All Join In
There are now so many e-mail co-op databases that the players themselves can’t keep track.
II TOOK 100 years from the advent of direct marketing for cooperative databases to be invented. In e-mail marketing, it’s taken less than five.
At press time, there were at least five major co-ops. None of them has been around longer than nine months. Others are forming so quickly that even their competitors aren’t sure exactly who they are.
List professionals who gave birth to e-mail marketing say co-ops deliver desperately needed prospecting names.
“I’ve been doing this for almost three-and-a-half years,” observes Deb Goldstein, president of IDG Communications, Framingham, MA, “and it’s incredible to me that there are still only a fraction of lists available in comparison to postal lists – it’s still in the 100 e-mail to 300 postal range.” That’s about to change.
The two oldest co-ops are dot-com upstarts. 24/7 Alliance, New York, has been on the market as a Consumernet product since April. After 24/7 acquired Consumernet in August, it grew the file 225% – to 16 million names, says Michael Rowsom, senior vice president of the 24/7 Media Mail division.
Vernon Hills, IL-based yesmail. com came on the scene in May as an e-mail marketing company. But even though yesmail doesn’t call itself a co-op, it is viewed as competition by others in the arena. By January, YesMail had 70 network partners and 5 million e-mail names.
Unlike traditional co-ops in which a marketer contributes a certain number of names in exchange for other names, neither yesmail nor 24/7 offers a name-swap arrangement.
Partners may join yesmail for free and get a 50/50 share in revenue for each name rented. The average list price is $250 per thousand.
Similarly, 24/7 Alliance members join for free. They enjoy a 15% to 20% discount on the $180 to $300 list cost per thousand.
Internet pioneers NetCreations and Worldata also feature co-ops. New York-based NetCreations – which was preparing to launch its co-op at press time – will debut with a 6-million name database from the company’s Postmaster Direct partners who enroll in the free service. The incentive to join – beyond a discount on names in the pool – is a two-fer: Contribute a name, get two names in return. NetCreations would split revenue 50/50 with the list owner.
Worldata, operating its co-op since December, installs a Worldata-Exchange submit button on a member’s site offering special Web deals. When a visitor to that site presses the button and registers, the site owner gets two prospect names.
“After you use up addresses already credited to your account, for a $200 per thousand charge, we will sell you more e-mail addresses,” explains Jay Schwedelson, corporate vice president of Worldata/Web Connect. By mid-January, the Boca Raton, FL, list company had collected nearly 100,000 names.
New York-based Abacus Online is the progeny of the May-December marriage of traditional catalog co-op Abacus Alliance and Internet advertising provider DoubleClick. The pair signed their pact in November and within two months, “had had discussions with 30% of the Alliance members” to enroll them for the e-mail database, says Jonathan Shapiro, senior vice president of DoubleClick and general manager of Abacus Online.
Shapiro also sought dot-com participants. By the beginning of 2000, he claimed to have “hundreds of thousands” of e-mail names. There’s no charge to join, and for each name contributed, the marketer receives 10. The price is $150 to $190 per thousand e-mail names.
And last June, Acxiom Direct Media announced E@Base – which apparently is more of a postal e-mail appending tool than a co-op.
Whoever the players, list professionals are cautiously optimistic. “I like the idea,” says Michelle Feit, president of Pearl River, NY-based E-Post Direct. “It could work. However, an advertiser’s first and primary goal is to get all the different prospect lists within their target audience. These databases aren’t going to have everything a marketer could use. For that they have to go into the general market.”
Marketers such as Coy Clement, president and CEO of Paragon Holdings, are sold on the idea. Clement, whose three catalogs are paper and electronic, has long been an Abacus Alliance participant and is testing names from two of his books with Abacus Online. “Being able to connect the depth and breadth of offline behavior that Abacus has and the online experience that DoubleClick has will be of great value to us,” he indicates.
A major difference between e-mail co-ops and traditional direct mail co-ops, like Abacus Alliance, Z-24 or SmartBase, is that each customer in the e-mail kitty must have given permission for their name to be used. Admittedly, each co-op has a slightly different definition of opt-in.
Ben Isaacson, executive director of the Association for Interactive Media, Washington, DC, admits there is no industry standardization. “There are all different levels of disclosure. It’s not just about the permission, it’s about the relationship between the marketer and consumer. If you are going to use this kind of mechanism, you need to reveal to the consumer that they are going to hear from you and your partners.”
That’s why these companies send out e-mail campaigns themselves, rather than turning over lists to renters.
That’s not good enough, say some marketers. Some catalogers are more comfortable renting lists from yesmail or 24/7 – which feature promotions on their Web sites that consumers sign up for directly – than with a “blind” database. “They’ve opted in to these third-party companies, so they are fully aware of how the company is going to use their name,” says Frank Quaranta, director of media services at Millard Interactive, Peterborough, NH.
Marketers also worry that they don’t know enough about other participants. “You would have to be sure there were limits and parameters if your competitors are contributing to the pool,” points out Craig Ima, director of database marketing for AutobyTel, Irvine, CA, who is considering joining a co-op. And, he adds, “that participants are reputable and there’s opt-in permission language in front of each consumer.”
Lack of control is the central reason Fingerhut won’t join an e-mail co-op. “We won’t put our names into any co-op, even on the traditional side,” says Steve Leighton, vice president of marketing services at the Minnetonka, MN, cataloger. “It’s too soon to tell what the customer’s preference is going to be. Any e-mail advertising not coming from us would appear as spam.”
One reason for concern is this new breed of co-op possesses none of the homogeneity of the old-style co-op. Some boast files as diverse as the Internet, with technical publishers marketing cheek-by-jowl with greeting card companies. Even Abacus Online now has a number of dot-coms seeking leads from brick-and-mortar catalogers.
This may be a good way to diversify your prospecting list, but then again, it may not.
A big marketer such as Fingerhut – with its millions of customers and multiple Web sites and affinity partners for prospecting – might fare less well than small companies trying to build their databases.
“Companies without a lot of money might say, `Here’s a way for me to get a good return without laying out as much cash,'” explains Feit. “Or small lists that span lots of different markets may put their names out. So it would be hard for the larger users to get a good prospecting universe.”
Co-ops attack this difficulty in various ways. Rowsom of 24/7, for example, organizes files by interest category, not by source, and tries to “keep the messages as vertical as possible.”
Undoubtedly, co-ops have improved the e-mail prospecting field, which six months ago was nearly fallow. But the quality of the names are still in question.
“The problem with most e-mail lists is they are not true direct response lists,” charges Reggie Brady, vice president of strategy and partnerships at the Greenwich, CT, office of FloNetwork Inc. “They are interest files. It’s all self-reported data, not actionable data.”
Shapiro counters that his co-op draws on Abacus Alliance’s transactional database “to determine who the best prospects are.” yesmail targets the individuals from many lists who reflect the interest the marketer is seeking. But no company claims to have bona fide buyers’ data in abundance.
Tracking buyer behavior is the next development, Brady predicts. “Year 2000 is going to be the year of modeling, data analysis, segmentation and developing a true strategy for e-mail marketing.”
