Partner Insights: Barnes & Noble’s Acquisition of Borders’s Email List

As most of our readers are aware, in late September, as part of a bankruptcy auction, Barnes & Noble acquired all of Borders’s intellectual property – including a customer database of 48 million records – for $13.9 million. Barnes & Noble then emailed Borders’s former customers, requesting that they opt-out if they did not wish to receive future emails from Barnes & Noble.

The situation lends itself to a healthy debate on privacy and the transferability of customer data in an acquisition.

This seemed like ideal fodder for our “Partner Insights” column, in which we take the opportunity to sit down with some of our valued partners (via email of course!) to get their perspective on a timely issue.

This month’s panelists are:

Arthur Sweetser, Chief Marketing Officer – 89 Degrees

Ryan Phelan, VP of StrategicServices – Blue Hornet

Christopher Penn, Director of Strategy – WhatCounts

FP (FreshPerspectives): Arthur, as you know, there’s been a lot of buzz lately about Barnes & Noble’s acquisition of Borders’s customer email list. What’s your take on Barnes & Noble’s move?

Arthur: Brilliant! I have provided strategic consulting services for two other clients that were exploring purchasing lists of competitors that had gone out of business. Surprisingly, there was not as much overlap in these databases as my clients had originally thought. For the lists we researched, we found less than 30% overlap.

Two pieces of advice:

  1. DON’T over pay. The list is shrinking in value daily. Benchmark on how you acquire names and then negotiate down.
  2. Work the list starting Day 1. What’s your marketing plan to on-board them? Special offers? Contact plan and offer plan?

If you can convert 20% over to your brand and the price is right, I’d say you should consider yourself a BRILLIANT marketer!

FP: Ryan, what’s your opinion?

Ryan: The Barnes and Noble acquisition of Borders’s email list has caused quite a deep discussion within the email industry as of late.

Here’s my take on this.

There are bound to be the following challenges in the file:

  1. Substantial overlap with B&N’s existing email list
  2. Numerous inactive emails and aged records
  3. Customers that opted in to Borders’s list but opted out of B&N’s list
  4. Brand advocates of Borders that are not advocates of B&N
  5. Customers that are unhappy that their email got sold to B&N

Based on these challenges, the marketer or executive is going to have to expect a fairly low ROI from this file. Additionally, I think B&N would be challenged to message to this file en-masse, and, based on deliverability concerns, would have to throttle or carefully calibrate these sends. Then we start to talk about the initial email campaigns and the work begins to pile up, particularly when you consider an initial touch strategy that is not merely promotionally based. All of these layers begin to make this campaign risky. Based on the price, however, the ROI may be acceptable.

Personally, I am not a fan of the B&N purchase. Email is about permission and affirmative opt-in should be maintained at all times. If B&N came out with an affirmative opt-in campaign, then this could have an advantage to a marketing mix, but I still believe a fairly low ROI.

FP: How do you think the acquisition is going to play out in the longer term, Christopher?

Christopher: The acquisition of the Borders’s email list by B&N is going to play out very interestingly, as it’s going to pit two email marketing principles against each other.

At WhatCounts, we say that if you want to succeed at email marketing, you must send relevant, timely, targeted, awe-inspiring email to people who asked for it. In this case, B&N will likely be sending relevant, targeted, hopefully awe-inspiring – or at least valuable – email to a list of people who are in their target audience. On the other hand, they will be sending to a list of people who didn’t ask for it – they asked for email from Borders, Inc., and not from B&N. This could prove to be problematic for B&N.

While B&N can use the list under the general terms of the CANSPAM Act, they run the risk of going afoul of the Canadian FISA law. Borders had a significant business in Canada through its partnership with Indigo so B&N needs to be absolutely relentless about screening out Canadian addresses since the FISA law explicitly states that permission must be given.

Ultimately, if the B&N acquisition is legal under both CANSPAM and FISA, then B&N’s safest bet is to run a re-engagement campaign asking permission from the former customers of Borders to determine if they’d like to receive email from B&N. Doing so would ensure that the new list is clean and populated by people who have explicitly asked for email from B&N.

FP: Given the ever-tightening filters used by ISPs to screen emails, FreshAddress always recommends a “better safe than sorry” policy when considering any email acquisition program. Whether Barnes & Noble’s purchase of Borders’s customer database will turn out to be a brilliant acquisition or an investment blunder still remains to be seen.

Thanks, everyone, for providing your perspectives!

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