Entering the Data/List Business

September 2, 2008 at 5:53 pm 2 comments

Your question: Hi. We are a consulting group and want to start reselling direct mail data in Canada.  Could you please tell us about reselling pros and cons of information and what license/permissions would we have to get to resell such data.

Our answer: We at RRW Consulting have been resellers of data here in the US since the inception of our business (2004). Prior to that we’ve worked for and represented some of the leading data compilers, selling data to high-volume direct marketers. So, this is an area where we have quite a bit of expertise. And, it’s one that is near and dear to our hearts.

As you requested, following are some of the pros and cons of being a data reseller (typically called a ‘list broker’).

Pros:

  • It’s a lucrative business–we’ve estimated list sales to be at $2.5 billion–yes, that’s billion with a b…  Check out this post where we’ve attempted to quantify the industry:
  • Data is fun! There is so much of it out there and so many tools that you can employ to make your targeting even more on-target. Each time I tackle a targeting challenge for one of my clients, I’m simply amazed at the depth and breadth of data available to marketers. Finding the right list and then using some other intelligent tools (i.e.: statistical modeling or segmentation) is like finding the key to the castle. The old (but I’ll assume true) saying is that 40% of a direct marketing program’s success can be attributed to the list. It’s so very important to purchase the right data so that your client can reach their ideal prospect, and achieve a successful marketing campaign.
  • List research can be pretty easy to do. With tools such as Nextmark’s list finder, you have immediate access to the more than 60,000 databases that are on the market today. Of course, the Internet has made searching for non-published data simple, too. As a data broker, you have the tools at your fingertips to identify the most appropriate data sources for each client.

Cons:

  • It’s a complicated business. You can’t simply rely on the info on the datacards to make your data decisions. There is a great amount of duplication and cannibalization in the list industry. People are reselling others databases, slapping a new name on the file and marketing it as their own. Without experience, you may be purchasing the exact same data from two separate firms. That’s where asking a lot of questions is helpful. Make sure at a minimum you’re clear about data sources and updating procedures.
  • There’s quite a bit of competition. From advertising agencies, to traditional list brokerage firms, to consulting firms, to database companies, it seems that everyone wants to get in on this business. So, you’ll need to separate yourself from the competition by bringing that extra value. We’ve found our niche to be in applying advanced analytics to data in order to maximize data performance. Therefore, we typically bundle in modeling, profiling and segmentation solutions with a large data sale. This niche has been a good one for RRW. Think about what you can do to differentiate your services from other data brokers.

Hopefully, these pros and cons will give you some good food for thought.

You also asked about which licenses are required to get into the business of selling data. I can’t speak for the Canadian marketplace, but I can speak for what’s required in the US. Essentially, most data owners will recognize a direct marketing consulting firm as a list broker (and therefore extend the 20% broker discount) if you can show that you are reselling the data. No special license is required, although if you can get listed in SRDS as a list broker, that might help your case. However, if the list owner you’re working refuses to recognize you as a list broker, at a minimum, they’ll definitely extend the 15% agency discount, usually with no questions asked.

Of course, you’ll need your normal business license that allows you to do business in your area. Note that data is not a taxable item (in the US at least…), so you shouldn’t have to worry about paying/charging taxes on the data you purchase on behalf of your clients.

For more specific info on requirements in your area, you may want to visit www.dmn.ca which is an excellent resource for direct marketing news in Canada. There may also be good info to be found on the Canadian Marketing Association’s site: www.the-cma.org.

Finally, I just today found this article from DM News.  Some interesting data on the state of the list business!

Good luck to you as you start this new venture. Of course, if you have additional questions, please just let me know.

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Entry filed under: Mailing Lists and Data.

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2 Comments Add your own

  • 1. Joe Pych / NextMark  |  September 19, 2008 at 8:54 pm

    Thanks for mentioning NextMark (my firm).

    I would add to this topic that your clients would appreciate this additional service you provide. With 40% of the success of each direct marketing campaign’s success riding on the choice of mailing lists, no campaign is complete without a good circulation plan. You can use this as a competitive advantage — for some reason, most agencies don’t get into lists.

    We help firms to get into the business all the time — let me know if we can help. You can find more resources here http://www.NextMark.com.

    – Joe

    Reply
  • 2. Suzanne Obermire  |  September 19, 2008 at 10:54 pm

    Joe,
    Great point! And, thanks for visiting.

    I use your search tool all the time, and I love it!
    Suzanne

    Reply

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