By Carol Krol

Jay Schwedelson, corporate VP of list manager Worldata Inc., sees a better year in 2003 for the list rental industry, with activity picking up across an array of industries. Schwedelson addressed the outlook for this year, list pricing, commission structures and other issues in a recent interview with BtoB.

BtoB: List companies had a tough year in 2002, with list rental and prospecting off by double-digit percentages. What lies ahead?

Schwedelson: Obviously, 2002 was not the greatest year for the list rental business, but it certainly wasn't a terrible year for b-to-b. The consumer side was dismal. B-to-b carried the freight for the list industry. B-to-b ended the year much stronger than the way it began.

E-mail was very strong, but direct mail took a pretty big hit. But direct mail volumes have started to pick up now. It should be a strong first quarter this year. We're not just seeing it in one particular vertical market. That's an indication to us that the marketplace as a whole looks like it's getting healthier.

While mail is starting to come back, the lists are smaller. Companies building lists have lost customers. It makes the job of the list broker more important, because companies have to go out and find new and responsive files worth testing.

Growth in e-mail list availability is another huge area. In the last 12 months, there has been 100% to 150% growth in the amount of lists. It's now commonplace to have your e-mail list available. It's safe to say that there's no major b-to-b publisher that does not have its e-mail list available for rental or is [not] planning to have it available in the very near term.

BtoB: List leaders continue to struggle with rate negotiation. What are the challenges of this situation?

Schwedelson: Mailers, brokers, list managers, list owners all want the same thing, and it becomes a very tense environment. Last year was the year of the negotiated list rental. Everybody was trying to work out a better CPM, a better net name arrangement, anything they could do. List managers and list owners were negotiating with brokers in order to get the business, even if it wasn't close to the rate card. Mailers received certain rates to use certain lists. Now that same mailer wants to use that list again, but the economy has started to pick up, and the list owner doesn't want to offer the same price.A lot of the debate at DMA's annual list leader meeting back in October was about locking in a pricing. There has not been any coordinated resolution.

BtoB: What are the effects of the Web on the list industry?

Schwedelson: Over the last 24 months or so, the traditional list management companies have taken over the prospect e-mail marketing space. Two years ago, the major players in the e-mail list space were Internet companies like DoubleClick, YesMail and 24/7 Media. A lot of those companies are not in that space now. DoubleClick sold off that business; so did 24/7.

The dominant players by far in the e-mail space now are traditional list managers. [They] represent in excess of 75% of all e-mail lists. They already are representing an organization's direct marketing database. It's just another thing they can market.

BtoB: Commissions seem to have become a point of contention. What are the issues?

Schwedelson: As a list manager, you generally receive a 10% commission for generating sales and list rental on a file. The broker who has the client gets 20%, and the list owner receives 70%. A lot of brokers are negotiating with mailers to take less than the standard 20% and give it back to the mailer.

Brokers are upset about that because it undermines the industry. We should be competing on our ideas, our customer service and our organization. It should not be based on shortsighted pricing.

BtoB: Are companies taking advantage of e-mail and postal lists to conduct integrated campaigns?

Schwedelson: The technology marketers are most actively using the multichannel effort. The professional sectors-doctors, lawyers, accountants-tend to be the least technical and to use e-mail the least, so they are a difficult group to do a multichannel effort to.

Beyond the technology marketplace, there's really not a lot of activity. It's an expensive program to test, because you're basically paying for two lists for one campaign.