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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.
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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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