Digital Opportunities
Much has been written about and debated over concerning the future of print now that the digital age is upon us. Many advocates of electronic delivery have predicted that within a period of 20 years or so printing will have all but disappeared and we will be viewing everything that we need for information or entertainment on screen. Others, and I include myself in this number, take a more cautious view. Whilst major changes will come about over the same period of time in the science and art of printing due to digital technology, in my opinion print as an industry still has a very bright future.
The trends in printing technology
Digital printing began to make an impact on the print scene in the early 1990’s with the introduction of machines that could seriously challenge litho printing for monochrome work. Colour followed about three years later. However, it was the late 1990’s before any real impact was felt on the levels of litho print production.
Currently, respected industry assessors such as CAPS Ventures and PIRA amongst others calculate that the slow down in litho printing is running at a rate of approximately 0.05% per annum overall, and it is not expected that the rate of decline will increase in the next few years to any marked degree.
Digital printing on the other hand is increasing year by year at a rate of between 3 and 4% overall and it is expected that if anything this rate of increase will accelerate in the next few years.
Digital printing does have a long way to go in winning market share from litho. The estimate in 2000 was that more than 90% of all printing was litho let alone other processes such as gravure and flexographic printing having their share. However, the future for digital print is bright, as it offers unique opportunities in the market place that other printing processes cannot match.
The unique opportunities for digital printers
Those involved in digital print production, particularly in the colour print sector, will know that competing with litho in the short run market is a very tough option. Such have been the developments in pre-press and on-press technology in the past few years that litho can be cost effective on orders for less than 1,000 copies, and in some cases as low as 500 copies.
The way forward for digital printers particularly in the colour sector is to focus on the type of work and offer the type of customer services that litho cannot match by virtue of the technology employed. To do this there are developments happening in the market place that aids this process which I would like to review.
One to one marketing
Marketeers see the most important development in marketing strategy as being the increasing sophistication of the one to one marketing approach made possible by developments in digital technology.
We have been familiar for many years with versioning on printed documents which have been used for billing customers for services as well as providing some degree of personalisation for marketing documents.
Computer processing power has increased dramatically in recent years. It has been assessed that computer power and capability quadruple every year as the cost of producing the computer memory capacity halves each year. Associated with cost effective and specifically developed software, this opens up the opportunity to develop and design marketing documents which include variable graphics as well as variable text which could not have been feasibly undertaken a few years ago.
Everyone will be familiar with the success attributed to the Tesco Clubcard and the associated one to one marketing that the company undertakes in its mailing of full graphic variable images to the customer base with information drawn from the cardholder’s pattern of purchases. This ensures that the offers that a particular customer receives reflects exactly what that customer regularly buys so that the incentive to retain loyalty to the brand is present rather than a non-specific offer which may not be of interest. Tesco themselves claim that this factor has been a significant contributor in lifting the company to the number one position in the UK supermarket league.
Tesco is a very large company using variable data to good advantage. Behind their achievement with their loyalty programme is a very big investment to serve a huge data base of Clubcard holders. However, one to one initiatives of this type are equally relevant to small companies and this offers an area of opportunity to develop new revenue streams of business for entrepreneurial printers and associated companies which take away the dependency on just the print and fulfilment process as being the revenue earning streams.
The new business opportunity
It will not be sufficient for a printer to just add to his sales portfolio the fact that he is now able to undertake variable data printing and wait for customers to turn up. There isn’t a queue of potential customers waiting to adopt variable data and the reason is that most are unaware of the potential of what they can achieve. It is the entrepreneurial printer’s job to wake them up to new ideas.
The concept of one to one marketing needs to be marketed itself. The customer, who will most likely be the marketing manager of a business, needs to be made aware of the high potential available to increase business through a new approach.
Almost all companies bringing any type of product to the market have a data base of customers. In the digital age this should be a valuable resource that is kept up to date and carefully monitored. All too often whilst the data base exists, it is frequently well out of date and knocking it into shape is the type of job no one in the marketing department of a company really wants to do.
Surveys undertaken by the industry analysts show that data base management being undertaken by third party external companies is set to double in the next two years. This is a revenue stream that some printers have already moved in to take advantage of by offering a service to their clients, and if the printer has a variable data future it becomes an important facility to offer.
Data base mining for specific campaigns is a natural follow on from data base management. Accurate profiling and targeting of segmented groups has been shown by market analysts to increase the response to a mailing by up to 15 times compared to the conventional ‘scattergun’ approach. This is highly attractive to the average marketing manager. It is far better to have several precisely targeted campaigns using shorter runs than having one long run printing with a non-specific target.
Design versioning to accommodate several different segmented groups of targets is the next facility required, and out of this grows the preparation of the pre-press formatting to ensure that the right versioned and graphic selection goes to the right person within the intended segment. This is then ready to feed the prepared data to the front end software on the press. Printing and fulfilment follow out of this.
It can be seen from the foregoing that several different operations are in front of the actual print and fulfilment process. These are all revenue earning streams in their own right. Database management, data mining, design, data merging, pre-press preparation are all separate and chargeable operations.
When properly marketed, the advantage to the printer is that the price to undertake a campaign on behalf of the client is the price for the campaign in total, not just the price for printing the job. The client is much more firmly linked to the printer providing more security for both.
The foregoing represents a very real business opportunity for the entrepreneur. Most printers have the advantage of being well versed in computer technology and already have a sound base on which to launch the new services that are required. Database management and data mining is not difficult to undertake but it does need dedicated staff to operate effectively. There are client confidentiality issues to be addressed as the database is the resource and property of the client. However, this is a well trodden road as any company that has been undertaking direct mailing fulfilment will know.
The biggest change for the would be entrepreneurial printer is the one of changing the approach to selling that he uses so that the consultative style of salesmanship is adopted rather than the conventional well trodden path.
Generally this involves the whole company, not just the sales staff. A decision by a client to adopt this way of working has to be one that is taken at senior level, so the approach to the client must be made at senior level in addition to the sales force making and maintaining the contact.
When a good prospect is identified, it will be important to work out a strategy before making any approach. Time spent assessing how to show the potential client that you can really benefit his business will pay dividends. Making sure that management, sales and technical staff are all involved and working together will strengthen the marketing effort and increase the chances of success.
Digital printing and particularly the increasing use of colour is bringing in new challenges and new opportunities. Print on paper has a strong future for as far as can be seen into the future, but no business can stand still. Now is a good moment to assess how you can use the increasing power of computer processing to the advantage of your business.