Big Brother is watching you, and he knows where you live. And what you earn. And where you shop. It’s true that there are vast libraries of data held on each and every one of us, something that puts civil liberties groups into a spin. Some forward-thinking printers, however, are turning this data boom to their advantage by taking up data management.
The existence of client data is nothing new, but the sophistication with which it is being used has leapt in recent years. Few companies know this quite as well as Tesco. When the supermarket set up its Clubcard scheme in 1995, it had set its sights on customer insight data, not customer loyalty. Tesco’s strategy for monitoring and using data on billions of retail purchases proves that ‘every little helps’. Indeed, it helps an awful lot: Clubcard is widely credited with the group’s rise to grocery dominance over the past decade.
There’s such a buzz around data that it might seem all the wannabe printer-turned-data company needs is a spare server, a bit of software and access to list rental providers. It’s not quite that simple, but it’s true that the first port of call for any data-driven campaign will be a data bureau.
In the details
Organisations such as Eurodirect and Experian rent lists on a cost per record or per thousand basis. Rate card prices for datasets could be anywhere between £15 per thousand for a volume buy up to a more realistic £100-£200 per thousand. This price tag varies depending on how detailed – or ‘granular’ – the customer information is. Name and address data is on the cheap end, and the price increases as soon as a phone number or valid email address are added. As further information is appended onto each record, the price goes up. A high-end ‘prospect pool’ split down with such geo-demographic data as media, travel, and even pets, becomes a powerful tool in the hands of a skilled data profiler.
The economic arguments for good data handling are obvious. For instance, the clever use of a bit of address data for mail sorting could equate to a 30% on the postage costs. Data cleaning is also a requirement in the recently launched PAS 2020 specification on environmentally responsible direct marketing.
However, tactical approaches to mailing campaigns get far deeper, explains Alex Walsh, head of postal affairs at the Direct Marketing Association (DMA. “The biggest significant change that has happened and will continue to happen is that the use of cold mailing lists will reduce,” he says.
“There will be much more reliance on talking to existing clients. Mail is quite expensive as a way to get a message across. Gone are the days of the credit card companies sending out five-million mailings with relatively little targeting,” adds Walsh. To squeeze more business out of existing customers, companies are looking for efficient ways to output highly intelligent customer data. Enter the entrepreneurial print firm, he says.
“There’s not a huge amount of money in print and mailing any longer, but if you can do data manipulation and hold customer databases, that’s far more profitable.”
It’s not just offering data services but actually hosting clients’ customer databases that can be particularly advantageous, he says. By controlling the data, printers can be more proactive, trawling data and coming up with suggestions for campaigns. Customer loyalty becomes more of a given. “If you control the customer database, there is a certain amount of lock-in,” says Walsh. Not only is it more difficult for a client to shift its database than to, say, pull a print contract for a marginal saving, they would also have to forfeit any fees associated with setting up the database in the first place.
New markets
The list of print service providers entering the sector is testament to the economic rationale of having a data arm. Firms such as Adare and Howitt bolted on data services in their quest to escape the commodity printer pigeon hole and rebrand as multi-channel marketing communication providers. In December, Communisis spent £12.6m on Surrey-based data services firm Absolute Intuistic. Last month, CDMS bought data firm Transactis. In the SME arena, Repropoint launched a multi-channel marketing service last October.
There is a gap in the market for printers offering a wider array of data services, says Dan Martin, head of customer insight at Airmiles. The UK’s most popular travel-loyalty scheme is both a data provider and a print customer through its contract with Charterhouse. “The advantages they offer with a vertically integrated package are attractive.” In past roles, Martin has found it “nifty” to work direct with technologically sophisticated printers with a broader remit.
Adare extended its portfolio in 2002 with the acquisition of specialist data company Intellidata. “We want to engage with clients at a strategic level,” says data services director Andrew Woodger. He says clients themselves are being more strategic with their marketing budgets. The answer is to be “channel agnostic”, he adds. The focus is data, not output. The more complementary services a firm can offer, the more tempting it becomes. “Where we see the market moving is clients looking for true marketing communications business that can create the offer, identify the audience and deliver the communication,” says Woodger.
The traditional campaign creation cycle of London agency, data specialist and printer is becoming outmoded, says Woodger. What customers want, he adds, is “disintermediarisation”. In other words, clients can be drawn to a one-stop-marketing-shop.
However, this doesn’t mean printers should thrust a sole marketing supplier arrangement onto clients, says Caroline Dover, managing director of Vee Combined Media Factory. The Reading-based firm isn’t a printer that has moved into data, but instead could be the exception that proves the trend. In June last year, 15-year-old marketing agency The Volume Group acquired litho and digital house Riverside Printing and transformed it into Vee Media.
It’s important to give customers a choice, says Dover. The Vee business model allows for clients to get an end-to-end service, but they can also cherry pick just the most relevant services. The services run from commercial print and design to data processing and web design as well as electronic direct marketing. While Dover is understandably confident there’s space in the market for Vee, she’s less than convinced of the model being an obvious fit for commercial printers. “You need to be able to offer expertise in different areas. It’s hard for a printer to just suddenly buy in that expertise and that understanding. That’s why we’ve done it the opposite way,” she adds.
Avoiding blunders
Expertise is a significant barrier to entry. Data Lateral managing director Ruaraidh Thomas explains: “The model for a data business is much more about the intellectual property of the people, the software and the mix of all of that put together.” Sure, the hardware investment is puny in contrast to the hefty capital expenditure needed to kit out a print business, but there are other costs. Aside from servers and software, security and staff must be considered. Thanks to the litany of high-profile blunders, most media coverage has focused on data mismanagement.
As the man on the street becomes increasingly savvy to the hidden world of the data economy, the cost of running and regulating a data business gets ever higher. Data Lateral, for instance, employs a full-time compliance officer to ensure the work it produces complies with the Data Protection Act and DMA guidelines.
Astute punters are also making the data game ever more difficult by being increasingly protective over data. Since being given the choice to opt out of the edited electoral roll used for marketing purposes, a majority of residents in one-third of councils have had their names taken off. A Ministry of Justice review last July condemned selling of the roll.
Meanwhile, as more printers enter the field, there could be a risk they’ll bring the same problematic baggage troubling print. Thomas believes that over the last decade, relatively simple data management have become commoditised. “The skills and understanding of the value that data management delivers has been lost because it has been undersold,” says Thomas. He explains that by offering simple data tasks such as mail sorting, de-duplication and suppression as a way to prop up flagging margins, printers have depreciated the services.
Yet as long as they can get the value proposition right – and avoid those tabloid-grabbing security faux pas – printers should be able to use the growth in data to target their own path to profit.
JARGON BUSTER
Data dictionary definitions
Customer insight The intelligence a firm can develop through the collection, interrogation and analysis of data to help acquire, develop and retain customers
Propensity modelling A way to predict the future behaviour of customers based on previous actions
Multi-channel Using a combination of media types, such as print, online, TV, outdoor, radio. Also called cross-media
Channel optimisation Analysing which media mix gives the best results in a marketing campaign
Suppression A way to prevent mailings going out to incorrect recipients, such as people who have moved house, died or opted out of unsolicited mail
Granularity Refers to the amount of detail available within a database. A database with email addresses has low granularity, while the same database with email address linked to postal address and telephone number would be considered as being more granular
