List Rentals: What’s Negotiable? What’s Not?

Anything is negotiable when it comes to list rentals, according to list professionals such as Karen Mayhew, vice president, consumer list management, at Direct Media. “Today, there’s not really anything that’s out of the question,” she explains.

Mayhew’s colleague on the list brokerage side at Direct Media, Linda Huntoon, executive vice president, agrees. “If you can think of something that will help a mailer use a file and can explain it to the manager and [list] owner, you can probably test it.”

Other list professionals also see an upswing in list negotiations. Dennis Bissig, group vice president/brokerage, Mokrynski & Associates, says: “There are a few exceptions, but overall, more owners are dealing these days, and more so than they would have even a few months ago.”

The reason: simple economics. As a list manager wanting to rent a catalog client’s list to other mailers, Mayhew says, “We need that mailer to succeed. And to cost effectively mail many prospect lists in today’s competitive market, catalogers must have certain concessions made.”

However, list brokers and managers caution that catalogers should not look to negotiation as merely a cost-saving strategy. “The process of negotiating list cost is, and should be, based purely on the performance of the list in question, not as part of a generic cost-saving campaign waged by the broker,” says Andy Ostroy, chairman and CEO, ALC of New York LLC. Two areas in which list-rental negotiations are taking place more than before include pricing and promotion.

Costs

When it comes to list-pricing negotiations, Huntoon says, “The cost of the list is more important [to mailers] than I’ve seen it in years.”

Ostroy says the types of discounts, deductions and other price considerations haven’t changed much. But, he adds, “when supported by evidence of marginal response, low average order amount, high duplication and/or other pertinent factors relating to the mailing, the process of negotiating can begin earnestly, and usually ends in mutual satisfaction.”

Considering the current business climate, Bissig adds, “As you have to do more slicing and dicing to get a list to work for you, you must ask for some concessions such as capping or waiving certain select charges.”

Following are some of the areas in which pricing-related negotiations now are more common.

• Selections. “Select caps are negotiable,” says Mayhew, “and that’s a good thing for catalog mailers wanting to test different types of files than they’ve mailed previously.” Noting that in most cases, base rates are fixed, she adds, “But you may be able to get some of the selection charges waived. This is important, because select charges can really add up when you must use a lot of selects to make a list work for you.”

• Exchanges. Straight one-for-one exchanges are not the only game in town anymore. “I’ve seen a little more of the two-for-one deals,” Mayhew says. This is where one cataloger’s housefile names are viewed as being of a higher value than another’s names—and an uneven trade is proposed. “It’s not a straight reciprocal relationship,” explains Mayhew.

• Running charges and enhancement fees. Some mailers even are trying to knock these costs down, and these charges have traditionally been non-negotiable. In some cases, a mailer may be successful here, but such concessions may depend on how much business the mailer is doing with a particular list owner, Mayhew explains. But, she adds, if it’s a “hot, new-to-market file, the chances of negotiation on these points are nil.”

• Base rate deals. An out-of-category mailer looking to rent a catalog list may find some openness to base-rate negotiation.

• Scoring charges. Modeling is very popular now, says Mayhew. “It used to be no one would try to negotiate a scoring charge. Now, it’s not uncommon to ask to have the scoring charge waived.”

• Net names. An interesting twist is taking place in this area. Huntoon explains: “Say a mailer has an 85 percent net-name arrangement. But due to nixies, DMA Suppression and other necessary deductions, they net out fewer names, say, only 82 percent. Someone’s losing out on that 3 percent.”

According to Huntoon, the major list houses are trying to devise a way to address this through a locked-in rate, whereby all deductions are negotiated before the names are shipped, and no further deductions are allowed after shipping (unless some unusual error occurs in the running of the order). If this becomes standard practice, she says, it will cause a lot more upfront negotiations but eliminate the back-end rebilling process.

Beyond Price: Promotions

The days are pretty much gone when list rental would be denied to a cataloger making a promotional offer, asserts Huntoon, a 20-year veteran of the list brokerage business. “To try to rent a list for a mailer doing a highly promotional mailing used to be heavily frowned upon,” she recalls. “Any promotional vehicles used by a cataloger had to be seen in hard copy and heavily negotiated for approval.”

As business has become tighter, the promotional nature of some books has become more acceptable. This trend is even true for more upscale catalogs that wouldn’t have tread into these promotional waters before, says Huntoon. In addition, catalogers from the low-end to the upscale are using promotional tools and offers such as free shipping. “All these things should be called into question—even whether a dot whack is printed on the cover or affixed. But many are being approved today,” says Huntoon. Regardless of the mailer, it still requires a clearing of the mail piece.

Says Bissig, “A year ago, we had to work harder to get those breaks. Now, as long as we can express it and demonstrate it to the list owner, we usually can get it.” He believes owners and managers recognize that in this market, if they don’t give a deal, they may not get the order.

The broker and manager generally are the ones handling the negotiation, with input from the list owner and mailer. To make deals work, Huntoon says, the broker has to become more involved in the circulation mail plan of the mailer.

Bissig agrees: “We must work closely with the catalog mailers and ask them, ‘What’s the mark we have to hit?’ That’s what we’ll go in and try to negotiate for.”