Listbroking of personal and company addresses – quo vadis?
I am often asked the question these days: Is the purchase or rental of addresses for the acquisition of new customers still a modern and legally permissible instrument in dialogue marketing? The 2009 amendment to the BDSG and then the DSGVO 2018 have made address trading, as list broking is sometimes called, more complex. However, this has not diminished its effectiveness.
Therefore the classic questions about acquisition are for the readers:
- What is Listbroking or address broking?
- Is it legally permissible? Where is the limit for personal data?
- purchase or rent of addresses?
- Why is it still needed today within the acquisition of new customers?
Little digression: New customer acquisition via inbound and outbound measures
In the past, there were significantly fewer channels in direct marketing to generate leads. Some of them are still effective today. But as part of digitalization, budgets have tended to shift from offline to online.
A fundamental distinction is made in marketing campaigns between outbound and inbound. Inbound means that the company does not offer itself, but is passive and ready when a potential buyer makes contact. Outbound marketing, on the other hand, means actively addressing the potential buyer and saying “I have a great offer here. Do you want to buy it?”. The way via inbound marketing is more sustainable, but also more expensive. Outbound marketing is faster and is sometimes considered intrusive. If you want to have many new customers, you will develop a strategy for both areas.
What are typical channels for acquisition and lead generation?
New customers can be acquired in various ways, e.g. via advertisements in magazines or on portals, inserts in magazines or packages, non-personalized or partially personalized home mailings.
However, cold acquisition or acquisition today often takes place via social media. In social media, content, product information and service play an important role.
The use of personalized advertising media, such as fully addressed mailings or catalogs, is particularly successful compared to non-personalized advertising media. And this is where personal data come into play.
The (short) history and definition of list broking or address broking of personal and company addresses
Address broking or also list broking is derived from the term broking. It is therefore about the brokering of addresses or address lists. A list broker therefore brokers address lists available on the market. The term list broking spilled over from America to Germany a few decades ago.
On the one hand it is about lead generation (a qualified contact), on the other hand a new customer with turnover can be created from such a campaign. First, mail order companies (today multi-channel merchants) discovered that the use of addresses is a very effective means of acquiring or generating leads. The use of addresses that are similar to their own customers offers a much higher chance of qualified leads, potential customers or new customers.
This was a real alternative
to all the advertising possibilities above-the-line, for example on television, on posters, in advertisements, etc. This form of advertising was called below-the-line. It virtually formed a category of its own in direct marketing.
On the one hand, it enabled a specific person to be addressed directly and was therefore significantly more responsive than unaddressed advertising. One also spoke of direct addressing or direct advertising. This meant that advertising could be targeted much more precisely.
Many mail-order companies worked according to the motto “Equals and equals like to be together”. This means: You use address lists of mail order companies that do not compete with you, but whose target group might have a very high affinity to your own products.
What are typical selection criteria for finding suitable persons or companies?
In the beginning, one differentiates according to criteria such as gender and age, later a lot of other selection criteria were added, so that the target group(s) became more and more tangible. In addition to gender and age, socio-demographic characteristics such as marital status, education, occupation were added. Micro-geographic characteristics supplement according to the motto that people who live close to each other form in some way homogeneous groups.
, i.e. when did the person buy something, are also exciting parameters for identifying the desired target group.
Company addresses also have many characteristics. Here it is necessary to distinguish who the respective information is available for. For the company itself there is usually information about the branch(es), annual turnover, number of employees, date of foundation and the like. But it is also interesting to know who the right contact person is. Possibly there are also further selection criteria available.
With the selection criteria and the use of the addresses by advertisers, however, data protection issues also increasingly arose. While the Federal Data Protection Act (BDSG) was originally designed to protect the citizen from the state (the causal connection was the census of the 1980s), in the course of time more and more restrictions were introduced to protect the citizen from the (supposed) hunger for knowledge of the companies, among other things.
Do data diversity and data quality go together?
Of course, every single piece of available information can also become outdated. If the information is out of date, the selection criteria will ultimately be useless. It is therefore important to keep data up-to-date. The more data is available, the more complex and extensive the data update becomes.
This is in the interest of both the owner of the data and the address user. Is this why the legislator has also written a right to correct incorrect data into the law. This means that the data subject can demand that his/her data be corrected. The data owner, in turn, has an obligation to keep the data stored with him/her up to date.
Rent addresses and data protection
I wonder if it would be in the consumers’ interest to receive advertising on anything and everything? Will an octogenarian be interested in advertising about bungee jumping? Will a twenty-year-old be interested in advertising for stair lifts? Probably not! And it doesn’t make much sense to advertise past the target group either.
So advertising, especially direct advertising, is not about the companies’ thirst for knowledge, but about addressing the potential consumer in a way that is appropriate for the target group. It is also about reducing wastage and optimizing the advertising budget.
Where is the limit with personal data?
The data protection amendments relevant to list broking also dealt with other issues, such as
- where the data is stored
- who has access to the data
- how do I know what is stored about me
- can I have my data corrected or deleted
- how can I prevent the transfer of my data
- and many more
All these topics were already properly regulated in the BDSG. Then Europe came into play. The existing set of rules was to be updated. In addition, Internet companies should be regulated in their data collection and use – beyond Europe. The result can be found in the European Basic Data Protection Regulation (DSGVO). This regulation came into force in May 2018.
What influence does the DSGVO have on list broking? Is list broking still allowed at all?
Yes, dialogue marketing is explicitly mentioned in Recital 47 as a legitimate interest. Thus, a balancing of interests according to Article 6 (1) (f) can be in favour of the advertiser.
Address broking in the so-called lettershop procedure is based precisely on this. There is a legitimate interest of the advertiser to draw attention to his products.
The Lettershop Procedure
Thanks to the lettershop process, this happens without the advertiser physically receiving the addresses. The advertiser or supplier has his advertising material printed by a printing company and sends it to the lettershop for further processing. Lettershop receives the addresses for further processing and personalizes the advertising material. The advertising mail is then posted and reaches the consumer’s mailbox. Only when the consumer or recipient responds to the advertising offer does the advertiser receive the consumer’s data. This works very well and
respects the applicable law.
Weighing up the legitimate interest does not allow for any conceivable use of addresses. In this respect, this balancing must be done carefully. If the careful weighing of interests is in favour of the advertiser, no explicit consent of the consumer is necessary.
Interim conclusion on legal issues and address lists:
Listbroking is possible under legal aspects and within the limits set there!
Is offline advertising to private individuals or contact persons in companies old-fashioned?
No, but this does not seem to be the only point that questioned address broking. In recent years we have often seen marketing budgets being moved from offline to online. This is also fundamentally correct, because the oldest rule in direct marketing, which is still valid today, is: test, test, test.
There are certainly interesting ways to generate new customers online. This means that if a company sets up an e-mail distribution list by obtaining e-mail addresses including opt-in (= consent), it can use this to promote its own web shop. Whether the e-commerce offer can be better advertised in this way must be questioned and examined.
It is therefore important to keep an eye on the costs! It can be seen that online marketing for the acquisition of new customers is not cheaper per se than offline measures, but sometimes even considerably more expensive.
What could be the reason for this assessment “online is cheaper than offline” by those responsible for budgets?
Renting or buying addresses costs money, offline advertising is much more expensive. Postage alone costs many times more than online mailing. If you add up the costs per offline advertising medium, the ratio is quickly 10:1. Offline is then 10 times more expensive than online.
But do you know the average cost per new customer?
If you measure the costs per new customer according to the motto “Total Cost of Ownership”, you will certainly find that these costs are significantly lower for new customers acquired offline than for new customers acquired online. According to the Muuuh Group’s CRM Study 2020, only 39% of those surveyed consider the costs of acquiring new customers to be important. Only 15% even know these costs. In this respect, apples and oranges are unfortunately often compared – to the disadvantage of print advertising.
It is also interesting to note that online marketing measures are more and more often referred to as targeting or “data driven”. So online, too, attempts are being made not to offer everything to everyone, but to target advertising to specific target groups. Of course, this also calls the data protectionists to the scene.
Offline offers advantages: By moving from offline to online, mailboxes have become considerably emptier! Is that so?
How many personalized mailings do you receive from advertisers who try to acquire you as a new customer? Is it a daily mailing? Or do you perhaps receive one mailing per week? Just have a look for yourself. Differentiate the personalized mailing in relation to customer communication, home mailings, etc… Surely you can then confirm that your mailbox is not overflowing because so many personalized mailings are received.
The constant refinement of the target group definition further reduces the circulation, through improved selections, data analyses and last but not least through the use of affinity models. These optimizations ensure that the same success is achieved with less print advertising, i.e. the response is absolutely maintained.
Especially in the times of Corona it was and still is clearly evident that there is an increased perception also on print advertising. No wonder, everyone is at home and has time to look through their mail in peace. In turn, the person who has been advertised in this way often makes himself noticed by telephone or online. In most cases, the reaction path is age-dependent, although there is an increasing number of older consumers who react online and look at, compare and continue to browse the advertised products on the net.
What does the future of list or address broking look like?
Listbroking is definitely not a means of the past but also a promising way for the present and future. The success is verifiable. However, address broking is not a panacea, because competition within the channels has also become stronger. This refers to the competition for consumer perception.
Therefore, it is equally important to get the right time to send out an appealing advertising message. Which brings us to another rule: Get the right message to the right recipient at the right time.
Yes, today’s marketer faces many challenges and tasks and should know almost everything. Can he do it himself?
At the very least, list brokers with years of expertise can help in selecting the right recipient. But list and address brokers can do much more:
- Knowledge of all possible address sources or address lists
- Information on data timeliness
- Observation of list migration (who advertises where)
- Ensuring a data protection compliant approach
- Processing of data protection inquiries, e.g. advertising objections
- Organisation of reciprocal orders (also cross-media)
- Address broking of e-mail potentials
- List broking of (e.g.: media/package/catalogue/invoice) insert potentials
- Procurement of international address or insert potentials
- Advice and support with regard to order processing and the contracts required for this purpose
- and much more
So what’s the bottom line on “listbroking quo vadis”?
With the know-how of a certified list broker, you as an advertising company can send effective advertising messages to potential customers both offline and online. This saves you from wastage, image loss and unnecessary advertising costs.
You win new customers with top quality!
To the writer:
His name is: Andreas Kneiphoff.
Andreas Kneiphoff is managing director of mediadress gmbh – www.mediadress.de – in Waldbronn.
After studying business administration at the Baden-Wuerttemberg Cooperative State University with a specialization in banking, he worked at the Volksbank Karlsruhe until he joined mediadress gmbh in 1998.
For more than 9 years he was on the board of the German Dialogue Marketing Association (DDV) – www.ddv.de – and chairman of the specialist group Listbroking (today: target group marketing).
He is still active in the data protection working group of the DDV.
Picture source: Fotolia
Note: This is a machine translation. It is neither 100% complete nor 100% correct. We can therefore not guarantee the result.