Outside List Optimization: Does it Pay?
The Best Economic Scenario
The “Cross Member Model” column makes the most sense economically. Here, only a 10-percent lift in response is needed to pay for the investment. A cross member model is when another member of a co-op, such as Abacus Alliance, allows its list to be optimized on a “net name” basis. An order still needs to be placed through the list broker. The cataloger requests a cross member model not knowing if this firm is a member of Abacus. Since Abacus is a “blind” cooperative database, it neither publishes a listing of its members nor reveals this information. So, the broker sends the order to the owner’s list manager and on to Abacus if approved. While the economics of this scenario make sense, several of the lists wanted for optimization would not be members of the Abacus Alliance, including publishers of compiled lists, such as Polk. However, this is the option I prefer and the one that makes the most economic and practical sense. Abacus claims this is a stronger model, too. It is more predictive because of the large amount of transitional data that comes into play, since all the files reside at Abacus.
Optimization costs are based on the net output of names vs. the gross input. To optimize an outside rented list, a cataloger needs to rent 100,000 names from any given list. Abacus selects a minimum of 25,000 names to make the economics work. That’s because Abacus charges $40 per thousand net names outputted amounting to $1,000, which is its minimum charge. If a single list of 10,000 names is optimized, the same $1,000 minimum is charged as would be for 25,000 names outputted.
Let’s take a compiled list such as Polk’s. Optimization might work with a list such as this due to the fact that much less is paid per thousand names rented. What’s more, these are not proven mail order buyers, and therefore there is very little chance for success mailing them on their own. By modeling or optimizing these names, we can identify the mail order catalog buyers within the universe of names available to us, which will result in a lift. We need to work through the economics of this, but the application seems to make sense.