Outside List Optimization: Does it Pay?

Taking into account the different types of modeling techniques, list optimization does not consider as many variables. In fact, this process only considers two or three key variables. Cross member models, on the other hand, use housefile modeling, which is the more advanced form of modeling done by Abacus. Since housefiles reside at Abacus, there is much more data available to Abacus for this process.

In summary, outside list optimization can be considered in the following examples:

• When lists are obtained on exchange from another list owner.

• If a “net name” arrangement can be negotiated.

• When compiled lists are used (providing the economics work).

• If a cross member model can be done.

• If we know we can achieve lift in excess of the cost differential needed to achieve breakeven.

Abacus, for example, developed its optimization model in order to identify single buyers post merge/purge. From my experience, this Abacus product works best on subscriber files and/or on compiled lists. It was designed for homogeneous lists. Trying to model several different lists is not the best use of this process.

I hope this provides a good understanding and explanation of outside list optimization. It is a good marketing technique to employ in certain cases, providing the economics work.

Stephen R. Lett is president of Lett Direct Inc., a catalog consulting firm specializing in circulation planning, forecasting and analysis. He is also on the faculty at Indiana University, where he teaches direct marketing at the MBA level. He can be reached at (317) 844-8228 or by e-mail at slett@lettdirect.com