You've Got Mail!
College students typically receive marketing offers in the mail from upwards of a hundred companies each year.
But the flood of mail masks a surprising reality--only two companies are responsible for most of the unsolicited marketing received by undergraduates at Harvard and other colleges across the country.
Educational List Sources (ELS) and American Student Lists (ASL) both compile vast databases of information about college students in the U.S. and rent them to companies interested in marketing their products on college campuses.
The information that ELS and ASL provide--including students' names, addresses, telephone numbers and e-mail address--allows companies to tailor their pitches to a pool of potential consumers that are flush with disposable income.
The service is big business.
With about 3,700 customers and annual revenues of $20 million, ASL has by far the largest presence in the student mailing market. In documents filed with the Securities and Exchange Commission (SEC), ASL reports that it maintains a database of 30 million names and addresses, in categories ranging from "College" to "pre-school."
The Crimson contacted a series of companies that have an extensive direct-mail marketing presence on college campuses and inquired about the source of their mailing lists. All of the companies, with the exception of American Express, which would not discuss the source of its direct-mailing lists, said they used either ASL or ELS. Several companies used both list providers.
How these list providers compile their information and how they use it is part of a complicated and sometimes cloudy relationship that touches most every college campus in the U.S.
In the Money
"We find that students who use our credit cards in college remain customers of ours for the rest of their lives," says Monica Beaupre, the head of public affairs for the American Express Gold Card. "They turn to us when they get married, buy a house, send their kids to college, or need a loan."
Both in the short-run and the long-run, college students, collectively, have enormous spending power.
Student Monitor Research estimates that in the year 2000 alone, college students will spend $105 billion on products like entertainment, books and clothes.
Credit card companies in particular have latched on to the student market, with the knowledge that they could be creating lifelong customers. ASL documents filed with the SEC show that credit-card companies represent the bulk of the list-maker's business.
But targeting these potential customers is not cheap.
ASL and ELS charge between $40 and $120 per thousand names, a premium over the cost of lists of the general public.
Lists that segment people into clearly-defined categories are particularly valuable to direct marketers, which can tailor their sales pitch to a particular demographic and therefore increase the likelihood of making a sale.
For instance, American Express offers bonuses such as free discount calling cards in its mailings to encourage students to sign up. Those perks might not appeal as much to the U.S. population at large.
So far, the ASL and ESL strategy for getting direct mail to college students has paid off.
"For the most part, our company, as well as most companies that market to the college student market, use American Student List," says Mendi Smith, the corporate communications director for Associates National Bank, one of the largest credit card providers in the country.
ELS is a privately-held company and does not have to disclose any information about its business practices.
But ASL, which is owned by a publicly traded company, must file quarterly reports with the SEC.
The reports make oblique reference to "long term relationships" with sources of information about college students and says the company also gets information from "certain publicly available sources."
Industry experts say the firms have longstanding relationships with many colleges to purchase the information directly from the schools or are given the information for free.
But at schools such as Harvard that refuse to release student contact information, list compilers often pay students to provide them with a copy of the student telephone directory. The directory is then re-compiled into the company's own proprietary database.
While most of the direct marketing that students receive in the mail comes from lists compiled by ASL and ELS, there are other ways for companies to get a hold of a student's name and address.
Credit card companies routinely make use of credit bureaus to pre-screen the U.S. population for individuals with established financial histories in order to present them with "pre-approved" offers of credit.
Sometimes, those individuals happen to be college students.
If an individual responds to a direct mailing, her name, contact information and credit history are released to the credit-card company.
"We don't know anything about a person until they actually contact us," says Lewis Cohen, who is the head of database marketing for Citibank.
Allen Alias, the corporate communications director for Providian Financial Corporation, a credit card provider, says his organization primarily makes use of lists produced by credit bureaus. Although these lists may sometimes contain the names and addresses of students, Alias says his company makes every effort not to solicit individuals under the age of 21.
"College students have a lot of burdens in terms of spending time hitting the books instead of taking on jobs. We're trying not to put individuals in that age group in debt before they even hit the workforce," Alias says. "That's not to say that if an individual who's over 18 picks up an application, we won't consider it."
A Never Ending Stream
Kerkache said last spring that it takes his staff hours to deliver the mass-mailings that swamp the mail center several times a week.
The situation at Harvard is indicative of larger problem for direct mail marketers--a low response rate among college students.
Citibank's Cohen says that of all the credit card solicitations that Citibank sends out to college students, less than 1percent engender any sort of response--and only half of the students who respond actually sign up for a credit card.
The College has also had to deal with companies looking to pay students to provide them with copies of the student telephone directory.
Last spring, a Crimson investigation into the source of telemarketing calls led senior tutors in several Houses to warn students that selling the directories for any commercial purpose was an Ad Boardable offense.
However, University Attorney Allan A. Ryan said last spring that Harvard may be largely powerless to prevent private companies from making use of its directory.
A Supreme Court decision in 1990 ruled that a telephone book was little more than a compendium of information arranged alphabetically, and so its contents could not be copyrighted.
"A good deal of the information [in the telephone book] is semi-public," Ryan says.
But Harvard may actually find a silver lining in the direct-marketing madness: the University indirectly owns a small piece of ASL.
ASL merged with Snyder Communications in 1997 and as of August 8th of this year, Harvard owned $1.5 million in Snyder stock--approximately 0.1 percent of the company.