Joseph,
I'm very familiar with this industry, both on the user side for many
years, and more recently as a small list broker myself. I'm assuming
that your question relates to the traditional list brokers that sell
the use of physical addresses and phone numbers.
There's a growing segment of companies that sell exclusively email
addresses. These companies sell you one-use lists that they send out
through their server. I'm assuming you're more interested in
traditional list brokers, and will spend my research time in this
segment.
This is quite an involved question, so let me go point by point.
1. How big is the industry?
The Direct Marketing Association (DMA) (http://www.the-dma.org/) is
the industry organization for list brokers. Much of the information on
their site is available with free registration.
According to a recent research report done by the DMA, "Direct
marketing advertising expenditures now represent more than half --
56.5 percent -- of total U.S. advertising expenditures. An
accompanying chart shows 2000 direct mail expenditures as $44.6
billion.
DMA Research
http://www.the-dma.org/cgi/registered/research/charts/dmexp_vs_advexp.shtml
This page, states the following expenditures on direct marketing for
foreign countries for the year 2001:
South Korea (#12) - $4.2 billion
Mexico (#21) - $1.7 billion
Chile and the Chzec Republic are not listed.
DMA Research
http://www.thedma.org/cgi/registered/research/charts/internationaladspending.shtml
I haven't been able to find any more specific industry figures. There
are many figures for advertising industry, but not broken down by
direct mail marketing other than the above reference. The American
Advertising Federation (http://www.aaf.org/) is a good source for
general information.
2. How are the lists usually rented?
I can answer this from personal experience. There are typically two
ways that lists are rented. One is a one-time usage. You would receive
the list on labels, mag tape, etc. And you would be expected to only
use them once. The list is "seeded" so the list broker will know if
you use it more than once.
The second method is to rent a list fo a fixed amount of time. This
allows you to use the list an unlimited number of times for the
specified period - typically a year. The cost is much higher. You can
expect to pay 3 to 4 times the cost of a one-time mailing. However,
remember that the quality of a list goes down dramatically over time.
And list brokers won't provide any compensation for bad addresses as a
list gets older.
You can sometimes rent a list for multiple uses, but this is rare
since the price will be close to the cost of renting for an entire
year.
3. What are typical margins on list rentals?
There are two levels to this question. Most list owners acquire their
lists through internal sources, or through relationships with
magazines and other consumer or business deliverables. Although these
relationships are paid, there is no set standard and rarely are these
payments made public. It's rare for a list owner to buy lists and
resell them. The more common approach is to acquire the names from
normal operations (ex: Dun & Bradstreet or credit bureaus such as
TRW). Other list owners will buy some credit report files, but this is
often to suplemment their own lists. Other companies will acquire
names by working with other direct mail companies, by having a staff
of researchers, etc. So it's hard to come up with a cost in these
cases since margin will totally be a factor of the costs of internal
operations.
Many lists are bought directly from the list owners. But there are
thousands of small and large list brokers who aggregate lists from the
various list owners and resell them. In this case, you typically see a
margin of around 20% which is the discount given to brokers by the
list owners.
4. Who are the biggest players?
US:
There are many big players in the US since this is such a large list
market. The biggest players include:
Dun & Bradstreet
http://www.zapdata.com/
InfoUSA
http://www.infousa.com/
AccuData
http://www.accudata-sales-leads.com/
USA Data
http://mip1.usadata.com/usapub/
You can also get a complete list of members at The Direct Marketing
Website
Direct Marketign Association
http://www.the-dma.org
South korea, Chile, Czech Republic and Mexico:
This is a good deal more difficult because direct mail is big nowhere
else as it is in the US. Part of it is the lack of disposable income
by a broad spectrum of the general public in the countries you cite.
To no surprise, I can find no list brokers who deal in the Czech
Republic or South Korea.
The following company offers executive and other mailing lists for
Chile as well as Mexico:
Infocore, Inc.
http://www.infocoreinc.com/lmanagement.html
This company does not have a website but does offer lists for Mexico.
Direcciones, S.A.
Mateo Aleman # 52
Mexico City D.F., Mexico, 11529
This company offers mailing lists for Mexico.
Excobar, Gonzales, & Assoc.
http://escobar.netgate.net/preseing.htm
Those are pretty much the sources I can find using the web. In
response to your request on what countries do have an abundance of
list brokers, I've found many in the following countries:
UK
Canada
Western Europe
Brazil (few)
Australia
Asia (few)
If you'd like specific names in these areas let me know with an answer
clarification request and I'll get you the websites where available.
Whew! I hope this answers some of your questions. It's really quite an
exciting industry, and is in the middle of some significant evolution.
Let me know what additional information you need to answer the
question to your satisfaction.
Thanks!
Prof |
Request for Answer Clarification by
joseph77b-ga
on
18 Jul 2002 02:08 PDT
Hi Prof,
Thank you for the info. A couple quick clarifying questions:
1. You mention compensation for undeliverable addresses. Is that a
standard procedure? How does that work?
2. You say the list broker industry is experiencing considerable
evolution, in what way? (just your opinion is fine)
3. If you could get me a few names and URLs of list brokers in brazil
and asia, that would be fantastic. Where did you find them?
4. You say direct mail is not as popular in other countries as here.
I would LOVE to have more data on that. What countries is it popular?
Where is it culturally discouraged or unpopular? Is it illegal in
some countries? Again, numbers or sources would be great, bu even
just your thoughts on this would be appreciated.
5. Last but not least, the ide i am exploring is the general
opportunity for an internationally focused list brokerage firm (a firm
specializing in brokering lists which reach consumers in emerging
foreign markets). What are your thoughts on that concept? Any
advice?
Thank you so much for all your hard work. You have been fantastic,
and i will happily give you a highest rating!
Best,
Joe
|
Clarification of Answer by
prof-ga
on
18 Jul 2002 07:44 PDT
Joe,
Good questions! Okay, let's see.
1. Compensation for undeliverable addresses
Yes, this is standard procedure. Almost all list brokers provide you
with a "guarantee". They will give you a new name for every name that
is bad. So if you send out 1000 letters you'll expect to get 50 back.
This will always happen since people will have moved, died, etc. since
the list was last updated. The "freshness" of the list relates to how
many. Generally you just tell your broker that you had 50 returned
letters and they'll send you 50 new names. They won't give you any
problems as long as the number falls within their known range.
2. List broker industry is experiencing considerable evolution
I was referring to the fact that email is fundamentally affecting the
industry. Traditional brokers who have not expanded to offer email
lists are hurting in this country. You may have noticed a reduction in
junk mail at your home in the past 5 years. Even the post office is on
the ropes directly because of the reduced use of the US mail for mail
solicitations. I would certainly consider offering emails in your
planned company. The percentage of overseas consumers with email is
skyrocketing and will continue to increase in the years ahead. In
addition, although you can expect some form of junk mail legislation
in this country, it may be quite a while before you see similar
legislation in some emerging markets. This opens up some great
opportunities for you.
3. List brokers in Brazil and Asia
By going to
Direct Marketing Association
http://the-dma.org
registering, and clicking on "service locator" near the bottom of the
page, I found one list broker in Brazil. It does not have a web page:
HSM DO Brasil Ltda.
Alameda Mamore, 989 - 13 andar
Alphaville
Barueri, SP, , 06454-040
BRA
By doing a search on Asia, I found about 15 listings. The most
interesting is
Alpha Marketing
http://www.internationallists.com/home.html
which seems to sell mailing lists for most countries. Check this one
out.
If you'll do a search on google for "list brokers Asia" you'll see a
number of others. For some reason I can find no more for Brazil. (Also
check Brasil, the local spelling).
4. Direct mail is not as popular in other countries as here?
Well you've forced me to really evaluate this statement! I do not
think that there is any legislation or cultural differences. However
my gut reaction was primarily directed toward the consumer segment. I
continue to think that this is a lousy market in emerging markets for
obvious reasons. Consumers in these markets are mobile; they rarely
receive mail at all, and have no disposable income. So who would want
to market to them? But business leaders in these countries are in
great demand. From my research the most frequently available list was
a list of business owners and executives. I think this would be a
great product to offer for emerging markets. For the same reason, if
you can get lists of consumers with high incomes in emerging markets,
I think this would be easy to sell at relatively high rates.
What about the first-tier markets of Canada, Western Europe, Japan,
and Australia (and marginally Mexico). I really don't see a problem
selling all categories of lists in these markets. There are certainly
no cultural problems.
The only consideration in any of these markets is that direct mail
marketing is in its infancy. It has not been the norm to receive
solicitations in the mail. But this really plays into a marketer's
hands since their piece will not be seen in a negative light - yet!
Unfortunately I can't cite any references in this section. This is
from my personal observations, thoughts, and research. I've spent some
time looking for independent confirmation and can't find a thing.
Emerging markets marketing is truly a brand new industry.
5. What are your thoughts on that concept?
Wow! I think it's an unqualified wonderful idea. I've been a startup
consultant for many years and I'm a hard sell on new ideas. But you're
hitting a brand new market at the right time. Although you've got a
few competitors, you've got some things going in your favor. In no
particular order, here are my random thoughts:
a. If you're located in the US, you're where most of the marketers are
and you can more effectively sell to your target market.
b. The challenge will be to acquire a quality list and keep it
updated. Word gets out fast so you won't have many chances. Acquiring
a good list is neither cheap nor easy. Where will you get the lists?
How will you update them? You'll need some heavy computer power to
maintain and output all of those labels. Can you handle delivery of
500,000 labels with delivery in 3 days? Do you have long-term
agreements in place with companies helping you develop the list? Also,
your customers will want screens by location, income, number of
children, and other demographics. Do you have enough data for this? It
may be very hard to acquire in emerging markets.
c. Are you adequately funded for all this infrastructure work?
d. Do you have the resources to market your lists once you get them?
If not, don't get started. You'll need to telemarket to all the major
advertising agencies, probably preceded with a fancy direct mail
piece. If you do get to them, you'll have instant business - once.
e. Have you done a test market or survey to gauge the need? I'd call
10 larger ad agencies and ask if they'd buy such a list. You may be
surprised. Within a few hours you'll either be exhilarated and ready
to spend your last dime, or ready to shoot yourself. :) Do not start
without this first step.
But the concept is just great, and I'll guarantee there's a need for
lists such as you indicate.
Joe, I hope this has helped. What an exciting concept! Good luck on
your venture. And thanks. :)
Prof
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