Partner Insights:
Barnes & Noble’s
Acquisition of Borders’s Email List
As most of our readers are aware, in late September, as part
of a bankruptcy auction, Barnes & Noble acquired all of Borders’s
intellectual property – including a customer database of 48 million records -
for $13.9 million. Barnes & Noble then emailed Borders’s former customers,
requesting that they opt-out if they did not wish to receive future emails from Barnes
& Noble.
The situation lends itself to a healthy debate on privacy
and the transferability of customer data in an acquisition.
This seemed like ideal fodder for our “Partner Insights”
column, in which we take the opportunity to sit down with some of our valued
partners (via email of course!) to get their perspective on a timely issue.
This month’s panelists are:
Arthur Sweetser, Chief Marketing Officer - 89 Degrees
Ryan Phelan, VP of StrategicServices - Blue Hornet
Christopher Penn,
Director of Strategy - WhatCounts
FP
(FreshPerspectives): Arthur, as you know, there’s been a lot of buzz lately
about Barnes & Noble’s acquisition of Borders’s customer email list. What’s
your take on Barnes & Noble’s move?
Arthur: Brillant!
I have provided strategic consulting services for two other clients that were
exploring purchasing lists of competitors that had gone out of business. Surprisingly,
there was not as much overlap in these databases as my clients had originally
thought. For the lists we researched, we found less than 30% overlap.
Two pieces of advice:
1. DON’T
over pay. The list is shrinking in value daily. Benchmark on how you
acquire names and then negotiate down.
2. Work
the list starting Day 1. What’s your marketing plan to on-board them?
Special offers? Contact plan and offer plan?
If you can convert 20% over to your brand and the price is
right, I’d say you should consider yourself a BRILLANT marketer!
FP: Ryan, what’s
your opinion?
Ryan: The Barnes
and Noble acquisition of Borders’s email list has caused quite a deep
discussion within the email industry as of late.
Here’s my take on this.
There are bound to be the following challenges in the file:
1. Substantial
overlap with B&N’s existing email list
2. Numerous
inactive emails and aged records
3. Customers
that opted in to Borders's list but opted out of B&N's list
4. Brand
advocates of Borders that are not advocates of B&N
5. Customers
that are unhappy that their email got sold to B&N
Based
on these challenges, the marketer or executive is going to have to expect a
fairly low ROI from this file. Additionally, I think B&N would be
challenged to message to this file en-masse, and, based on deliverability
concerns, would have to throttle or carefully calibrate these sends. Then we
start to talk about the initial email campaigns and the work begins to pile up,
particularly when you consider an initial touch strategy that is not merely
promotionally based. All of these layers begin to make this campaign risky.
Based on the price, however, the ROI may be acceptable.
Personally,
I am not a fan of the B&N purchase. Email is about permission and affirmative
opt-in should be maintained at all times. If B&N came out with an
affirmative opt-in campaign, then this could have an advantage to a marketing
mix, but I still believe a fairly low ROI.
FP: How do you think the acquisition is
going to play out in the longer term, Christopher?
Christopher: The
acquisition of the Borders’s email list by B&N is going to play out very
interestingly, as it's going to pit two email marketing principles against each
other.
At
WhatCounts, we say that if you want to succeed at email marketing, you must
send relevant, timely, targeted,
awe-inspiring email to people who
asked for it. In this case, B&N will likely be sending relevant,
targeted, hopefully awe-inspiring – or at least valuable – email to a list of
people who are in their target audience. On the other hand, they will be
sending to a list of people who didn't ask for it - they asked for email from
Borders, Inc., and not from B&N. This could prove to be problematic for B&N.
While
B&N can use the list under the general terms of the CANSPAM Act,
they run the risk of going afoul of the Canadian FISA law. Borders had a
significant business in Canada
through its partnership with Indigo so B&N needs to be absolutely
relentless about screening out Canadian addresses since the FISA law explicitly
states that permission must be given.
Ultimately, if the B&N acquisition is legal under both
CANSPAM and FISA, then B&N’s safest bet is to run a re-engagement campaign
asking permission from the former customers of Borders to determine if they’d
like to receive email from B&N. Doing so would ensure that the new list is
clean and populated by people who have explicitly asked for email from B&N.
FP: Given the ever-tightening filters used by ISPs to screen
emails, FreshAddress always recommends a “better safe than sorry” policy when
considering any email acquisition program. Whether Barnes & Noble’s
purchase of Borders’s customer database will turn out to be a brilliant
acquisition or an investment blunder still remains to be seen.
Thanks, everyone, for providing your perspectives!