You've got a hot product that's destined to sell like
crazy--and an ad budget that couldn't buy you half a second on a local TV station. Like many of us, we have to pass on running commercials during "must see tv" time slots to advertising through direct mail. Direct mail, after all, can be a fairly cost efficient means to reach a targeted audience.

When you decide to advertise through direct mail, you'll need a mailing list to send to, which you can typically rent through a list broker. But before finding a broker, you'll want to have a basic knowledge of mailing lists.

There are two types of mailing lists: compiled and response. Compiled lists are generated from public information such as directories of demographic data. On a broad level, a compiled list could be a listing of all residents within a certain zip code. More targeted compiled lists could include extra information such as marital status, income level, and credit card ownership.

Response lists, however, are generated from privately collected information. The people or businesses that make up response lists have responded to a particular interest, either by subscribing to a publication or by purchasing a mail-order item. Because these lists are so specialized, response lists are more useful, and subsequently more expensive.

But the extra expense can pay off. In general, you'll discover that the more targeted you can make your mailing list, the more successful it will be. For instance, let's say you're a real estate developer for a retirement/golf community in Southern Florida. While you could certainly obtain a Golf Digest subscriber list and send mailings to everyone on it, that might be too broad. Instead, you'd be better off to narrow your list to include only those subscribers who are of retirement age and earn $100,000+ annually.

Once you've come up with a clear idea of your target audience, it's time to find a list broker. Plan to speak with at least 2 or 3 brokers before making a decision.

First, look for a broker with knowledge of your industry and a sense for how to target your optimal customer. When you find a couple of contenders, ask how often bad names are removed from lists. (Ideally, every three months). Also, make sure the list's accuracy is guaranteed; the broker should credit you if more than 5-10% of the mailings return.

And don't forget to check references. Get names and numbers of businesses that have rented the mailing list within the last six months. Ask questions: What was their response rate like? What percentage of mailings were returned as a result of bad addresses? Were they happy with the overall success of the mailing?

Expect to pay anywhere from 4-9 cents per name for a consumer list, and 7-20 cents per name for a business list. Costs may vary slightly depending on whether you want to receive the list via email, diskette, or CD-ROM, or on labels.

Quick tips

Be up front with your numbers. Depending on the type of list, brokers can vary greatly on the minimum number of names that they'll rent you. Don't use a rented list more than once. List brokers commonly protect their lists through a practice known as salting--meaning that fake names are sprinkled throughout the list. When more than one mailing arrives to these fake names, the broker is alerted and you will most likely be recharged. Bring a sample. Be prepared to have a sample of your mailing to show the broker. This will ensure the broker that your mailing is legitimate and that you are not renting the list for competitive reasons.