List rental – is it such a big deal?

Historically publishers have used list rental either to fund circulation activity or as an additional revenue stream. Here Richard Gibson looks at making the decision to rent and how to maximise revenue from one of your most valuable assets – your mailing list.

By Richard Gibson

To rent or not to rent, that is the question. To some publishers the words ‘list rental’ are an everyday occurrence, to others they are an anathema creating mutterings about "loss of control" and "selling the crown jewels".

Decision time

Weighing up the pros and cons, circulation professionals (as this is often where the decision lies) need to separate the fact from the fiction.

Fact – list rentals create revenue which can be used to support circulation or treated as part of the magazine’s turnover.

Fact – advertisers also have below the line budgets. If you don’t make your list available and your competitors do, they will get the revenue.

Circulation lists are also good prospects for those companies whose business model is purely via direct marketing channels. Mail order operators, conference organisers, financial services and corporate gifts companies may never advertise, but they will readily use your list.

Fact – allowing third parties to use the list and asking for goneaways to be returned helps to keep it clean.

Fact – money can be made from otherwise "redundant" data (expires/reader offer buyers and trialists).

So where’s the down side?

Does list rental really mean losing control over your data? Only if it is rented without proper terms and conditions and is unprotected by seeding and secure transfer. Publisher approval of all rentals means that the data can be rented out to non competing third parties who will deliver revenue back – a real asset amidst static or declining advertising markets.

A more real concern is compliance with privacy legislation, particularly the opt-out/opt-in requirements for collecting data. Some publishers have experienced a higher opt-out rate for their own cross-selling as a result of including an additional third party box. 3rd party opt-out rates are generally increasing in any case.

But does list rental have a negative effect on re-registration efforts or subscription renewals? This all comes down to frequency and timing. Some publishers preserve a mailing or emailing window around their own efforts, others reserve one channel (often email) for their own use but allow rentals for other contact methods.

Finally, there’s the more practical issue of the logistics of list rental. Counts and orders have to be produced quickly to meet the needs of list buyers and this may get in the way of circulation or audit procedures if managed in-house.

So which publishers make their lists available? The answer is the vast majority. It’s more difficult now to list those who do not rather than those who do. Magazine publishers have certainly been more visible, with the newspaper groups following in the mid 1990’s. Recently online publishers have been the newest entrants into the list rental market place.

Outsourcing sales

Once the decision to rent is made, the next question is whether to handle sales in-house or to outsource to a manager. The apparently obvious internal solution is to ask ad sales to take on the job. A word of advice here; generally, advertising sales people make lousy list sellers.

There have been some recent changes within publishing companies as to how they deal with list rental marketing. Many had in-house departments dedicated to list sales but during the softening of the market experienced over the last few years – particularly in B2B - several publishers have outsourced their list rental to professional list management firms.

If you are going down the outsourced route or you are looking to change supplier how do you go about selecting someone to manage your list? This is not an exact science. My recommendation here would be to look for executives who have experience of working with publishers, knowledge of your product, understanding of key advertisers and who know which direct marketing clients operate within your market. Speaking to the manager’s existing customers to get actual feedback is advisable.

Are you getting enough?

Benchmarking your list rental sales performance can be tricky. There are multiple factors that affect performance in the list rental space. Some of these are: file sizes, whether competitors are also making their lists available, the size of the direct marketing niche that your title covers and the relevance to the wider market whether it be in business or consumer.

File size is crucial. Direct marketers’ very lifeblood is the constant cycle of test and rollout. If the circulation volume is static, rollout potential will be limited. Publishers in B2B have countered this by adding in recent lapsed or inactive subscribers, charging a slightly lower price to give the list user more targets of the same profile. In B2C, reader offers or trial subscribers who do not convert to a full subscription will also be good prospects. Clever publishers in both B2B and B2C can use website registrants to increase their list sizes.

Renting email addresses

According to the Direct Marketing Association (DMA), email and online as channels are still growing. Publishers know this and they are already using their sites to serve third party advertisements. Recently testing budgets in some key sectors which have traditionally used direct mail have been migrated to email or online. Those publishers with properly consented, rentable email address lists along with a technology partner (ASP provider) for the professional delivery of bulk emails have made the biggest gain on their competitors.

Few release email addresses for two main reasons. Firstly the legislation changed on December 11th 2003 and some email lists were withdrawn as they were not properly consented; this has made the remaining lists very valuable. Secondly there is a line of thought that shuns email list rental much in the same way direct mail was shunned in its early days. I do think this is a missed opportunity. Above all, email is a medium that can be controlled. The majority of publishers currently undertake email transmission for their own purposes in house so, in addition to the creative check you get with direct mail, the publisher has full control over the day of the week and the time of the send. So clashes with, say, a newsletter from the title itself can be avoided.

It is very important to ensure the relevance of any third party promotion to your email addresses. If you bombard the subscribers with irrelevant information in B2B or B2C then they will almost certainly know the source and unsubscribe from all your promotions. If monitored correctly and relevant messages are sent then the subscriber will be far less inclined to opt-out. The key with making email lists available for third party rental is complying with DMA’s best practice guidelines on data collection.

Covering all the bases

So what of the other potential opportunities for publishers to increase their revenue from their data? Competitive pricing, clever segmentation and a proactive sales and marketing effort are essential. A professional list manager should be looking after these details on the publisher’s behalf. Time should be taken to ensure that the manager has as much information as possible about the circulation base so that he can make informed suggestions when talking to potential users. Engaging advertising and insert sales people so that they provide leads is helpful. The simple step of featuring list rental contact details in media kits and in the magazine itself is often missed.

Participation in pooled databases can bring extra revenue and rarely dents solus list sales. Enhancement of the data (using demographics from universe B2B or consumer files) may also bring sales in new areas. Few publishers have grasped the nettle and sought additional sales really successfully. Some are some of the way there, and others have pioneered initiatives which may bear fruit in the future.

Whether you decide to go all or just part of the way to renting your names, you can be sure there is money to be made which can be used to maintain and grow circulation. Offering advertisers a multi-channel approach to the marketplace you serve can enhance the magazine’s position and the services of an external list manager will give you greater reach into customers who only use DM. As a circulation professional, you may be inclined to hold back and protect the asset but as a budget holder you must surely be tempted by the significant contribution list sales can make.