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SMART ANSWERS
By Karen E. Klein
MARCH 9, 2000


Is This Mailing List Worth the Price?

At $35,000 a pop, you'll want to make sure before buying

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Q:  I am negotiating to buy a catalog mailing list of 30,000 names. About 20,000 are nonbuyers, 5,000 are 18-months buyers, and 1,500 of those are repeat buyers. The price tag is $35,000, which I think is outrageous, but I'm not sure what a reasonable rate would be for such a list. How do I find out?
--P.H., Crozet, Va.

A:  Without knowing the requested list format, how many times you can use it, or any other specifics, it's hard to judge if the quoted price is right. Having said that, the experts we contacted said it sounds high for what you're describing.

First, for everyone else's benefit, a little direct-mail nomenclature. The nonbuyers represent names of people who requested a catalog, but never bought a thing from it ("catnobuys" is the technical name for them). They account for two-thirds of this list, or 20,000 people. That leaves 10,000 "buyers" who have bought once in the past 10 years. Break it down, and you'll find 5,000 who have bought in the past 18 months. The latter group includes 1,500 who have bought more than once in the past 18 months -- theoretically, the most desirable of the bunch.

The best way for you to find out the market value of this list is to simply contact two or three list brokers and give them the specifications you've been given, then ask them to quote you a price. Compare the quotes you get with the price being asked for this list. You might also contact your local direct-marketing association and ask them for an opinion and for recommendations for list brokers.

Meg Goodman, a partner at consulting firm PCG Inc., in Batavia, Ill., says the cost of direct-mail lists varies depending on their type and origin, and many list brokers will require you to buy a minimum number of names. Basic consumer lists range from $85 to $95 per thousand, she says, with high-demand lists priced as high as $150 per thousand names. She suggests that you select lists prescreened for particular parameters, such as age, gender, or Zip code.

"These additional options can dramatically increase a list's effectiveness for very little cost," Goodman says. She adds that if you're purchasing a list, you should ask the list broker for a "data card" that shows you the price of the list, a detailed description of it, and the options you can select, along with their cost.

You should be able to negotiate a "net-name" arrangement, experts say, where you pay the list owner for only the names you use after you have deleted undesirable names and duplicates from multiple lists. Generally, you will wind up paying for at least 85% of the total names on the list you buy.

You can find out more about direct marketing and sources of list brokers, by starting with the Direct Marketing Assn.'s Web site, www.the-dma.org, where you can purchase the DMA's Statistical Fact Book ($149.36 for nonmembers), an annual industry survey that will give you the standards for many different kinds of lists, along with average costs and much additional useful information.

Before you use any lists, make sure they've been run against the DMA's "opt-out list" -- a database of individuals who do not wish to receive any direct-mail promotions. Using it will save you the expense of sending promotions to people who do not want to receive them. And when it comes to price, be aware that direct-mail lists are currently a buyer's market. "The list business overall has experienced 18-plus months of volume decline because of the severe drop in sweepstakes mailings and the use of modeling and targeting on house lists," Goodman says.

For more information, check out the Instant Expert column from February's print edition.



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