Street Wiser

American Demographics, July 1, 2003

Byline: JOHN MCMANUS

Gwen St. Clair can tell you exactly who puts the worth in Fort Worth. Which is why Billiards & Barstools, a fast-growing Texas-based game room furniture and equipment retailer with a new store opening in Fort Worth's Northeast Tarrant County, turned to her when they wanted to roll out marketing messages to well-heeled residents in search of leather basement lounge chairs and chalk cubes. So far, St. Clair's solution for the company is going about as smooth as green felt over slate.

As special features manager in the ad department at the Fort Worth Star-Telegram, St. Clair's job is to help 40 or so advertisers - cosmetic surgeons, posh boutiques, swimming pool builders, high-end audio entertainment retailers and the like - comb through the 240,000 daily circulation base (337,000 on Sundays) and beyond, to identify the creme de la creme among readers and non-readers in the nation's seventh largest market. That's what caught the interest of the folks at Billiards & Barstools, and this is where Panache comes in.

Panache is the Star-Telegram's lifestyles magazine, created to allow advertisers to zero in on affluent readers via a minor miracle in production and distribution of the Friday edition of the paper once a month. Panache has been around for about six years, but it struggled at an anemic 16 pages until February of this year. At that time, it shifted from ZIP code to address-specific distribution along newspaper routes, landing at the homes of only those residents with incomes in the $100,000-plus range. The May and June issues suddenly swelled to 40 pages, thanks to a host of newly enthused advertisers.

As industry forecasters predict advertising and marketing expenditures - on everything from network TV to newspapers to radio, yellow pages and direct mail - to head northward of $250 billion in the United States and $470 billion worldwide this year, the mind-boggling magnitude of the dollars doesn't hide a glaring fact: Organizations investing those funds want results. As pressure intensifies for measurable returns on advertising, marketing and retail site selection costs, a raft of geodemographic segmentation products is set to flow onto the market over the next three months, heralding unprecedented precision and details about consumers and their purchasing behavior based on their home addresses.

Five organizations compete in what is estimated to be a $100 million subset of the marketing information landscape, and four happen to be taking the wraps off analytics products and services newly upgraded to reflect the sweeping population changes that came to light with Census 2000.

Available now or in the coming weeks via a Web site easily accessible to you (see accompanying product information, pg. 35) will be PRIZM [subscript]NE from Claritas Inc., Community from ESRI, MOSAIC from Applied Geographic Systems/Experian and PSYTE U.S. from MapInfo. Already on the market, drawing on a huge 110 million home data mine of consumer transactions fused with life stage demographic information, is Acxiom's Personicx. For a price, ranging from $500 to $100,000, these technologies promise to advance the techniques of geodemographic cluster classification from the realm of art to the domain of science.

Apart from the wonder of being able to "top" the Friday paper once a month with a magazine designed for a specific audience, the story here is that Star-Telegram sales executives can one-up the competition in pinpointing the people-affluent market that advertisers want to reach. Selective insertion is still rare among a few pioneering newspapers, but the Star-Telegram's unique use of it is due in large part to a market segmentation system - Claritas' PRIZM - that offers the mailbox-by-mailbox specificity Billiards & Barstools and the other Panache advertisers so crave.

"Creating these targeted advertising products for specific reader groups is one of many applications we're putting PRIZM to use on," says Eric Rossi, database marketing manager for the Star-Telegram. "We're using cluster segmentation across the board among all departments, especially circulation and direct marketing efforts aimed at subscriber retention, renewals and customer acquisitions."

Common to the bumper crop of post-Census 2000 geodemographic cluster segmentation releases are assertions that technology has powered the study of the nation's consumer behavior and lifestyles tapestry to a whole new level of granularity and fidelity. They all have roots in the original PRIZM product developed by Claritas founder Jonathan Robbin after the 1970 census, and might be considered 4th generation products, embedding new batches of census statistics, grouped according to new matrices of lifestyles assumptions and variables, and crunched and cross-crunched with more filters than anything Robbin could have imagined all those years ago.

Since all the systems except Acxiom's derive from so similar a theoretical set of assumptions, and since the raw data - Census 2000 numbers - is also shared, a fair amount of similarity in classifications among the respective competitors is likely. Claritas' focus will be on the granularity of household-level information, while MapInfo is emphasizing the statistical soundness and stability of its 400 "atom" like building blocks pouring into its PSYTE system, the better for creating "custom clusters" and proprietary analytics tools. Acxiom positions its Personicx system as best for capturing purchase motivation and intent behavior related to key life stage changes, while AGS/Experian attempts to cobble an advantage for MOSAIC clients through aggressive alliances with media-consumption and purchase behavior researchers like MRI, Simmons Market Research, Scarborough and Media Audit. ESRI's Community system is an outgrowth of CACI's ACORN program, but with a dose of ESRI's long legacy of geo-intelligent technology infused.