're not going to respond quite the same but [the Internet represents] more of their buyers.

DUGGAN-JOSEPHS: I love service bureaus. However, the charges that they started off with to allow the mailers to do the match-backs were ludicrous. Which is why it took mailers an additional year to get into it. But thankfully they've come to their senses and begun to understand that if the mailers have this information they can mail more.

BISSIG: But it's interesting that there's still a great many people who don't fully grasp that. I think some mailers think all we're trying to do is force them to order more lists by telling them to go and do the match-backs. While that may be true, the real issue is we're sitting here understanding the importance of doing it, and we've got to make that an even stronger case to our clients.

MANDEL: [Since delivering] that customer over the Internet is so much cheaper than taking the call over the phone, they're truly remiss not to spend the money to understand that customers are coming in that way.

MONTROY: Regardless [whether] the names are coming in over the Internet, the critical factor here is what lists they're coming from. That's what we're talking about. The mailer, regardless of the list they're coming from, is getting those names that are going to purchase on the Internet.

MAGILL COOK: I think it does boil down to dollars and cents, but also to manpower. Think about these organizations that have cut back in response to lowering profits. So that's where we need to come in with the added value.

LAKE: Let's take that a step further. I think there's still a lot of companies where online marketing departments are separate from [the rest of the business], and they're just taking the credit, saying ‘Internet sales are up 50%,’ and not understanding that most of that business is coming from people who are getting the catalog.

KATZ: Brokers have to sit down with the mailer and not just sell them the list but tell them the implications and how the results can improve if you do X, Y and Z. The bottom line is education from our companies to the mailers and that also will help pick up our business.

BISSIG: Its' got to be our job.

DUGGAN-JOSEPHS: As much as some of the people are doing it because of the cost involved, it's really like you're saying it's a fear of technology or just not understanding it. There are some people who will not approve of somebody using their list and maintaining the file for match-back purposes. So that whole purpose of educating them about why they want the company to be able to attribute the sale to the use of their name — you should be doing it. An awful lot of education is involved.

KATZ: Also a major part of the education is when the mailer understands more about his customer. I think knowing who his customer is, using overlays and modeling, really getting into the heart of the list and tailoring the buy of the lists to who their customer is will give mailers great success.

GOLUB: You need knowledge. It helps brokers if they work with managers, because what are we trying to do? We're trying to help them make [business] better. We can [find] a new select or an overlay or something else.

MORGAN: I think it's important that even in the list industry we're not that autonomous island anymore. We have to work with lots of channels of marketers and I think companies have to work to communicate more within themselves. I'm encouraged that there are new titles being created like chief technology officer, Internet officer, so that person can be charged with [making sure] the online and offline divisions are speaking with each other.

BISSIG: The right thing is to let everybody get to that point of saying, ‘New world, new rules, new game plans — and here's what you have to watch for.’

CASTLE: If your business has increased recently, what has led to those increases?

MANDEL: From our perspective, our business has gone up based on companies shifting dollars. A major increase we've seen is in new business from the outside. It's not based on increased business from existing clients, although we are doing some of that — hotlines and lists that used to be on the market that aren't there anymore.

KATZ: As far as increased business for us, we're seeing that most of our new business is coming from e-mailers and also from established businesses.

MANDEL: When you say new, do you mean new companies or new to the marketplace?

KATZ: New to the marketplace and new to our company. Also, I think the do-not-call issue has made a big impact on our business. [Companies] are increasing buying on the insert media side and cutting down on telemarketing. And we also feel that the new mailers coming into the industry have been using one kind of venue for so long they don't know there are other ways to get a customer and they're really not thinking outside the box. Moving ahead, I think to increase business, mailers will have to think outside the box — really look for things they wouldn't normally look for.

MONTROY: The slight gains we've seen are basically because of new business coming in. I don't see the existing mailers really increasing and I think that's most evident if you look across the board at hotline counts. They're much lower than they have been and they continue on that trend. We keep track of that for every major list category by hotline, by month, and its either flat or down. And then you add that people are increasing the segmentation they're using on a list. One of the major complaints we hear from our existing clients is, ‘What are we going to mail?’ I mean, they have to cut their mail quality because the counts aren't there and you don't see a lot of new mailers coming in that are picking up on that lull. Part of what we need to be responsible for as an industry is to create new ways — not only from a media perspective but from a list perspective — for people to be able to appropriately market.

MANDEL: I don't think we touched on cooperative databases, which are also taking a large amount of circulation out of our day-to-day orders. I'm not saying whether that's good or bad. If its working, it's good.

MULLIGAN: There's a number of factors, besides the fundraisers and the midrange publishers which I mentioned before: the creation of new list properties. We're working with some of our company's other divisions to create lists that have never been on the market. Taking an e-mail list and appending postal names to it, taking a look at a variety of compiled files and putting them together and creating new segments, enhancing them with a variety of ethnic data, religious data. Some of the things we've talked about for many years. Taking those lists and creating new files that almost resemble a mini-catalog or mini-publishing file…in reality they're a compiled list, and that's a new area. We're working with a variety of associations and putting association databases on the market. They're an additional source of consumers that have buying habits, whether they're lawyers, doctors or accountants.

MONTROY: You know, one thing I'd like to [ask] is whether [you're seeing] an increased number of orders. We are. The number of orders has gone up and the average order size has gone up too.

DUGGAN-JOSEPHS: I don't know what you're all finding, but that segmentation is a killer. Pricing…I mean, my God, there are some lists we order where the selections cost more than the list. Whether that started because people weren't making as much income on their list so it just started the ball rolling, [I don't know], but now it's just gotten so out of hand. And everybody has it priced that way to start as a negotiating point, because you never pay rate card.

MONTROY: That's another thing. We spend more time negotiating, don't you? We talk about all the marketing we should be doing and we don't have any time, because we spend all this time negotiating.

DUGGAN-JOSEPHS: It used to be you didn't even think about negotiating unless the order was over 150,000 names. Now, it's ‘I'm not paying full price on a test.’

KATZ: I think brokers are finding that they're negotiating, they're doing more for less. Brokers have to understand the client's needs, and I think a mailer is only interested in ‘How much can I get this for, how soon can I get it and how fast can you get it to me?’

GOLUB: Way back when I started, the easiest thing was to get a list on the market. Everybody would want it and ask for a hotline. ‘That's it. Give me everything you have.’ It was so easy. Obviously, now we know that is no longer the case. If they take a hotline, it's ‘I need this select, that select, that select.’ There are not many new lists coming on the market. We're thrilled every once in a while something new comes along and it's ‘Oh my God, everybody is jumping all over it.’ Our growth is not coming from something brand-new coming on the market. We've been taking the data we own and [going to] our clients and saying ‘OK, we're going to take the data we have and let you use it, apply it to your files and create new segments you didn't have before. That's what we're going to try to sell to people. We're going to create the data and create models, for infomercial mailers, for financial mailers — and it's all based on modeling and data. So our growth is coming from getting our clients to use products and helping their files expand and creating new lists ourselves from the data we have.

DUGGAN-JOSEPHS: Cooperative databases are one of the ways our current clients are growing, [and they] are proving to be very successful for a number of them. And like you said, if they work, it gets the client to be more successful, which means they can mail more names. So we go into [co-op databases] pretty wholeheartedly with our clients because it does help.

BISSIG: It's a matter of us getting smarter and what we can do to inform our mailers about it. You do go in and segment more. You do more modeling, you use those resources that were out there that were limited to the one or two service bureaus, one or two co-op databases, and now they're expanding. It seems like every service bureau has some way to do some modeling, to do some appending, so if we're going to grow the business we all have to work hard to get that new mailer and there is that movement. You win some, you lose some. You just keep moving out there. That's the unfortunate thing from the mailers' side. They look at it and they really believe, they truly believe that it's not their catalog that's causing their sales to go up or down, it's the list. So [the mailers] just order the list from [another broker] instead, and that makes all the difference in the world.

DUGGAN-JOSEPHS: It has nothing to do with their creative. (Laughter.)

BISSIG: That's right. It's not [the mailers' problem]. They're making their changes now so we're all going to see some new business. But the increases we're getting is because we're really trying to work out what we can do to get the mailer to be more successful. The co-op databases may be a curse, but they're there and they work. Sometimes they're a lot better than other times but that's one of the things we pay a lot of attention to, monitoring it by client. Anything that makes their business better is going to make our business better next year.

MAGILL-COOK: I think there's three areas [where] we're seeing growth. We're seeing huge success with reactivating former mailers on a client's list. [We're] going back to users who had a good experience with the list five, six, seven years ago and for some reason disappeared. And that could be for a variety of reasons, whether it's response [or a] change in personnel at that third-party marketer's shop. And the lists have evolved over the years and the source mix or the offer has changed, and we really go back to them [and say], ‘You need to take a look at this because it has changed and it's new.’

CASTLE: That speaks to the value of a broker or manager, because they provide the longevity, the history.

MAGILL-COOK: Number two is list extension. What I mean by that goes back to talking to individuals within a client's organization in all channels and saying, ‘Where are all the pockets of names and how do you bring them together?’ Because if you have mailers who are taking ‘all available’ and the ‘all available’ is shrinking because the universe is down and it's a good performing list, if you can offer another extension of that list they'll probably take it. And then the third thing we're seeing huge success with is modeling. We have about eight clients right now that are in full regression model scenarios or profile models and it's actually about 30% of their overall revenue. We're seeing, if you look at modeling five years ago, there were about 10 guys doing it. Now we're seeing about 85 active modelers out there. So the word is that we can do it quickly, cheaply, and get you your responses quicker.

MORGAN: In what we define at our company as same-store sales — a client that has been with us for two years — we have seen a slight increase, but then that varies from category to category. Publishing may be up in certain categories, catalog may be up in certain categories, but overall there are still very minimal gains. Where we have seen increases is, again, in modeling. We've seen some great inroads. And also diversifying our current existing clients, getting them to open up to new programs — you know, package inserts or lots of alternative media. We've seen that as a great success, getting our established clients to open up to new programs, be it a cataloger or a publisher that welcomes inserts into their renewal series or statements. So it's really been a year of trying to be creative with what we have. And speaking to Fran's point as well, we look at what we've got, based on the technology we have, the data elements and segmentation. You repackage it, that's the bottom line. I don't think it's delivering a huge new universe, but it's allowing mailers to continue to use a file.

LAKE: Our corporate goal is very similar. It's been to grow market share as opposed to new-to-market, whether among brokerage or management clients. With one caveat being e-mail, where we've launched a lot of e-mail lists and we've actually grown in terms of the number of clients using e-mail from an acquisition standpoint. Taking a step forward, e-mail growth has started to shrink as well. I think the only thing that really will change is clients moving from very expensive e-mail lists to more inexpensive co-registration, lead-generation online programs.

MONTROY: Are your clients looking for partnership opportunities? There's been more of that going on than I've ever seen anywhere.

MORGAN: That's definitely something we've been charged with. I think the problem with that equation and business model is where do we fit in and find compensation.

MONTROY: And how long it takes to put together.

LAKE: Not only that, but is it successful? It's a total test. You could spend two months trying to get a partnership together and if they try it and there's no lift or no value to it, it just doesn't work.

MORGAN: But I think that's where we provide a valuable service by putting two like companies together, one a publisher, one a cataloger or Internet[-based firm] or whatever, to get some increase in revenue, customer acquisition.

KATZ: It goes back to the saying that brokers and managers have to give more service to their clients.

MORGAN: Value added is where it's at. Value added to them.

GOLUB: But it's time you don't have.

KATZ: Managers and brokers are offering more services and more education to mailers, but they're also making less. They're using more time to do these things but they're getting less out of it.

MULLIGAN: We're saying we're not just professionals, we're marketing consultants.

KATZ: I think everyone's niched into this ‘Oh, you're a list broker’ or ‘You're an insert broker or a direct mail broker’ [categorization]. We know the full scope of the marketplace. I've sold TV space as a broker, which I didn't do five years ago. You have to diversify into all these aspects because this is what the mailer wants. The bottom line is choice. The mailer doesn't want to see just one thing. He wants to see a choice.

MONTROY: What other industry can you think of where the better you do — the better pricing you get, the better exchanges you get, the better you're considered — the less money you make?

MORGAN: And if you're both a broker and a manager, you're fighting with each other.

MANDEL: I've been hearing this over and over. You've got to look at the positive side of some of this stuff, and create the right deal for your company. If you're going to go cookie-cutter — this is a 10% commission or a 20% commission — if you don't think outside the box and create the right deal and work with the strength of the client to create the right deal, then I agree that this is gloom and doom. But if you feel comfortable with this relationship and you're making your client money, you should feel comfortable and you should be able to structure a deal that makes you money.

DUGGAN-JOSEPHS: For so many years, we complained that we didn't get the respect and that we really are marketers, we're not just list brokers. I think we have convinced a good portion of mailers out there that yes, we are really marketing support for them, we're not just brokers. It's between you and your client and you determine what the value is so it's profitable for both of you. And I don't think we're locked into living by that 10%-on-the-base-price commission anymore.