State of the Co-ops ’07

With the postal rate increase in effect and the marketplace demonstrating fierce competition, catalogers are seeking more efficient ways to handle the database information they accumulate. Certainly, there’s no shortage of companies that offer to streamline the process, but how do mailers know which of them is best for their needs? Here (in alphabetical order) is what the nation’s eight cooperative database firms are doing this year to set themselves apart.

Abacus Alliance

Acquired by marketing technology firm Epsilon earlier this year, Abacus recently launched its next generation solution, Abacus ONE, based on the company’s current proven modeling system. “We have taken what was working really well and made it even better for performance and consistency over time,” explains Casey Carey, senior vice president of alliance data services at Abacus.

There are currently 400 tests in the mail using Abacus ONE. Approximately 50 clients have rolled out more than 100 campaigns on it. On average, Carey reports, cataloger users are experiencing a 14 percent increase on dollars per book, a 9 percent increase in response and 56 percent greater mailable universes.

Carey defines Abacus ONE as more of a methodology than a product, providing a way to improve the consistency of models over time. “One of the things that always seems to come back on co-op databases in general is that they’re not consistent,” he observes. “Many times, when we peel back the layers, it wasn’t anything we were doing; it was that something else had changed — either the offer or the target market, or something else. We wanted to use modeling technology to create better consistency.”

ALEXA

ALEXA, which stands for the American List Exchange Association, is an alliance of mailers rather than a conventional co-op database firm. It was established last year to give catalogers the ability to leverage more exchanges. Participants can forward names in their databases to a central network and control the access other catalogers have to these names.

“When mailers choose ALEXA, they have to use the power of the database to get the performance out of a file they wish to take,” explains Michael Hayden, ALEXA’s president. “Then there is a charge from ALEXA of $8 per thousand for the names they select. This is available to members only, however demographic overlay services are offered to nonmembers.

For a flat, per-order fee of $50, mailers may omit their own housefile names from the names they select in an order. A $45 charge is applied to each order processed, and standard order turn-around time is 24 hours (ALEXA will fill same-day rush orders as well).

“We have a number of members who have requested specific things for their orders, such as special polls or selections,” says Matt Draxler, ALEXA’s list rentals fulfillment manager, “and we are in a position to accommodate those on a very timely basis.”

Experian’s Z-24

Experian’s Z-24 catalog cooperative database now is enhanced with life event and lifestyle data, to offer further insight into customer behavior. This new data includes such characteristics as hobbies and interests — e.g., skiing, golfing and fishing — as well as “life events,” such as the birth of a child.

“Adding this breadth of data to the cooperative landscape,” says Denise Hopkins, vice president of marketing and product development for Experian’s Marketing Information Services unit, “allows for the creation of more predictive models wherein marketers can make more advanced list selections in order to broaden their prospecting environment.”

I-Behavior

Having undergone some restructuring (former Abacus COO Chris Dice was named president in late 2005), I-Behavior recently launched a wholly independent subsidiary, Acerno, an online data cooperative. Based on the same model as traditional co-ops, this year-old venture addresses the increasing impact of the Internet by collecting anonymous purchase behavior tied to browser I.D.s.

“More and more business is moving online — and especially this year, in light of the postal increase, most merchants are probably going to spend more dollars online, and shift away from sending catalogs,” notes Samuel Cardonsky Sr., vice president of I-Behavior. Acerno offers remarketing, where if Web clients abandon a shopping basket or don’t purchase anything, an advertisement is served up the next time their browser shows up across the ad network, encouraging them to click through and, hopefully, make a purchase.

“There’s also pure prospecting: using the aggregate, anonymous cookie data network collecting at the browser I.D. level and the purchase,” Cardonsky says. “We’re serving up ads across the network using the behavioral targeting of the consumer profile.” Acerno is priced on a pay-per-performance model; the company takes its cut only when a customer makes a purchase on a member’s site.

NextAction

Since its inception five years ago, NextAction’s mission has been to enable catalogers to streamline data down the chain. “As a co-op, we focus on the data supply chain,” says Connie Howard, senior vice president of client services. “We’re heavily focused on making that more efficient and effective.”

Earlier this year, NextAction launched NextGen, a proprietary system that uses investment-grade analytics and proprietary processing to allow mailers to pinpoint their best list sources. “It offers our clients an opportunity to identify large universes at the most efficient price points, with increased feed,” Howard explains. “It increases their view into how their customers respond into any channel.”

PerformanceLink

Last year, American List Counsel (ALC) launched PerformanceLink, a 30 million-name, open-source, multichannel co-op. The list firm has since discontinued the service, opting to focus on data management.

“Most of my interaction with the databases is through interactions with my clients and knowing what they’re doing in their mail plans, and what portions of those mail plans are being made up from the co-op databases,” explains Britt Vatne, ALC’s executive vice president of data management.

Vatne observes that over the past couple of years, ALC has witnessed its clients not only increasing the number of names they’re taking out of co-op databases, but they’re also increasing the number of databases in which they participate.

“In the past,” she says, “we might have had clients that participated in Abacus exclusively. Now, she adds, they’re participating in Abacus and testing out four other co-op databases. As mailing costs rise and response rates fall, this has become a more attractive option.

Prefer Network

A division of direct marketeting service firm CMS Direct, Prefer Network’s new FreeMax 8 focuses on address hygiene and data modeling on a post-merge, prebindery basis. It’s made up of two crucial elements: proprietary change of address and preferred data modeling.

Prefer General Manager Bill Luth says that Americans’ mobility can wreak havoc on catalogers. “Today, something like 800,000 Americans move every week. Only 70 percent of them actually fill out a change-of-address form. Because of the matching logic that Prefer uses, only some 70 percent of the people who’ve filled out the form actually get matched up against the mailing list. Thus, there are 400,000 movers not identified on mailing lists every week.”

FreeMax 8 obtains change-of-address data from sources beyond NCOA. “For example, if you have gas at your house, you will probably change that as you move, as well as your phone, cable, Internet and so on,” Luth explains. Prefer uses an outside partner to accumulate this data.

FreeMax 8 doesn’t require clients to change vendors; it’s simply inserted in the process, post- merge, before the ink-jet tapes are created. Those addresses that can’t be cleaned up are replaced out of Prefer. The company also optimizes the prospect rental file, and if low yields are found there, they too, will be replaced by names out of the Prefer models.

Wiland Direct

With its pre-validated customer model, Wiland Direct touts its ability to construct prevalidated response models on the fly — and have them perform well.

Dan Wells, executive vice president of member services, explains that the company takes the data that catalogers have at their fingertips one step further.

“Many of our members have very sophisticated database marketing companies that do some level of analytics,” Wells says, such as recency/freqeuency/monetary segmentation with additional overlays made of products or channels — all of which enables catalogers to know what a specific customer has purchased.

“What Wiland Direct knows through our database,” Wells says, “is what an individual has bought across every other cataloger out there.”

Wiland’s system also includes a customer’s level of profitability to the cataloger. “If a person is profitable all the time,” Wells says, “it’s easy to figure out to mail to that individual. But a strategy should be applied to those customers that don’t purchase anything every time a catalog is mailed.

“It’s around that break-even line,” he adds. “All mailers, right around that break-even line, have clusters of names. This gives them the ability to say, ‘If you don’t contact some of those names right below the line as frequently, they’d actually perform better and come above the line.’”

Carolyn Heinze is a freelance writer/editor based in Vancouver, British Columbia, Canada. You can reach her at carolynheinze@free.fr.