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• Tim Barlow, vice president, list services group, VentureDirect Worldwide
• Bob Castle, marketing consultant
• Lynne Decker, vice president, list management, Rubin Response
• Stephen T. Dunn, president, Mal Dunn Associates
• Deb Goldstein, president, IDG List Services
• John Papalia, president/chief executive officer, Statlistics
• Stevan Roberts, CEO, Edith Roman Associates and ePost Direct
• Rob Sanchez, senior vice president, list management/interactive services, MeritDirect
• David O. Schwartz, president, 21st Century Marketing
• Jay Schwedelson, corporate vice president, Worldata

Like their consumer colleagues, business-to-business list professionals see lots of opportunities for growth, even though mailers have to be cautious about obstacles like Can Spam. In Direct's B-to-B list roundtable, participants talked about how their industry has expanded by evolving and going that extra step to serve clients. There was a healthy sense of competition in the room, but an overwhelming feeling that everyone needs to work together to survive.

CASTLE: How is business now in the B-to-B field and what do you expect to see in the next year?

DUNN: There are a lot of opportunities and challenges in terms of pulling data together so we can go deeper and help businesses get more information more quickly. If I were a young man entering the direct marketing field, I'd want to be on the B-to-B side. There's a lot more room for growth, the margins are a lot better and it's a better place to be.

SCHWEDELSON: We are definitely seeing a lot of growth, especially over the course of the next 12 to 24 months, based on what a lot of mailers are telling us. We're really starting to see some of those mailers in categories that had not been doing so well — for example, technology — come back with greater volumes and more long-term planning. And some of the publishing categories too. There are a lot of positive signs.

SANCHEZ: I would agree with that. From our perspective, what's happening that's really positive is a strong synergy between online and offline, particularly in B-to-B. When e-mail lists first came on the market, you really had a big separation on sourcing. The offline people weren't sure they wanted to put their e-mail lists on the market and the online people really didn't have quality products. What we're seeing now are companies that have really strong cooperative strategic initiatives. They're putting out good, quality products.

SCHWARTZ: I like the optimism in what I hear. I tend to find at roundtables that the air is always more optimistic than when we sit one-on-one and discuss what's going on. I think the market definitely has improved significantly from last year. I think we all are still reacting somewhat to challenges from 2001 on in our industry. Our discipline really felt it pretty badly and so as mailers started to return to greater activity, it bolstered our spirits. But I think we are greatly affected today by macroeconomics and what's going on politically, so I find myself jumping from both extremes. On one level I'm working very hard with clients who are struggling with their B-to-B prospecting, in [areas like] the IT market area, clients who are very concerned about a lot of the new regulations and obstacles. E-mail is a wonderful medium, but we're all receiving so much e-mail and so much spam that the numbers very often just aren't there. It's hard to make it work. I'm relatively optimistic, but we have a lot of challenges.

ROBERTS: We're coming off a truly great year, so our experience has been somewhat different. As I talk to my customers and the agencies, there's a very strong movement to increase their budgets. We feel very bullish. We feel our business could be up anywhere from 20% to 50% this year, based on the stuff we're hearing. I think B-to-B in general is strong. But I also think the publishing marketplace, the IT marketplace, traditional B-to-B marketers, the educational people, the financial services people, all the people I speak to are telling us they plan increases on the postal side and the e-mail side. They have more money to do regression models, to do analytics on the back end.

PAPALIA: The B-to-B world is very resilient. The B-to-B mailer has to learn to survive by being innovative and creative, and dealing with the frontier town of e-mail coming in, and slowly adapting that into the normal process of doing business. Everyone in this room has learned over the last five to 10 years how to adapt, how to evolve into a different business, a different company, a different persona to help their clients.

BARLOW: I think the key to a good B-to-B strategy is to identify the clients who tend to be adopters of new technology [and] ideas, identify the ones who are returning from previous successes, but know they have to change and look at what those strategies are and share. Treat each individual client differently but maintain that global focus. I particularly agree with the change in e-mail marketing as it synergizes with postal. I think what a lot of B-to-B mailers are doing is using e-mail as a closure strategy or a [way] to stay engaged with a client they haven't yet been able to close.

DECKER: We definitely see reasons why the last 12 months will have a dramatic lift and I agree that one of those is the fact that people who have been doing e-mail have figured out they need to incorporate direct marketing principles. We also see that postal marketing is coming back more strongly than before, especially in the technology area. Two-tier or synergy marketing is going extremely well. In addition, it has taken some of the major mailers the better part of 2004 to figure out how to be compliant with, or how to manage their needs under, the Can Spam regulations. I think they've gotten hold of what they need to do, they've put practices in place and I think that will be the real strength for all of us for the second half of this year.

DUNN: On the whole argument between passive, inbound direct marketing and [outbound] direct marketing, the same old stuff applies. We just have more opportunities to get better at what we do, which is selectivity, targetability, accuracy. I think our industry [needs to] work together to share data, pool data into databases and find emerging industries that would love to do outbound pushes. They're selling something very expensive to someone who is very hard to find. There's always going to be someplace for that in their budgets, if we're good at what we do.

BARLOW: My company is in the early stages of doing some stuff with [co-registration]. We've had success in the training area, particularly distance education and hard skills training. There's a lot of opportunity there.

CASTLE: Deb, how do you think business has been?

GOLDSTEIN: I think I agree with David. I'd rather be the voice of reality and reason here. We saw some very serious investment from some companies that in the past three years have not spent a lot of money in the April time period, which we were really excited about. But I still think it's a roller coaster. We're going to see a really robust time in the short term and then it's going to dip. Let's face it, with integrated marketing the pie has shrunk and there are more ways to slice it. We're just one part of it. My feeling is that the impact of Can Spam has been significant. As they tried to work out compliance, a lot of companies that [do] integrated media were just paralyzed and that really affected us. That's the reality. Do I see us coming out of it? Yes, I do. And like everybody else here, my glass is always three-quarters of the way full and I think it's going to recover — this is a cyclical business. People have to market and they will get back in the mail and they will get back into e-mail. E-mail is still the killer media app and I think it will come back in force.

ROBERTS: Our broker friends and clients have told us they did not cut back their budget because of Can Spam, they just delayed it. The good news is people have accelerated their mail plans through the rest of the year. We're seeing a tremendous upsurge in the use of e-mail going forward. From February on the curve has been very strong.

SCHWEDELSON: I'm going to have to disagree with you from what we're seeing, at least, on the Can Spam front. It goes without saying we've had to fight that much harder to bring new mailers and clients into the fold to make up for some of the budgets that have been cut due to Can Spam. And the real issue has been the major mailers, the major e-mail marketers from years past. They're compliant, they're back. Are they renting e-mail lists? Absolutely. Is it even at half the volume that it was last year? No, and they're not saying it's [ever] going to be. Those budgets have been moved elsewhere, they've found other things to do with them. Can Spam has had a long-term effect that at least for the foreseeable future we don't see changing.

ROBERTS: Our business is actually up, though.

SCHWARTZ: You might be an anomaly. You also might have some incredibly strong leadership in your organization. I think there's some truth to what you're hearing. [But we had] traditional clients who were slated to do e-mail marketing in '04 [who said] ‘We can't even put this up to our board at this time.’ We're each feeling a different part of the beast and I'm not sure which part you're feeling. With all due respect, I go out and I see lots of people who test online. And I still hear many tales of ‘We just can't get the numbers to work.’ And then you run into someone who [says] it's really working well and it's well executed and has great creative behind it and a strong corporate budget. And they're making it work and they're generating leads and they're converting them. But there's not as much of that as I'd like to see. We're still at the beginning of this new frontier. And that's the good stuff. For all of us in this room you have to say, ‘Thank God we're in this room,’ because three, four, five years ago, everybody was telling us, ‘You may not survive. You may not survive if you don't embrace a whole new ideology. Everything you've learned is out the window.’

SANCHEZ: The bottom line is that in direct marketing and the list business, people do what works. So if you had clients who were flirting with e-mail and it wasn't working, they're not likely to go through the aggravation. A lot of e-mail dollars come from bigger companies, and bigger companies have more bureaucratic legal departments, so it takes longer. The list owners and managers have always had privacy policies, [but] the mailers never thought they had to deal with that and this is what has taken three or four months.

GOLDSTEIN: Think about Microsoft. Every time they do marketing they have to do a suppression file to everyone who says ‘Microsoft, I don't want to hear from you again’ within 10 days. That's just an incredible feat to manage at big companies.

SANCHEZ: But it's an opportunity and I think list people should be in there offering them merge/purge database solutions, because we know how to do that.

DECKER: But the major mailers, they just can't move that quickly.

CASTLE: Let's talk about changes in the last year. Where is your business coming from? Is it established clients shifting from their brokers or managers, is it new mailers or owners coming into the market, or an increased number of orders?

GOLDSTEIN: Well, I think it's a combination of things. I've had to grow my business, yes, by taking on new accounts, by being creative in terms of new services, opportunities. Has there been enough new business, new testing coming in to replace the business that's dropping off? I don't see it. So I think you have to build your business now by looking for new accounts, and unfortunately, hoping that accounts will move to your business. But I think the other thing is more names. Let's face it, that's the business we're in. I'm continually going to the publications to try and mine ways to find more names. New names, new information, new ways I can create opportunities to enhance what I have.

DECKER: We've worked hard to educate new mailers that come to us. I think we do more ‘Direct Mail 101’ than ever before. We value each of the individuals, not that we ever looked aside and didn't value people, but now we really understand each person as a brand-new opportunity. And we have to continually look at the lists we represent and say what type of segmentation can we present as new information, as a new opportunity, see what's new and what's going on, looking across groups of lists and finding new groups of segments that are important.

BARLOW: What I've observed is there are a few new mailers. Very few. [But] over the course of the last 12 months, a lot of people are re-emerging, people who were on the sidelines. We've had some good experience with that. And there are a lot of collaborative environments, folks who were doing other things in the direct marketing arena who are now going into mail, looking at e-mail, particularly some online folks who are going into postal. A lot of strength on the brokerage side. The challenges that need to be met are working that business model, thinking on a cost basis, how you can give the additional selects they're looking for — sometimes selects that list owners don't even know they have or that somebody wants — cross-pollinating and still maintaining that price point you're looking for. We all know, as veterans in this industry, where they like to get that from — and it's from our hide. A lot of companies think of us as being 20% participants and it's a lot less than that. Sometimes they think that's the scope of our insight: ‘Hey, you're 20% of my planning.’ You need to work your clients so they know that you're the expert and not just a supplier. We're consultants and experts, and in some cases navigators, and that's probably the biggest challenge brokers, direct marketing professionals and e-mail marketers face, certainly in the database industry. A lot of folks wanted to build their own databases internally and we know that the real expertise is around this table, not the internal ‘gurus.’ The same with CRM. A few years ago CRM was ‘Hey, everybody's a genius.’ That's a sort of rear-view mirror kind of thing. You want to see how it worked in hindsight, rather than spending millions with foresight.

CASTLE: Very good point. The growth of technology has created a need more than ever for brokers to show clients they do more than just pick out data cards.

BARLOW: You need to pay for that, though, and nobody wants to be on the bleeding edge of technology.

PAPALIA: I think all of us in this room are still in business because we've gone that extra step. We know the extra buttons to push to make that business happen. Like Deb says, we're innovative in looking at lists, finding selections, enhancing lists, working with mailers to find segments for those people. We do whatever we can do.

ROBERTS: Across the board, the unifying thing clients are looking for is integration. They're not looking for [one] person to do their brokerage, another person to do their management, another to do their transmission and another to do their e-mail. They want somebody who can put all their pieces together for them and they're looking for solutions. What they're looking for is a customer relationship manager who works with them and harnesses all the disparate disciplines in direct marketing to support their goal. Their goal is ‘Solve my problems.’ [They] need new customers. The bottom line is not all of my [clients] are looking for lists. They're looking for customers.

SCHWARTZ: There's a lot of truth to that. I would say that I always saw myself and my organization as a solutions provider, so from the earliest years I would say something like, ‘Well, if you're looking for a mailing list, there's lots of places you can get that. But if you're looking for a marketing consultation, then you're looking for an individualized program. And if you're looking for someone to push this to another level, that's where we come in.’

SANCHEZ: I think what's been important is expanding on [our established] clientele. I think if we would have just stuck to a single core competency of, let's say B-to-B catalogs, I think we'd be in a very different place. So we consciously said, ‘OK, well, e-mail is going to play out well in the next couple of years. Let's do that.’ Business publishing is important to us and we've got the experience, let's expand there. So we've been able to grow by new client acquisition, new services and then also new categories within B-to-B. I think if you look at any group of clients, I think it would be a mixed bag. It's a lot simpler growing a business with your perfect client. Your perfect client does most of the things you tell them, they take your recommendations, you don't have a lot of bureaucracy, they move quick. But your client who has some financial difficulty, you can help them through, they've got some challenges and they're really looking to you to help them build some efficiencies, maybe to keep prospecting rather than cut altogether.

SCHWEDELSON: You know, one of the interesting things with the clients, especially those we've had a lot of success with over the past few years, is that on the list management side, [for] those list owners we've done exceptionally well with, we've started playing a bigger role in their overall revenue mix. That changes the dynamic of the relationship. They start looking at this once-passive ancillary revenue stream as a core component of their business. You start entering into meetings with people who don't understand our business, don't understand how growth happens in the list rental space, and they look at it as this exponential situation that's not realistic. And because we've had success, they're expecting dramatic success because some of their other areas, [like] ad pages, are down. It is very, very difficult to manage those expectations.

DUNN: Well, most of our revenue still comes from good old list rental. Insofar as our business funnels go, seminars and the Microsofts, they're definitely down, not just on one list but on 200. But banking and credit cards are way up. On the traditional mailers that we've had for two or more years using files, I'd say all in all, business is down. I expect it to cycle back, like the seminar industry goes in and out every 10 years or so. But the whole thing, business finance and credit cards and services are getting more interested. I think the Internet in the long run helped get people into direct marketing, and certainly into business-to-business. So all of our increases, or make-up for loss — we haven't had a big year of increases so far, to be honest — have come from new business and developing new products for that business, creating sub-databases for the business environment that are targeted toward certain industries that are coming into the mail.

CASTLE: What is the most urgent issue of the year for brokers and managers in the B-to-B field?

ROBERTS: Well, I think the most urgent issue for us is how the industry can [implement] an operating system across all the brokerages that will allow us to communicate more efficiently and effectively. It's crazy that I have to key in an order that Deb has already keyed in her system. We're still working by fax. In an Internet age, where everybody is connected, why can't we figure out how to get this problem solved and raise our margins?

CASTLE: We tried this 10 years ago and we almost made it work.

SCHWARTZ: Every one of us who has been in this business can look ahead and connect the dots. And those dots take us to a place where we do our research, research generates a recommendation, the recommendation is honed and then narrowed and then the orders are grown out of that and placed with a service bureau for fulfillment, all with one click. And it all happens behind the scenes. And it's not so far away from now that that will happen. But will it all happen as we're all holding hands in the meadow, and all agreeing on the same platforms and systems? No. This is [an] entrepreneurial community, violently independent. I want to do it my way, he wants to do it his way, she wants to do it hers.

SCHWEDELSON: But is that really the biggest problem our industry faces?

SCHWARTZ: If we were to draw some circles on a paper, obviously privacy legislation, politics is a big issue. But I love this issue for a different reason. When pressure was applied to the auto industry [by the government] to achieve emission standards and fuel efficiencies, everyone moaned ‘It can't be done.’ And today we have 400-horsepower engines out there that are fuel efficient. I think our industry has always faced this challenge, which was ‘How do we make this process so simple, so easy that we are in the marketing business and not in the list processing or order processing business?’ And with today's technology that has really happened. Now is that the single greatest challenge to us? Maybe not. But it's one of the single greatest opportunities. We are under this microscope and government is saying, ‘Hey, we can't catch the bad guys but we know the bad guys are getting names and lists and printing and we know all you guys because you don't move.’

GOLDSTEIN: And [they] want to enlist [us] to help find them.

SCHWEDELSON: Why did the emissions in all the cars change? They didn't do it because all the automotive dealers got together. They did it because the government forced them. And that's the same thing that is going to happen to this industry. And I think that has massive implications on everything we do, especially in an election year.

GOLDSTEIN: Legislation feels like a freight train headed in our direction. I think one of the other issues is the perception of our industry. One of the things to counter why legislation is looking at us is because there's a negative image, not necessarily around the list business, but direct mail and how we've been portrayed. And I think the direct marketing industry clearly has a job to do from a PR perspective to turn around how we're looked at. The perception of our industry should not be [formed] by the bad players. We have a lot of ethical people in our industry who are doing best practices, who are doing the right thing, and we should be celebrated for the right things we're doing instead of being looked at as an industry that has to go under the microscope because of the negatives.

SANCHEZ: With Can Spam, it didn't really get settled until some of the big guns said ‘Hey guys, you're talking about limiting advertising. We're not going for that.’ All of the sudden there was a law.

GOLDSTEIN: And that's why it got tempered.

SANCHEZ: We've got to broaden the scope of our industry, because when you look at it, basically at this point it's very mainstream. If you look at your order log and the clients you're dealing with, these are big companies, these are public companies. I think you need more participation on some of these levels because they have a lot more weight to throw around than a MeritDirect or a Worldata or someone else. There's a need to have some of the big guns in there realizing that ‘Hey, they do these things that work.’

GOLDSTEIN: And they're legitimate marketers getting penalized for someone who is not.

DECKER: I think you're right. The credibility of some of the larger mailers would certainly do a lot of good for us, because we're perceived as the bad guys. And by the outside world, we're perceived as the people who are responsible for all that spam and those inappropriate e-mails. We're taking the rap for that. I think it's important that people understand that.

DUNN: On the e-mail side for me, a really [big issue] is working with the AOLs and those guys and getting them to understand our business, so if they develop technologies to stop unsolicited e-mails, we're able to survive because we partner with them and they understand what we're doing is something the customer wants.

SCHWARTZ: How do we get our e-mail read in this hostile environment? That's a challenge we and our clients have. If we come up with solutions that help, then as a list company we're really serving a need.