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 print’s 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 laminate’s 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.

by Two Sides

A new survey into the preferences of consumers for printed versus digital communications has been published by Two Sides, the global organization created to promote the responsible production, use and sustainability of print and paper. The survey, which was commissioned by Two Sides and undertaken by international research company Toluna, sought the opinions and preferences of UK and US consumers on a number of issues relating to the change from paper-based to digital media.

Results of the US survey highlighted that 88 percent of respondents indicated that they understood, retained or used information better when they read print on paper compared to lower percentages (64 percent and less) when reading on electronic devices. The same trend was found for reading complicated documents, with 80 percent indicating a clear preference for reading print on paper, and reading on screens showing a much lower preference than print at below 16 percent across all age groups.

The survey also revealed 81 percent found printed media more relaxing to read, while 62 percent of mobile/smartphone users (rising to 73 percent among the 18-24 year olds) were concerned about how these devices were damaging their health (eye strain, headaches, insomnia). Overall, the survey reported that 81 percent of respondents preferred to read print on paper when given the choice.

“The results of this US survey will be useful for all those who choose the way in which information is distributed, particularly for advertisers, marketers and educators who need to understand how information is being delivered, received, processed and retained,” explained Phil Riebel, president of Two Sides North America. “While on-screen reading occupies an increasing amount of consumer time, people’s preferences still are for reading print on paper, which they believe to be more informative, less distracting and less harmful to their health. Results also show that many people are concerned about the effects on learning and literacy due to the switch from printed books to digital media in our school system.” The Two Sides survey shows that 68 percent of respondents believe that books are more likely to encourage learning and the development of other skills than using screens, and that 63 percent of respondents worry that children are not going to learn as much without books.

While acceptance of digital media generally is stronger among younger age groups, there also is a strong preference for print on paper existing across all ages.

Key findings from the Two Sides US survey

1. 88 percent of respondents believe that they understand and can retain or use information better when they read print on paper. There were only minor differences between age groups.
2. When given a choice, 81 percent indicated that they prefer to read print on paper. These percentages drop to 39 percent for screens, laptops and PCs; 30 percent for e-readers and 22 percent for mobiles or smartphones.
3. 81 percent indicated they are most relaxed when reading print on paper. Age group differences were minor. Mobiles or smartphones are seen as the least relaxing way to read, with only 30 percent preferring this method. Younger age groups indicated that they are more at ease with reading from screens than the over 45 age groups.
4. 75 percent indicated that they were more relaxed and receptive when reading a magazine in print, compared to 26 percent when reading a magazine on screen. Differences among age groups were minor, with over 73 percent of all age groups preferring to read a magazine in print.
5. 80 percent stated a clear preference for reading print on paper for complicated materials in contrast to only 13 percent preferring to read complicated materials on a computer screen. Mobiles and smart phones were preferred by only three percent for reading complicated materials. Reading on screens showed a much lower preference than print at below 16 percent across all age groups.
6. Only 23 percent indicated that they are easily distracted when reading print on paper, whereas electronic media showed higher distraction ranging from 66 percent for mobiles and smartphones to 42 percent for e-readers.
7. Many respondents print out documents. The main reasons are as follows:
   • 74 percent believe printed documents are easier to read.
   • 55 percent believe printed documents are more secure.
   • 56 percent believe printed documents are better for storage and archiving.
   • 47 percent believe printed documents are less likely to be lost.
8. 44 percent to 57 percent indicated that they prefer paper bills by mail for their financial services, utilities, telecoms, mobile or smartphone and TV. The over 45 age groups showed a higher preference for paper bills than the under 45 groups.
9. Advertisements in print are clearly given more attention than their online equivalent, as evidenced by the following:
   • 64 percent pay more attention to advertising when reading magazines in print. 26 percent pay more attention to advertising when reading magazines online.
   • 60 percent pay more attention to advertising when reading newspapers in print. 29 percent pay more attention to advertising when reading newspapers online.
   • 48 percent pay more attention to advertising when reading leaflets received by mail or dropped at the door.
   • 26 percent pay more attention to general online advertising.
10. There are clear concerns that switching from printed books to digital methods is affecting education, such as the following:
    • 68 percent believe that books are more likely to encourage learning and the development of other skills than using screens.
    • 63 percent worry that children are not going to learn as much without books.
    • 59 percent believe that learning from books is the best way to learn.
    • 58 percent would insist that their children learn from books.
    • 42 percent believe that learning from screens, PCs, tablets, etc. is just as effective as books.

The full report can be downloaded at www.twosidesna.org.

Two Sides is an independent, nonprofit organization created to promote the responsible production, use and sustainability of print and paper. Two Sides is active globally in North America, Europe, Australia, South Africa, Brazil and Colombia. Its members span the entire print and paper value chain, including forestry, pulp, paper, inks and chemicals, pre-press, press, finishing, publishing, printing, envelopes and postal operators. For more information about Two Sides North America, please call 855.896.7433, email info@twosidesna.org or visit www.twosidesna.org.