Q&A: Mandel Sees Strong B-to-B, Tough Consumer List Arena
Lon Mandel may have slowed his organization’s acquisition pace, but he’s hardly resting on his laurels.
Mandel, the founder, president and CEO of Specialists Marketing Services, Inc.—as well as the DMA’s 2011 List & Data Leader of the Year Award recipient—has shifted from the strategy which brought Transcontinental Direct, 21st Century Marketing, Response Media’s list division and Rickard List Marketing’s fundraising unit under his company’s umbrella to an organic growth strategy.
Which is not to say his organization isn’t growing. It recently attracted list industry figures Dolores Ryan Babcock and Mireille St. Armand from Infogroup to its ranks.
Chief Marketer asked Mandel to reflect on trends within the marketing list industry.
Chief Marketer: What are you observing in terms of the upcoming summer/fall/holiday mailing seasons? Who’s in, who’s out, and how are volumes changing?
MANDEL: The B-to-B arena is strong. Things are doing pretty well, response rates are strong, and we don’t see a lot of decline in that area in mail volume. That projects out for the rest of the year.
In consumer, especially in the catalog space, circulation is down, along with prospecting to outside lists. Catalog companies are doing their best to utilize the Internet to sell more product. The holiday season will be similar to last year: We are not seeing a lot of circulation increases there. Food mailers within the category are down.
[Within consumer lists] some lists have seen 20% declines in list rental revenue. Others have increased. This 20% decline holds true in all categories of lists: Publishing, catalogs, fundraising continuity and so forth.
File sizes are shrinking due to less prospecting via the mail and lower response rates. [Additionally], many mailers suppress buyers who are generated from the Internet. [Marketers are] using email and social media lists. We may never see mail volumes truly go up again because the mix has shifted. Other than fundraisers, marketers are using a lot of other channels to bring in new business.
CM: Is the revenue slippage in consumer lists being made up by ancillary services, or are consumer-focused companies just doing less?
MANDEL: The answer, in most cases, is both. They are mailing smarter through modeling and analytics, however the companies that do not utilize those techniques are still cutting back circulation based on declining response rates as well as lower risk tolerance. This is all combined with the fact that marketers have additional channels to bring in new customers in a more cost-effective manner.
CM: Why the strength in B-to-B lists?
MANDEL: Email B-to-B lists perform very well, and there are many available. B-to-B companies have been renting their subscriber and product buyer email names for many years, unlike in the consumer marketplace where many of the top list owners do not make their email names available.
CM: What are the growth areas for list companies?
MANDEL: Any company that is in the list business has to consider itself a marketing services firm. We’ve seen growth in our interactive division, which aggregates email data as well as partners with other large email providers and is able to create email campaigns for large banded email companies.
We’ve also seen growth in our lead generation division, especially among the continuing education sector, as well as our insert media and computer services divisions. And we will be moving further into the email deployment business over the next 12 months. We will be investing in software and people to organically grow systems.
CM: Outside of InfoGroup, Specialists Marketing Services was one of the more aggressive acquiring companies during the last decade. What is your current acquisition strategy?
MANDEL: We don’t currently have an acquisition strategy. We don’t have the need. We’re at a size and place where we can bring business on based on our brand and grow at substantial rate within the traditional list arena without having to do acquisitions during the next 12 months.
I think that most of the very good companies have been acquired already. There isn’t a tremendous choice in terms of doing acquisitions. For a company like mine, acquisitions would not be in the list space but more in social media or email marketing or interactive. I think that is why it has slowed down.
CM: What has the impact of social media been on your business?
MANDEL: Right now I haven’t seen much impact on what we do. That’s not to say there won’t be. I think there is a place for that. We need to bring in more qualified people and see how we can apply it, but for us we have not attacked that marketplace yet.
Our hesitation is ROI. In other area we’ve had great returns on investment, which we are going to maximize before we take on social media.
CM: Aside from jumps in technology, what changes have you seen in the list industry during the past 30 years? How have clients changed, for instance? Or list use?
MANDEL: One of the biggest changes that I have seen is the decline of promotional offers primarily within the sweepstakes category of direct mail over the past 10 years. The utilization of email and postal combined to help sell product. What else? The rise in multichannel marketing. Large consumer product companies utilizing the email channel as a branding tool.
