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KOWALSKI: Data from one source is not necessarily going to be reliable. In the past, you could count on getting that information from one place — like public records — where somebody would tend to put their correct date of birth. But if you're now getting it from the Internet or self- reported means, you have to verify those sources against each other.

ROVELSTAD: They're also using predictive modeling when they can't get self-reported information.

KHANNA: It's strategic. We've done a lot of acquisitions in the brokerage and management arena, so we can go beyond compiled data. In 2001, we were aggregating 800 million transactions to compile our database. Today, we've done more than 3 billion in just a few years. The historical delineation between compiled data or response data has become fuzzy.

GREENBAUM: We're focused on life-stage data, so it's not as relevant to our compilation process whether the data is, say, from a subscriber file or a mail order buyer file.

CONNOLLY: When age data is self-reported, it might be accurate plus or minus five years. Age isn't nearly as accurate as year of birth.

DIRECT: What's happening with compilation costs?

KOWALSKI: You have to look at each data source. Many sources specialize in a group of people of a particular age, so you have to go to more sources to compile a complete database.

BOWMAN: You have to engineer the data more intelligently to bring in more sources. It does increase the cost, but at the same time it increases the value so the price doesn't get compressed. If you let it be viewed as a commodity, it will be. Perception is reality.

GREENBAUM: We're finding that it's more expensive to compile when the market is not allowing incremental price increases. It's very competitive. There's a lot of commoditizing of data being done.

DIRECT: Lynn, you're a reseller. What's your perspective?

ROVELSTAD: We enjoy a relationship with just about everyone around this table. The compilers have gotten more efficient, and technology advances have helped to keep some of those costs in place. But we have seen the cost come down as more compete.

KHANNA: The solution is different for different segments. For the mom-and-pops, it's about providing a complete solution with data and helping them execute a campaign. We're trying to stop the commoditization of the base ‘name-address-phone.’ It's very easy to ship [telephone] books to another country and have ‘name-address-phone’ keyed in. The question is: How accurate is that? If you don't have those fundamentals right, you'll never match up the sources.

CONNOLLY: We're seeing the same thing. Customers are asking for more, and they're trying to compress the price.

DIRECT: Are they doing so successfully?

CONNOLLY: If you're just in the business of ‘name-address-phone’ as a commodity, you're going to be in trouble. You have to add value to your data elements.

BOWMAN: The days of just delivering data are gone.

GREENBAUM: And when you add value, you don't always get to add price, so it's hard to keep up sometimes.

ROVELSTAD: But at least you don't lose ground when you add value.

GREENBAUM: Right — that's why you have to do it. Some people use the suppliers that are commoditizing and then they say, ‘I tried compiled data and it didn't work.’

KHANNA: People often fail when they make their decision based on price. Maybe it's because the name and address weren't right. But they get totally disenchanted with direct marketing. If the first campaign isn't successful, the typical response we see is that the marketer won't even try a second one for 18 months. How many small businesses stay alive that long?

GREENBAUM: And that just doesn't happen to the small mom-and-pops. Some larger mailers think that compiled files don't work. I say, ‘You need to look at this as a source of data because your response data pool is shrinking.’

BOWMAN: We have a transition process for clients to go from using vertical to compiled data. There's a testing environment where they can evaluate each list they're buying. It may not get rid of all their vertical lists but they will save enough money to see the benefit [of using compiled data].

KOWALSKI: On the other side, you have large customers that know direct marketing has to be part of their mix. They've been hammering away at it for so long that they've just come to accept these horribly low response rates. You have to come back and show them that you can understand their customer base and [give them] some tools they may not have used before. Sometimes they'll see a 1% or 2% jump in response, [which can be impressive] for the volumes they're doing.

DIRECT: It sounds like there's been a substantial move away from RFM into softer areas like psychographics.

ROVELSTAD: It's a combination.

KHANNA: RFM is still there, but we're seeing four trends: lifestyle, behavior, life stage and multichannel.

BOWMAN: The information technology is such that more data can be matched together, and that's pushing a lot of these demands.

ROVELSTAD: Modeling is now available to the small mom-and-pop shops as well as the big guys.

KOWALSKI: You can turn around a model in a couple of days now, whereas in the past it used to take weeks or more to build a decent one off a customer file.

KHANNA: Even beyond that, there's enough actual behavioral lifestyle information available that in some cases you don't even have to model it.