Corrections or additions?
This article by Evelyn Goldin was prepared for the February 21,
2001 edition of U.S. 1 Newspaper. All rights reserved.
American List Counsel Moves to E-Marketing
Times were auspicious back in the fall of 1999 when,
flush with $15 million in venture capital funding, a young and feisty
dot com, Impower, spun off from American List Counsel to conquer the
world of Internet marketing. It was barely a few months later when
the Internet walls came tumbling down, leaving a wake of deflated
dot coms and technology stocks laid low.
Instead of staging a hasty retreat, Impower spent the year bulking
up and racing towards its E-marketing mission. The company’s staff
grew from 20 to 120, and together with its traditional direct
counterpart, ALC, the two signed leases for a combined 110,000 square
feet at the recently completed Bernard Kilgore Center at the Dow Jones
campus on Route 1 North. Impower, so far, has been keeping the faith.
Internet marketing is poised for a spending explosion, says Donn
president and CEO of both ALC and its Internet spinoff. He predicts
the boom will be fueled by a new wave of traditional marketers, many
with little Internet or direct marketing experience. These stalwarts
of the old economy, sellers of say, candy, detergents, or healthcare,
have been waiting on the sidelines for the dust to settle. Rappaport
thinks he can convince the Fortune 500 companies to dramatically
their E-marketing budgets, and also that he can answer their concerns
about respecting consumer privacy. He is so certain of his future
success that he has just bought North Brunswick-based Datamark
which offers the very latest customer loyalty programs for
"Many brick and mortar companies are waiting in the wings,"
says Rappaport, "and once they’ve got the feeling that this
thing has been cracked, they’re going to throw money at it because
they know that’s where the future is going."
High-profile online research firms like Forrester
of Cambridge, Massachusetts, and New York-based Jupiter Communications
tend to agree about prospects for a rosy E-commerce future. Predicting
that "online advertising’s current swoon won’t last,"
said last month that it expects traditional marketers to embrace
advertising, driving digital marketing spending to $63 billion
by 2005, from $11 billion last year. Forrester predicts traditional
marketers will account for 84 percent of digital advertising by 2005.
Impower, with several key products it says offer a unique advantage
to overcoming the challenges of E-marketing, sees itself in a strong
position to take advantage of the predicted spending resurgence.
"One of the things we go on is that no one has ever completely
turned Impower down," says Michael Keeler, Impower’s chief
officer, "because with products like TransAct, there is no money
TransAct is Impower’s response to the traditional Internet
advertising model, which charges advertisers per thousand viewers
on a given site. Newspaper advertising works in a similar way, with
high-circulation papers charging greater ad rates. But just as viewers
of a newspaper ad may not necessarily purchase the product, viewers
of Internet ads don’t always convert their mouseclicks into purchases.
The trouble with "cost per thousand" advertising, Keeler says,
is "the conversion rate — the percentage of consumers who
actually follow through on an offer — is so low. You may have
tens of thousands of people visiting, you may have a million people
visiting, but the conversion rates on banners are less than one-half
of one percent. It gets worse all the time as the clutter goes
TransAct was developed in 1997 by Irv Brechner, now Impower’s
vice president. Officially launched last August, it is an advertising
network that is performance-based. Advertisers pay only if viewers
act on offers that can include business products, magazine
charities, book clubs, credit cards, and financial services, among
TransAct users include Rodale Press, the New York Times, Pitney Bowes,
Save the Children, BMG Music Club, IT World, Audio Book Club, Register
Once, Cell Trader, Cool Savings, and MatchLogic. Impower says that
transactions through 30,000 affiliated sites in last year’s third
quarter — its first full-scale quarter — broke the 1 million
mark, making it one of the fastest-growing new marketing channels.
"We make money because we split the revenue and the sites make
money because they’re finally on somebody’s radar, and everybody
by it," Keeler says. "Marketers love it because they know
from the offline world how much it costs to get a person to sign up
for a magazine or credit card. They basically say, `if you can do
it for half of that, we’ll take as many customers as you can
Working to ensure TransAct’s success, Impower helps marketers
which sites should carry their offers, and conversely, helping sites
know which offers their viewers respond to. "It comes back to
what our pedigree is," Keeler says. "We’re direct marketing
people who know what kind of offers work for what kind of
Impower’s founding company, American List Counsel, is in fact the
largest direct marketing list broker/manager in the nation. American
List Counsel was founded in 1978 in the basement of the Scotch Plains
home of husband and wife Donn Rappaport and Liza Price Rappaport.
Donn was at that point working in Manhattan at Young & Rubicam, the
advertising agency. Later the two moved the firm to 88 Orchard Road
off Route 206 in Montgomery Township. In 1994, as part of a divorce
settlement, Donn Rappaport bought out his wife’s share. At that point
it was a $42 million company with 85 employees. It now has 200
in four regional offices and more than $130 in gross sales.
Originally called ALC Interactive, Impower was started in 1997 and
spun off two years later with $15 million in funding from
venture capital firm Counsel Corporation, which acquired a 33 percent
stake in Impower, which has about 110 employees. Though the two
are separate, Impower and ALC share such functions as operations and
billing. And ALC shareholders are also Impower shareholders —
but not majority shareholders.
After 21 years ALC is leaving behind the 18th century Orchard Road
farmhouse that saw the company’s rise into a direct marketing
with compound growth of 35 percent a year for the past five years
and inclusion on the Fortune 500 list.
The farm’s four outbuildings, plus space in a Hillsborough industrial
park, amounted to 35,000 square feet, a tight fit for the 163
here. The farm is under contract, says ALC’s broker Wayne Kasbar of
Woodbridge-based Newmark JGT, but he released no details.
The two companies have moved to 110,000 feet in the $25 million
square foot addition to the Dow Jones campus that was completed in
1998. This granite-faced building, designed with lots of glass by
Philadelphia-based Kling Lindquist, was intended for a Dow Jones
Telerate, which was sold as construction was in progress. Dow Jones
has Factiva, housed here now, but 63,000 feet remain to be leased.
The Orchard Road farm was such an integral part of the company culture
that ALC and Impower have brought some of the farm feeling with them.
The Manhattan-based architect, the Phillips Group, has created four
"farm stations," circular areas with bucolic-looking murals
of silos and farmhouses.
Donn Rappaport, age 50, serves as chairman and chief
executive officer of both ALC and Impower. After graduation from Penn
State, he worked as an advertising copywriter in Manhattan. (For this
article his comments were relayed through a spokesman.) He and his
second wife, Susan Rice Rappaport, live in Princeton, and each has
three children, ranging in age from 9 to 22.
Susan Rappaport is chief operating officer and a partner at American
List Counsel. The daughter of a United Airlines pilot and a fashion
designer, she majored in finance at the University of Santa Clara,
Class of 1981. She was a brand manager at Clorox, director of catalog
marketing for Eddie Bauer, and a vice president at Direct Media Inc.
on the West Coast before joining ALC.
Keeler, a 1985 graduate of Cornell University, has worked for several
advertising agencies in New York City and has been at Impower for
one year. He and his wife, a watercolor artist, live in Pennington
with their two school-aged sons.
Keeler says that Impower and ALC work together to provide one-stop
shopping for clients’ on- and offline marketing needs: "We call
it convergence. Other people call it synergy."
"Impower has the same value proposition as ALC, but its toolbox
really focuses on Internet tools, where ALC deals more in terrestrial
traditional direct marketing," says Susan Rappaport. "We
think there’s a convergence going on with the Internet now becoming
an additional channel for direct marketers. We see it as a real
with their traditional marketing, and it’s really where our expertise
feeds in perfectly. We are really one of the major resellers of
One key product that highlights Impower’s roots in traditional direct
marketing is called ImpowerBase. It aggregates data from more than
450 million E-mail address records and is designed "to help
and list owners unlock the true potential of permission E-mail
by bringing new data, a higher degree of accuracy and sophisticated
segmentation to the E-mail universe," company literature says.
Impower acts as middleman for a marketer who needs a list of, for
example, gardeners. "We query our database and come up with the
name of every list owner who claims to have a list on gardeners,"
says Keeler. "The lists may have rates of $300 per 1,000 (names),
$100 per 1,000, and we go to all of them and negotiate one against
the other," Keeler says, "to get optimal pricing for our
Impower goes a step further with ImpowerBase. "Every time we add
a new list to the database, we decoy ourselves. We sign up to be a
recipient of that list," Keeler says.
Impower then "audits" the list, opting in, opting out, opting
in again "to see if they re-recognize us. You can kind of tell
how sophisticated they are," Keeler says. In a system called
each list is then scored, with the best lists earning scores between
one and four, the worst from five to nine.
"One of the problems with renting lists on the marketplace is
the list quality is really very very poor. The first thing you can
do is get rid of the percentage that is complete junk, so we’re really
adding some semblance of discipline to the marketplace," Keeler
The e-Score system, Impower says, is one of its biggest competitive
advantages. But ironically, Donn Rappaport in early January presented
eScore to the Direct Marketing Association, proposing it as a standard
the entire industry should adopt.
For what reason would Impower would encourage all its competitors
to use its prize product? To deal with the Internet privacy issue,
which looms large in the face of direct marketers. "Our product
is the best way for marketers to insure that every message they mail
has absolute adherence to customer privacy and respects the rights
of the customer," says Donn Rappaport. "Our concern for
privacy and marketers’ concern for message effectiveness go hand in
hand. The data shows that the more you give consumers what they want,
the more effective the marketing is going to be."
Impower hopes that by adopting E-score, the industry can ward off
potentially chilling legislation that would not only hurt Impower’s
business but actually curtail E-commerce.
If legislation is one cloud that could cast a shadow on E-mail
increased "postal" costs are another. Right now, E-mail
messages can be sent for very little cost, but the portals are
to charge for them. Wouldn’t that impede Impower’s success? Not
says Keeler. "But it would put the onus on the marketing partners
to make their promotional messages more effective, so that each
will still pay for itself. When the postal rates go up, for instance,
you reevaluate the overall effectiveness of your marketing plan and
With a raft of promising products and close ties to a large and
off-line marketer, when does Impower expect to begin turning a profit?
"There’s nothing left to buy or spend on," Keeler says.
our investments are made and completed. We expect to be profitable
by the end of the first quarter this year."
"This year will represent the end of "E" as E-commerce,
and E-marketing," says Donn Rappaport. "Moving forward, marketing
will be marketing, and all marketers will have to be adept at all
forms of marketing, wherever a message could touch their
Although Impower has been an independent entity for more than a year,
the company plans a "grand opening" in early March. One goal
of the grand opening, Keeler says, is to advertise the sophisticated,
high-tech nature of the Princeton area to the many who don’t yet
To some, especially those from out of state, "Princeton is the
land that time forgot," Keeler says. "Part of the opening
is to have people realize that substantive, technological, Internet
things are happening here."
— Evelyn Goldin
CN 5219, Princeton 08543-5219. 609-580-2800; fax, 609-580-2888.
08543-5219. 609-580-2500; fax, 609-580-2555. Home page:
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