The Future of Printing
The Elevator Pitch for the Future of Printing
1. A large portion of available information (and entertainment) is printed. Still. Newspapers, books, magazines, brochures, direct mail, and many more. There are certainly far more new pages on the web each day, but print is still a dominant force.
2. The printing industry has not been ignoring the changes that surround it. The technology of print is in a state of constant innovation. It has never been cheaper and faster to get a high-quality publication (of any sort) to the reading public.
3. At the same time print publishing is now assaulted from multiple angles. Paper prices are up. Postal rates are up. And the reading public is increasingly distracted by other media: the Internet, television, computer games, mobile devices and more.
4. The economic analyses surrounding the health of the printing industry are as contradictory as they are for most other industries covered on this site. There’s bad news, and there’s good news. My overall read of the figures is not positive; at the same time the industry is apparently not in freefall.
5. The future success of the printing industry is very closely tied into the shifts in advertising spend. (This section should be read in conjunction with the section on advertising.) Those trends show a clear move away from print as a primary medium for ad dollars. With its huge reliance on advertising-supported printing, it’s difficult to see how the industry will be able to transition to wean itself of that essential source.
6. Like many other industries covered here, the print industry is in the midst of substantial consolidation, removing capacity so as to shore up prices. At the same time, new print technologies are adding capacity roughly as quickly as consolidation removes it, and the net is likely a wash.
- Summary of the Future of Printing
- The Latest News About the Future of Printing
- Printing is a Diverse Industry
- The Impact of Internet Advertising on Printing
- Is Printing a Zero-Sum Game?
- Which Half?
- Advertising Drives the Future of Print
- It’s Not a New Story
- What’s a Printer to Do?
We’ve reached a time for a vote: does printed matter matter to us more than the Web? The jury is out, because instead of twelve jurors we’ve got millions, of all ages and demographic backgrounds. As you can read in the section on Social Demographic Issues, the answers vary widely.
Regardless, there’s no doubt that printed matter matters. I’ve been very tempted to pose a challenge on this site: who ever ACTUALLY SAID that print is dead? Print is so far from dead that the (too-often-repeated) comment draws doubt to its authenticity.
Print is very much alive, and, I guarantee you, will outlive anyone reading on this Web site.
The questions of course are what form printing will take, how the industry will evolve, and what consumers will do in the face of the enormous change in media choices.
Clint Bolte has reliably covered industry print industry conferences for probably longer than I’ve been in the business. He sends his conference reports to industry colleagues, and versions were often reprinted in publications like the old Seybold Report. His précis on the NAPL’s former Top Management Conference was full of informed analysis of how to make the print industry stronger, and of strategies printers can follow to improve their operations. He began his coverage with a report on the “State of the Industry” presentation from NAPL’s superb chief economist Andy Paparozzi. Quoting from Bolte’s coverage:
Recessions are sneaky and unpredictable,” offered NAPL’s Chief Economist, Andrew Paparozzi, during his State of the Industry address. Industry sales growth has been slowly deteriorating since mid-2006 and yet over 40% of the NAPL Printer Business Panel reported faster growth in ’07 than ’06. However, pre-tax profitability for 37% of this panel has not been as low since February 2004 – the end of the last recession. All of these national economic woes “were created by the excesses of the late 1990s and earlier this decade,” according to Paparozzi and do not rest solely on the shoulders of Mr. Bernanke or the Federal Reserve Bank. He concludes, “No one knows how long the correction will take or how deep it will go.
No analysis of print is worth its weight in print without recognition of the tremendously diverse range of activities that comprise “printing.” The result is that while, for example, newspaper printing may be taking a steep hit, direct mail advertising continues to grow. In the chart below, direct mail printing falls under the category of “general commercial printing,” by far the largest printing segment in total sales.
Source: Looking Forward: What’s Next for the Economy and Print Markets in 2008-2009, published by GAIN.org
Magazine publishing may be challenged, but magazine printing represents only 3.6% of total U.S. print sales. Worried about the shift of financial and legal printing towards online publication? This category represents only 1% of print sales.
Nonetheless, most industry observers agree that the print market is driven by advertising more than any other force, and that is a source of concern.
When I recently searched Google for “printing” I was offered three pages of sponsored links, including “Who’s Your Print Daddy? – Printing that looks like a million bucks, but costs like .03 cents” Clicking on the URL I learned that “With presses in Texas, California and Florida, we can deliver high quality product nationwide for a fraction of the cost anywhere else! Our mission is simple: To give our customers the greatest return on their investment with service and quality that is unmatched. Highest Quality – Lowest Prices – Guaranteed.”
For an old print buyer like myself it all sounded a trifle suspect. But for the average Joe, not sophisticated in the ways of print procurement, it could sound pretty appealing.
More importantly, I think, how else would DallasPrinting ever reach a worldwide market for its services? Could it effectively advertise across North America on television or radio? What magazine would offer a profitable return on its advertising investment?
Still, what’s most important about DallasPrinting’s Google ad is that DallasPrinting.com pays only for those who “click through” to its website. Sure, not all of them will be buyers. But a substantial percentage probably will be – otherwise they wouldn’t click on the link. And further, if DallasPrinting finds that the click-throughs aren’t leading to real orders, it can quickly pull its ad from Google and try it somewhere else. Or it can stay with Google and perhaps switch the listing just to people searching for “low-cost printing,” or to “printing in Dallas.”
Welcome to the new age of advertising. It’s not for the masses, it’s for individuals. It’s about the often-rumored and too-often-discussed one-to-one marketers: advertisers who believe that it’s possible to reach out directly to individuals, rather than just throwing up billboards for the masses.
Who are the blind who will not see? Everyone involved in traditional advertising, whether buyer or seller, who refuses to look closely at the changes taking place in advertising and fails to determine a counter-strategy. Printers are probably no more guilty of this blindness than television networks and newspaper and magazine publishers. But the change is accelerating, dramatically so, and the required adjustments are neither obvious nor simple to put in place.
To understand the impact of Internet advertising on print (and other media) it’s very important to recognize Thad’s “Law of Shifting Ad Budgets,” a.k.a. “Thad’s Zero-Sum Game.” When a new advertising medium becomes popular, be it cable television or the Internet, marketers do not augment their existing advertising budgets to accommodate the new medium. Instead they subtract dollars from existing advertising media to accommodate the shift.
The following data on 2007 advertising to sales ratios by industry sector is from a publication called Advertising Ratios & Budgets, published by Schonfeld & Associates (SAI).
Clearly the advertising-to-sales ratios of different industries vary greatly. What they do not do is vary according to available media. The percentages are determined based on optimal advertising expenditures against sales revenues, not against the availability of media on which funds can be expended.
While it’s conceivable that an advertiser would decide to retain all of its existing ad campaigns and supplement those expenditures with an Internet spend, simple logic makes it obvious that a prudent marketer would look to reduce expenditures in one medium if another, such as the Internet, was delivering a better ROI.
I know that half of my advertising budget is wasted, but I’m not sure which half.
– Lord Leverhulme, date unknown
Nothing has so much characterized the modern advertising era as the too-often-mentioned quotation above. What should a marketing executive boast after committing hundreds of millions of dollars to network television advertising (or to a single advertisement during the Super Bowl)? Sales are up; an impact was achieved. But how to measure an ROI on the campaign? Impossible.
The essential difference between Internet advertising and all other forms of advertising (including, of course, print in periodicals) is that the results are measurable. OK, not 100% measurable. But compared to any type of mass-market advertising, the Internet is like a smart bomb.
Direct mail marketing is the closest thing that print offers to compete with the Internet. It’s direct and it’s measurable. But sadly it tends to measure responses rates below 5%, while targeted Internet advertising dwarves that number, not simply in overall response rates, but, far more importantly, in cost per response. (It’s significant that the fastest growing sector in print today is direct mail powered by variable data. When used well, response rates rise enormously. Clearly this can be cost-effective advertising, even more so when used as part of an integrated marketing campaign with a strong Web component.)
Make no mistake about it: advertising is the engine the drives most print expenditures. According to the PIA’s Ronnie Davis, advertising drives nearly 45% of print spending, dwarfing its nearest competitor, “wholesale trade,” just below 10%.
If the Internet is siphoning off ad dollars from network television, it’s also taking money away from print.
As reported in Pira’s Future of Print (by John Birkenshaw and Peter Hart, © 2000), based on data from Zenith Media, the percentage of the total ad dollar marketshare enjoyed by print has been declining slowly but surely since 1990.
On June 6th the Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers announced that Internet advertising totaled over $2.8 billion for the first quarter of 2005, a 26% increase over Q1 2004 ($2.2 billion) and a 4.3% increase over Q4 2004 ($2.7 billion).
Magazine ad revenue will total some $18 billion in 2006. The Internet won’t be all that far behind. More importantly, it will be gaining fast.
As Jonah Bloom, as executive editor of Advertising Age (the bible of the ad industry) pointed out in his July 25, 2007 column in AdAge.com: “…few seem to have integrated their Web operations with the rest of their marketing. In most marketing departments or agencies, the folks who evaluate and buy keywords or optimize search engines sit in a separate silo from the rest of the ad or marketing team…”
This is the problem that besets printers just as drastically.
Every printer must be tired by now of the lecture that starts: “Stop calling yourself a printer: you’re a graphic communicator.” But as the quote above reveals, it’s not only printers that find themselves myopically pigeonholed. The customers of printing companies are increasingly looking to integrated marketing across multiple channels. Can printers command the shift, or will they be left collecting shekels in its wake?
Printing Industries of America (the merged PIA and Graphic Arts Technical Foundation (GATF)) is the great source for the printing industry, followed closely by the National Association for Printing Leadership (NAPL) (after it’s merger with the quick print association).
2. A Good Book and It’s Free
Disrupting the Future, by Dr. Joe Webb and Richard Romano is an essential resource for anyone trying to understand what makes the printing industry tick (a PDF can be downloaded without charge). It’s described as “a contrarian look at the printing industry and the new rules and strategies needed to succeed.”
This 54-page report by Frank Romano, written in 2003, offers Frank’s customary thorough research and attention to detail. Things have contracted since 2003 but this report delineates the core relationships. You can move from this report to RIT’s broader research bank and find a plethora of additional free reporting and data.
4. Trade Journals