The Digital Imaging Association hosted a breakfast presentation on Friday November 11, 2011 at Graphics Canada. Keynote speaker, Jeff Jacobson, Chairman and CEO of Presstek addressed the survival tactics used in a tough economy by printers who are thriving.
Jacobson began his presentation by highlighting how the continuing digital transition has changed the way we communicate. He defined “the good old days” with relatively limited choices – print consisted of ads, brochures, catalogues and bulk mail. All were mass produced and aimed at a general market. Ads are now targeted to very specific markets. Brochures and catalogues have been refined by interest and personalized mail has replaced bulk mail distribution. Further delivery options now include email. Technology has enabled this and is also giving us the ability to refine point of purchase materials to deliver product information. Websites facilitate e-commerce and are augmented through search engine optimization and search engine based marketing. Radio and TV are now competing with YouTube and Podcasts. The multi-media marketing message is prevalent. It seems like a new channel arises almost every day. Marketing budgets remain relatively flat, which means, said Jacobson, that the same number of dollars are being spent over a larger number of channels.
The challenge for printers
Printers need to adjust their business model to the new dynamics. Print, said Jacobson, is still by far the largest piece of the multi-media market spend today. However, the role of print is changing. The major changes are to shorter runs, faster turnaround, and more colour. The print and distribute model has been replaced. People print what they want for the short term – and they want it done quickly. 80% of colour runs are now 5000 impressions or less. Changes in printing technology have enabled marketplace demands. With the right production platform, printers can profitably deliver the short-run, fast-turn work the market is demanding.
Our job, Jacobson told the DIA audience, as owners of printing businesses and suppliers to the graphics art market, is ensure that media buyers understand all their options. We want them to turn to us as the experts and we want to be able to guide them toward the best media mix for a given project.
Jacobson prefaced his next statement to DIA listeners as perhaps the most important thing he had to say at the morning session:
“We want to position print as the igniter for the overall multi-media marketing message.”
He further explained that we have to understand that print may not be the most important media in a given campaign. The significant role of print is to ignite the message and to drive people to other parts of the media spend. If we do this, we will be vibrant and we will stay relevant.
The challenges to remaining profitable
First and foremost, Jacobson believes, we must have the right infrastructure consisting of people, processes and technology. One of the most important things any business needs to do in today’s world is ensure that business and production processes are as streamlined as possible, taking any unnecessary steps out of the process to make the workflow as lean as possible.
The world has changed. Volumes are not where they used to be – thus driving unit costs up. Every company needs to look at each part of its operation, no matter the size, and ask how can we do it differently and how can we drive costs down? The DIA audience was able to hear examples of how Jacobson suggests companies work to achieve this. He truly believes that your own people can be key contributors to your company’s ultimate success.
Where investments are involved, it is even more necessary than ever to do a detailed and realistic ROI analysis and to track outcome once the investment has been made.
Technology enablers must include a web to print solution, some form of automated workflow. Savvy printers are investing in efficient bindery according to Jacobson.
When demand first started moving to shorter runs and consistent high quality colour, many printers started to invest in toner technology to bridge the gap with jobs where offset was no longer cost efficient. This move created a new gap – between toner-based digital technology and traditional offset. DIA is the technology Presstek recommends to bridge that new gap and to compliment other production options. In addition to downward run lengths, the toner technology enables variable production. Jacobson shared his own statistics with the DIA audience. He said that when he asks what volume of a printer’s business is variable production, he gets one of two answers: “I don’t know,” or, “probably less than 10%.” There certainly are companies that might be doing 50%-70% variable, he said, putting them in that mid range between the efficiencies of toner technology at the short-run end of the scale and offset for the larger runs – the new gap.
In Jacobson’s opinion, however you configure your pressroom, your focus should be on how to profitably handle the range of runs your customers are asking for.
The role of people in profitability
In most companies the structure consists of an owner, a leadership team, a vision, and a company culture. Once you have defined a company culture and have put systems in place, how, asked Jacobson, can you fire your people up to drive and achieve your vision? It is all about moving the needle forward, not staying in the same place forever.
One of the areas in the people equation that requires special consideration, Jacobson told DIA listeners, is sales. Today’s sales professionals need to develop deeper more connected relationships with customers, sell programs not project and add value to customers’ marketing programs. Solutions-based selling requires a different skillset from that required for transactional sales. The foundation of this is the ability to move out of procurement into marketing, moving further upstream into the decision process. If you do not have a seat at the customer’s table upstream in the organization, said Jacobson, you will likely be relegated to the role of commodity sales. Jacobson told the DIA audience that he has found that the best sales people he has understand their customers so well… as if they are part of that customer’s operation. The best sales people are fighting for their customers and, said Jacobson, telling us internally what their customers need. That, he said, makes us – and will make you – a better company. The seat at the customer’s table puts valued sales people in a position to influence the media mix chosen – making print the igniter of the overall multi-media message. This type of influence requires that companies make a greater investment in the people who can drive it. But…the peak ROI is longer term relationships with higher margin accounts.
Selling the graphic industry to investors
Presstek is a public company, so selling to investors is something Jeff Jacobson does every day. He told DIA listeners that the most frequent question potential investors ask is if print is going to be here in five years. Their perspective is that newspapers are on-line, books are on-line, everyone is going to iPads – what is left in print? You can then show them some facts such as what percentage print still enjoys in the overall multi-media marketing message. Print is still into the well-solid 40% spend range. It is still huge, it is still significant and it is still relevant.
Certainly, he said Canada has fared better in this economy than the US, but financing is still hard to acquire. He further stated we need to do a better job of selling our industry to investors. It will be a different market as we go forward, but, Jeff Jacobson believes, Print is an industry in which we can still thrive. There is still too much capacity in this industry and some of it has to go by the wayside. But somehow we still have to make print even more relevant to utilize that capacity. The challenge here is that, statistically, about five years ago press capacity utilization was tracking at 82%. Now it is at 62%. That forces lower pricing into the market and it forces costs to go up at the same time. That’s why we need to streamline our processes to take cost out of the industry and drive a positive message to investors.
To sell a compelling story about the industry’s future and about your company, Jacobson advised, you need to explain how your company is well-positioned for the future. Tell stories about your customers and how you have made a difference in their businesses. Jeff Jacobson proceeded to do just that for the DIA audience – summarizing some real-life cases and demonstrated returns on analysis for three of Presstek’s customers, showing how they have become more successful than their competitors. His examples identified companies that migrated to complementary platforms, utilizing a hybrid digital and offset strategy, demonstrably increasing business volume, utilization capacity – and profit.
Jeff Jacobson ended his presentation by tasking the DIA audience with sharing their own success stories that demonstrate how having the right people, process and technology in place can drive innovative ways to meet their customers’ needs and to drive profitability in today’s ever changing market.
