Are List Rental Prices Really Falling?

This week, BtoB Magazine had an item from Worldata that supposedly “proves” that CPMs for email list rental are falling.

We’ve found it interesting the past couple of years since we entered the email list business by acquiring Postmaster Direct that Worldata is the only company in the space that publishes data about industry pricing. Kudos to them for that. We plan to publish comparable data from our own business later this year, and at least anecdotally, I can tell you that our experience with market pricing runs counter to Worldata’s – prices are stable, and in many sectors, they are on the rise.

So we have to wonder why the disconnect – why does Worldata consistently report quarter over quarter that prices are falling? They have a strong portfolio of lists and a good salesforce. Perhaps the response rates they drive necessitate lower CPMs to make up the shortfall? Do they have a deliverability problem that goes beyond the “5 or 15% overage” they talk about mailing to compensate for it?

There is a more likely reason why Worldata would be pressuring publishers to lower their ad rates. They have long charged service fees that are far above industry norms — therefore putting the squeeze on publishers to make up the ROI for advertisers. Worldata charges for HTML Image Hosting, Flash Email Hosting, third-party email merge/purge, personalization, more than two tests or creative changes, tracking of more than three URLs and suppression files. There are also complicated sets of fees around cancellation of an order, missing a mail date or changing a mail date. (See a listing of these fees on this datacard.)

Some of these fees are the norm in the industry and, in fact, Return Path charges for some of these services for Postmaster Direct files. The key word there is “some.” The sheer number of service charges, coupled with the amounts, computes to big dollars for advertisers, depressing their returns. The only way to make up the shortfall in this kind of world is with lower CPMs for publishers.

Worldata’s Ray Tesi was quoted in their study as saying “Email must continually lower their CPMs in order to make list rentals cost effective for marketers.”

We respectfully disagree. We believe that by increasing response rates for advertisers and keeping fees within reasonable limits you can make the ROI equation work for advertisers and keep CPMs stable for publishers.

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