This week’s question: Overall, how is continued list industry consolidation affecting your ability to do business?
Our current panel features Tom Colwell of Conrad Direct, Don Eaker of Wave Direct, Ed Krug of True North List Marketing, Michael Peterman of Veradata, Stefanie Pont of Pont Media Direct, Harold Pratt of Pratt Direct Inc., Kathy Tribel of Lawrence Direct Marketing Inc. and Michele Volpe of Media Source Solutions. Would you like to be considered to be a member of our roundtable? Contact Larry Riggs at [email protected].)
Thomas Colwell., vice president, Conrad Direct Inc.:
If we can get our lists and have good relationships with other list companies, our everyday work is really not affected. Everyone is looking for efficiencies in price and service and that is what consolidation offers. In the big picture though, I think that there is an effect we are not acknowledging. This industry was started and is still run by entrepreneurs. The more you consolidate to large companies the more you lose the individualism of what made all of these list companies great. Sometimes it is harder to find the right person to speak with to make a deal beneficial to both sides quickly and without a lot of red tape. Larger corporate structures lead to more levels that have to give clearance. Having list companies that are able to address new ideas quickly and efficiently have brought us this far. Let’s not lose sight of that!
Don Eaker, national sales director, Wave Direct:
We have seen a steady upturn in paid subscription/controlled circulation publishers either killing publications, or discontinuing the print side of the magazine. This has decreased options in some business-to-business niches. But overall, consolidation has not really been a factor with our business model. However, we expect to see further consolidation with many of the small, private publishers being squeezed out due to declining sales, and increased publishing and delivery costs.
Ed Krug, vice president, True North List Marketing:
Over the past six years, we have seen a record number of major list companies consolidate. Consolidation has occurred across several direct marketing business segments such as printing, data compilation, data processing, telemarketing and now it is even occurring in the interactive space. I believe today mailers understand that a vendor could change at a moment’s notice. Understanding this change has allowed mailers to rationally consider their options. We must remember that we are in a service business. If a mailer’s broker remains with the new company, they will most likely maintain that business. It’s when personnel changes occur that mailers will consider other options.
Consolidation also forced brokers to reinvent themselves by taking a more strategic/consulting approach with their clients beyond new customer acquisition to include customer retention and customer reactivation.
Michael Peterman, CEO, VeraData:
The frenzy of consolidation is encouraging. The storm of economic events has left behind some incredibly strong talent (small to mid-sized businesses) weakened by factors beyond their control. The larger companies are buying intellectual property at bargain prices in many cases. Not many of us planned to encounter the headwinds we face today. Perhaps it’s the idealist in me, but the consolidation is helping everyone. In some cases (we all know who they are) the sheer magnitude of data sitting in one company, if aggregated, analyzed and used to the degree currently possible could yield a quantum leap in how we do our jobs. At the same time, these behemoths need distribution channels and client insight and even with all of that data sitting under one roof, the need for more still exists. Small to mid-sized brokers who have weathered this storm have grown smarter, they’ve broadened relationships with the consolidators, and are taking advantage of their rolled up purchasing power and increasing their margins. Some of the most senior people in the companies being acquired are finding themselves back on the market, much to the benefit of the remaining boutique and mid-sized brokers. In most cases, there have been no material changes in the business processes—a little extra red tape here and there—but nothing of consequence. The speed with which these consolidations have taken place is the main challenge.
Stefanie Pont, managing partner, Pont Media Direct:
Consolidation doesn’t affect my ability to do business. It does, however, try my patience. In some rare happy cases, acquisition has meant a better standard of customer service and data integration to the brokers. In most of the others however, consolidation seems to mean making the brokers work harder to get simple information, because the company has now lopped off the staff that used to provide service and not rethought fulfilling their functions. I’m an old fashioned fan of fair market competition. You see less and less of that because the competitors keep getting purchased. I read last week where one of the largest companies is going to focus on marketing more services. I applaud their wish to sell me and my clients more things. I just wish they’d focus on service a bit as well in the process.
Harold Pratt, CEO, Pratt Direct Inc.:
List industry consolidation is a double edged sword. With fewer list sources, there is diminished competition and fewer opportunities to negotiate better terms for clients. That’s the downside. On the upside, consolidation has contracted the playing field and opened up new selling opportunities for small, nimble broker/managers.
Kathy Tribel, List Broker/Manager, Lawrence Direct Marketing, Inc.:
The lists that we manage are consolidated and most of brokerage companies we work with have consolidated lists as well. In my experience, they just seem to perform better that way for our clients.
Michele Volpe, vice president of sales and marketing, Media Source Solutions:
The large list management companies have the bulk of the big-name files so it’s one-stop shopping for many list brokers. It’s made it easier in my opinion. But it does make me sad. I miss the smaller businesses and the direct relationships that I developed with list managers over the years.
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