by Hal Hinderliter, Hal Hinderliter Consulting Services
The ability to obtain information from a screen is driving massive changes in how print is purchased and distributed. The effects have been profound, but not all forms of print have been impacted equally. While some types of printing companies have suffered rapid attrition of their client base, others have maintained or expanded their billings.
Research published by the Print Industries Market Information and Research Organization (PRIMIR) indicates that the printing industry’s output is splitting into two categories: products whose functions easily can be digitized and print that performs a necessary function not easily replicated on a computer screen. PRIMIR’s study, Value-Added Printing & Finishing for Improved Profitability, supports the premise first published by Dr. Ronnie Davis and Ed Gleeson from the Printing Industries of America, which established three categories of Print by Intended Function: (1) print that informs, (2) print that provides packaging logistics and (3) print used for marketing/promotional purposes. The Value-Added study collapsed the second and third categories, leading to two: print that informs and print that performs.
The principal investigator for PRIMIR’s study was Hal Hinderliter (your author), assisted by the data gathered from a detailed survey. The survey pool’s 577 respondents included print buyers as well as printers and trade shops. Many FSEA members participated in the survey, helping to assure an accurate picture of a robust marketplace. Beyond the quantitative survey data, in-depth interviews were conducted with dozens of suppliers and vendors; before its publication, the study’s conclusions were corroborated by a panel of experts.
The high-level takeaway from PRIMIR’s Value-Added study is easy to see, yet seldom discussed. Anyone with an eye on the printing industry can detect how digital media’s immediacy and low distribution costs have decimated the use of text-heavy “data dump” print applications – phone books, provider directories, user manuals and many other forms of print that informs have all but disappeared.
Print that performs a market-driven purpose needs to outperform the benefits of an electronic alternative, such as viewing on a computer, tablet or smartphone. These print applications likely are to enjoy exceptional capabilities or eye-grabbing appeal thanks to value-added enhancements. Examples of print that performs include packaging, labels, product safety guides, security printing or the persuasive messaging of direct mail and marketing materials.
The takeaway? Print that merely informs is less likely to be enhanced via value-added processes. As a result, these applications become more susceptible to digital replacement, as the distribution of basic information moves to the Internet. In contrast, this study revealed that sales have remained stable for applications that perform a market-driven purpose (typically, to sell something) and that revenue from these enhanced products has maintained prints traditional GDP-tracking growth pattern.
But, to what extent does the “eye candy” of value-added enhancements – such as foil stamping, diecutting and embossing, but also less traditional upgrades including special effect coatings, metallic process color systems, taggant inks and stainless steel stitching – motivate print buyers to ask for them? “Capture end-user interest” was the most commonly-cited justification, but print buyers and brand owners were nearly as likely to choose “improve quality of printed product,” with “essential component of a specific printed application” not far behind.
Print buyers noted reliance on their print service provider when it came to exploring new print and finishing options; fortunately for them, many printshops constantly are on the lookout to broaden their offerings. A case in point would be Rider Dickerson, a Chicago-area commercial printer and marketing services provider offering sheetfed, web and digital printing, along with mailing and fulfillment services. The company attracted attention by offering a special MTE laminated paper to its clients. The lamination was developed by trade bindery Chicago Laminating, which then made Rider Dickerson aware of the laminates special attributes. Normal offset inks take on a metallic appearance when printed on top of the MTE laminate. After in-house testing, Rider Dickerson brought this value-added enhancement to the attention of its clients.
“We went through all our due diligence in testing it out. It’s given us the opportunity to present this option to clients when it’s appropriate,” said Dean Petrulakis, senior vice president business development at Rider Dickerson. “In one case, it turned into a really, really big order. The customer went from paying about four cents a piece to 12 cents a piece on this project, and had no problem doing it, because the customer loved the effect that the laminate gave it. It’s things like that – we’re upselling, we’re definitely getting increased revenue. We’re still creating the awareness, we’re continuously exposing our customers to it every chance we can.”
One key factor affecting the future growth of any value-added enhancement is the extent to which customers judge it to be cost-effective. Fortunately, print buyers and brand owners viewed all 23 processes included in the Value-Added study as providing benefits that outstripped the additional production costs. Topping the list was scented coatings, a process with very low barriers to entry and a broad supplier base. Interestingly, the enhancements that print buyers and brand owners named as most cost-effective were all processes with low barriers to entry, including computer-controlled spot gluing, UV- and EB-curable inks and the use of specialty stocks (as portrayed in the Rider Dickinson case). These options were followed by a cluster of coatings: UV- and EV-curable coatings, special effect coatings and tactile/dimensional finishes.
Shifting consumption patterns are forcing changes in the popularity of value-added options. The PRIMIR study identified three items as “fastest-growing” from among its list of enhancements, with the top spot going to an emerging technology known as spectral database systems. Only of interest to those shops that generate printed output, spectral database systems include the use of a spectrophotometer and an online database of substrates to specify desired spot color appearance (instead of relying on physical swatch books) – systems include PantoneLIVE and Esko’s Color Engine. Second-fastest growth was predicted for computer-controlled spot gluing, small “fugitive glue” pumps that can be used on a folder or at the delivery end of a press; and third place went to metallic process color systems, which provide a controlled method for printing (digital or analog) on top of a metallic ink or substrate – vendors include Color-Logic and MetalFX.
Print products that utilize value-added enhancements are likely to be more resistant to digital conversion (replacement by electronic media), but potential threats still remain. The use of enhancements must coexist with the ongoing struggle to reduce time-to-market; production bottlenecks will dampen enthusiasm, not only for the problematic process, but for value-added processes in general. Other worries include communication between print shops and their outsourcing partners, downward pressure on print budgets and the concern that a particular value-added process might go out of style. The greatest threat of all, however, may be that print buyers will fail to understand the return on investment provided by the value-added enhancements they’ve purchased.
This study’s quantitative and qualitative data both point to a continued stable climate for value-added print and finishing, as opposed to dramatic declines in “print that informs.” Key to this stability is the ability of value-added enhancements to convert commoditized run-of-the-mill process color printing into an effective and compelling communication tool. Print buyers and brand managers project modest growth in their use of value-added enhancements, and both print service providers (PSPs) and trade service providers (TSPs) are optimistic about future sales growth.
What’s the hot take? Print that performs is alive and well! Monochrome and commodity CMYK printing increasingly will be targets for digital replacement, but value-added print provides additional benefits that buyers and brand owners say are difficult or impossible to replace electronically. However, print and finishing suppliers must do more to make uninitiated customers aware of new ways to improve print’s effectiveness. Material and equipment vendors can help printers evangelize the benefits of value-added print and finishing. Marketing investments desperately are needed – not only to inform customers of new or underutilized options, but also to build marketing campaigns for the printers and trade shops themselves. PSPs and TSPs need to “walk the walk” by proving the value of these value-added enhancements in their own marketing campaigns. Rather than acting as order-takers, service providers must become more proactive by suggesting solutions that will improve the effectiveness of their customers’ products.
Suppliers of value-added enhancements should rejoice. For decades, providers of print and finishing services have sought to redirect buyers’ fixation on “price per unit” toward a discussion of the superior return on investment that comes from value-added processes. That time is finally arriving! As commodity print continues to shrink, look for the print applications that remain to leverage value-added enhancements in order to improve their effectiveness.
Hal Hinderliter serves the printing and publishing industries through his company, Hal Hinderliter Consulting Services. With more than a decade of on-site problem-solving experience, his consultations help clients to increase profitability, improve quality and select new technology related to graphic arts processes. For more information, visit www.halhinderliter.com.