October 18, 2006

Brookstone, Abacus, and You

I want to revisit yesterday's announcement that Brookstone selected Abacus "to provide all of the prospecting, analytics and database management for its direct marketing efforts."

The DMNews article states that, among other reasons, the goals include "... gaining additional market share within its potential customer base while lowering overall direct marketing expenditures.
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Obviously, I know nothing about the inner workings at Brookstone. I have worked with the folks at Abacus, and there is nothing wrong with Abacus taking the direction to provide these services, that is why they are in business.

But if you have spent your career in the Direct Marketing industry, what used to be the "Catalog" industry, or the Database Marketing industry, this should cause you concern, a lot of concern.

Strategically, Brookstone has a lot of ways to acquire new customers. Having stores allows Brookstone to acquire new customers organically. The internet feeds the direct channel with new customers. With the declining importance of catalog, it may be acceptable for a multichannel retailer to prospect off of the compiled list Abacus offers its clients.

By ceding database marketing skills, circulation skills, prospecting skills, and online marketing optimization and allocation skills to Abacus, Brookstone has made the decision that owning this important skill-set in-house is not important. If other companies follow-suit, jobs will be lost, and skills that served the direct marketing industry well for the past twenty years will be gobbled-up by a small number of large organizations. Database Marketing will go the way of the advertising agency. The Chief Marketing Officer will have one more reason to be fired after just two years on the job.

I believe this isn't an isolated incidence. I believe this is a trend. Direct Marketers already invited Google to the "C-Level" table, they just don't know it yet. Brookstone, you also added Abacus to your "C-Level" table.

2 comments:

  1. Firms don't (shouldn't) outsource their core competencies.

    Dell will manufacture. Google will own their own servers. PayChex will do their own payroll.

    I don't see Brookstone's choice as an indication of the health of DM industry.

    Rather, I think this move is a reflection on Brookstone's self-perception.

    Perhaps they're emphasizing stores more than direct. Perhaps they consider themselves merchandisers, more than marketers. Whatever.

    I am bullish on the future of the DM industry. The rise of Google's trackable advertising model online, and their move into direct response radio and direct-response print, suggest our industry will become even more central, not less.

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  2. Kevin Hillstrom8:00 AM

    Let's hope you're right, Alan. Thanks for commenting!

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