A complaint filed by the Citizens for Responsibility and Ethnics in Washington (CREW) says that Newt Gingrich, Republican presidential candidate, has unlawfully sold his mailing list for $42,000.  Whether Newt was unlawful or not, is it possible for a mailing list of this kind to be worth the amount paid?

Before we jump to conclusions, let’s look at how mailing lists are valued.  Certainly, if the list will be used for direct mail purposes, and said direct mail campaign performs as expected, the answer is yes.  But, has the list been proven to respond?  How many records are on his mailing list?  Is it for one-time use or can the mailer use it more than once?  How clean is the list?  Here’s how BB Direct would value the mailing list before adding it to our mailer’s recommendations.

1.       Who’s on the list?
Let’s make the assumption that Newt has a mailing list of contributors to his campaign.  Are these political donors all responders from a previous direct mail campaign or from a variety of campaigns?  Furthermore, are they all from direct mail responders or is a portion of Mr. Gingrich’s mailing list from friends, associates, and golfing buddies?  This matters because to get the most out of the mailers direct mail campaign investment, they will want the language and offer of the campaign to best resonate with the recipient.

2.       How large is the list?
A typical political donor file goes for anywhere between $80/M and $150/M (M=1,000 records) for a one-time use.  Let’s assume that Newt’s salesmanship is better than most and he’s able to get the highest price for this kind of database ($150/M).  If that’s the case, the Gingrich mailing list is 280,000 people long ($42,000/$150).

3.       Is the mailing list worth $42,000?
First, let’s look at what Newt disclosed so far to the Federal Election Commission.  According to their website, Newt has received $2,910,879.  Though we cannot assume that every donor gave the same exact amount, let’s use what we have for valuation purposes.  So, $2,910,879/280,000 donors = $10.40.  Now, likely, there are many donors who ponied-up a bit more, but for those who gave more, many more gave much less.  Should anyone mail this total number of 280,000 people, the numbers simply do not add up.  I mean, let’s put some made up numbers to it.  With a standard direct mail cost of $1.42/per piece, a direct mail campaign to this audience would run $297,600.  Now, let’s assume the mailer get greater than average response of 3%.  The total number of responders would equal 8,400.  So, to break even on their direct mail investment, they would need to generate at least $35.43 dollars in profit from each and every responder just to break even.  So the mailer would have to generate more than 3 times what Newt was able to generate from these very same people.  Brian Berg, President and CEO of BB Direct, concludes, “Newt Gingrich’s mailing list is definitely not worth $42,000.  I’m more likely to assume that Newt put his best salesman foot forward and convinced the buyer that they can do 3 times better than he has done”.

BB Direct recommends that all mailers evaluate their break-even point on this type of investment prior to launching.  To find your direct mail campaign break-even point, click here.

BB Direct is a provider of targeted mailing lists, list enhancement services and database hygiene processes.  If you’d like more information on how mailing lists are valuated, please visit us at www.bbdirect.com.

Posted in Uncategorized