Proper Information Usage in a Private/Public Database Environment

Recently, my VP of Sales had a meeting with a prospective client to discuss the design, implementation and usage fees associated with a private database. While reviewing the results of the meeting, I became aware of a flaw relating to how the prospect interpreted the ownership, usage and payment of external data. With "information" being today's most important corporate asset, it is critical for marketers to understand what they can and cannot do with externally rented data. In this article, we'll discuss how external list data is properly used in a private/public database environment.

Private databases are comprised of external list universes that are typically selected and warehoused based on prior "stand-alone" rental performance and/or their coverage of a particular vertical market segment. With permission of the individual List Owners (as well as a mailer-side sign-off on an industry-standard database usage agreement), the external names are merged and de-duped with the mailer's house file at a bonded, third-party service bureau.

Regarded as direct marketing "tools", private databases yield a variety of benefits to mailers as well as the corresponding List Owners. The unduplicated data warehouse facilitates usage and payment on a "net-net" basis, allowing mailers to pay for only unique names that are not part of their current house file. Additional mailer-side benefits also include ease of management, reduced merge/purge costs, relaxed minimums, as well as rapid access to external data and extensive selects to drive high-frequency mailing campaigns. List owners also benefit, enjoying added revenue streams, volume name commitments, and reduced fulfillment costs.

The Database Administrator, who is typically a List Broker/Database Marketer who works closely with a service bureau, is involved with the overall coordination of the data as well as the reporting of usage and payment to the participating List Owners. For reporting purposes, an identification number is inserted into each record, associating the source of the name with a List Owner. In the case of names that are common to two or more List Owners, revenue is shared on an equal basis.

Whereas a private database is built and driven by the specific needs of a client, a public database maintains similar constructs, except that it is designed to be used by a variety of pre-approved renters. Public databases typically have a homogeneous theme, catering to a specific classification of mailers, i.e. high technology, business-to-business, seminars, etc.

In both public and private databases, the participating List Owners may include extended data beyond basic name and address information to facilitate enhanced selection capabilities within the database environment. For example, a publisher of controlled-circulation magazines might include information such as job title, job function, purchasing interests, industry, and hardware platform.

With the addition of such selection criteria, the List Owner benefits by the enhanced opportunities for their names to be selected. On the other hand, mailers benefit by having access to an information-rich data warehouse that can generate highly refined prospecting universes.

The "flaw" mentioned in the beginning of this column specifically relates to the usage of the extended data. The situation occurs at the merge/purge level, when the external files are brought together with the house file (in the case of a public database, there are multiple house files from the various participants in addition to outside prospect files). Lets analyze the scenario where the individual "Joe Smith" at the "ABC Company" appears in both the house file as well as a controlled-circulation magazine list that has been submitted by a List Owner for participation in the private database.

The record containing "Joe Smith" would be attributed to the house file, since it is a name that is already owned and used by the mailer. Nevertheless, the extended data for "Joe Smith", i.e., his title, purchasing interests, hardware platform, etc., belongs only to the List Owner.

The extended data cannot be moved into the house file record without permission from and payment to the corresponding List Owner. With practically every public/private database build involving an industry-standard database usage agreement, it has already been agreed, prior to the shipment of data, that it would not be used for "… tagging or enhancement purposes without explicit approval by the List Owner."

We had encountered a situation during our presentation of a private database for a prospective client. The database was designed to drive a customer acquisition program as well as offer additional stratification of their multi-million name house file. The client intended to achieve this by integrating external data (such as title, job function, purchasing interests, etc.) through the merge/purge process during the database build. The question arose when we informed the prospect that there would be a charge for using the external data, even if it was used in conjunction with their own names. Compensation to the List Owner makes sense, since the data helps the mailer know more information about their customers than they are able to garner via their normal marketing activities.

As a professional Direct Marketer, if you are considering the creation of a private database and evaluating proposals to perform such a task, understand that the usage of external data is governed by agreements designed to protect the interest of the List Owners. There is no "free ride", especially when it pertains to this most valuable corporate access.
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