Forty-six per cent of the printing firms saw a decline in demand for conventional (non-digital) print over the last five years, compared with 21 per cent who reported an increase, a report said.

Packaging came off by far the best, with a far smaller net balance reporting a decline of 14 per cent compared with 33 per cent for commercial and 42 per cent for publishing printers, added the Global Insights: Impact of Internet on Print released by drupa, the largest printing equipment exhibition in the world.

In terms of substrates, a net balance of 9 per cent reported a decline in demand for paper over the last 5 years, compared with those that reported an increase. This contrasts with net balances reporting growing demand for carton board, flexibles, metal, glass and fabrics.

Advertising pays for the majority of print so the steady drift away from print to other forms of digital communications has had a compound effect over time. The relative decline of print is not across all markets but for some sectors it has been severe.

In contrast packaging is forecast to grow at about 4 per cent per annum to 2018 as the Internet has not removed the need to protect our goods and promote them on the shelf. Equally industrial/functional print is growing at an annual rate of about 13 per cent albeit from a much smaller base.

By 2012 it was calculated that 35 per cent of the world’s population was connected via the Internet, although distribution is very patchy. As for mobile phones, by 2013 there were 3.4 billion subscribers, equivalent to just under half the world’s population.

So print is now part of the broader communications industry, and printing companies need to be increasingly IT-led. Yet only 23 per cent of our drupa expert panel reported that IT expenditure had grown over the last five years and virtually all reported difficulties in recruiting adequate IT skills.

The migration to digital communications

A range of factors explains the rapid migration to digital communications over the last 30-odd years:

• Digital communications are rapid, even real-time.

• Interactivity offers great advantages.

• The consumer has adapted to an ‘always on’ communications lifestyle.

• We are mobile with access to multiple touch-points and channels.

Marketers will therefore consider all the channels available and choose those that fit within budget and prompt the best (ideally recordable) response. Regrettably, younger marketers may only consider digital channels.

Yet print can add huge value to multichannel campaigns. The average response rate for standard direct mail is reported at 3.4 per cent, compared with 0.12 per cent for email. So direct mail that drives consumers to a digital channel, ideally via an interactive element, is an attractive way forward.

So how have commercial printers on the drupe panel responded to these challenges? Commonly they have sought additional revenue streams by adding new services such as web-to-print (W2P), customer database management, digital asset management etc – most of which use the Internet to function.

Publishers of newspapers, magazines and books have faced equally stiff challenges from the Internet.

For every $25 of lost print advertising it is calculated that newspaper publishing gains just $1 of digital advertising.

Nevertheless, while digital revenues are growing rapidly for magazine publishers (particularly for business-to-business), it will be many years before print advertising and circulation revenues cease to be the dominant source.

As for books, again the printed book will remain for some years the dominant revenue source for professional publishers. However in the book publishing supply chain a radical transformation, enabled by ecommerce and digital print-on-demand (PoD), has taken place.

Furthermore use of ebooks is steadily increasing, but in complement to print, not as a full alternative. The other big features for books are that with PoD no book need ever go ‘out of print’ and there is a huge growth in so-called ‘self publishing’.

A drupa expert panel of printers who work in publishing has responded to these challenges by adding on-demand or short-run digital print; adapting to ecommerce-led supply chains and adding a variety of new services e.g. customer database management, adapting files to alternative output devices etc.

While conventional book production was reported as declining or at best stable, 59 per cent reported growth in short-run digital production and 51 per cent reported growth in on-demand digital production.

Sustainability is an issue of increasing concern for publishers, marketers and the consumer.

About 72 per cent of the commercial printers in the drupe panel offer VDP and 56 per cent reported modest or fast growth, albeit from a low base. Indeed, last autumn the panel’s commercial printers selected cut sheet digital electrographic presses as their top print investment.

Another striking development is the rapidly growing popularity of interactive print (QR codes, augmented reality etc) that enables print to play a role in an online sales cycle. 32 per cent of the expert panel offer at least one such service.

One key driver of mass customisation is the ever-increasing volume of digital data that is being held – so-called ‘big data,’ where the volumes are so large that conventional analyses would struggle to cope.

For example, online business data is forecast to grow at a compound annual rate of 40 per cent. However with the right software and skills to drive it, very exact segmented marketing, down to the level of individuals, can occur – either digitally or by printing. Here is a great opportunity for printers (who are used to handling high volumes of digital data) to manage and analyse customers’ data for them.

Packaging supply chains are responding to such opportunities to create just-in-time, on-demand business cycles that reduce lead times, cost and waste. Technical issues such as exact colour management are being resolved and supply chains are becoming agile enough to exploit the opportunities. Indeed, among packaging printers on the expert panel, 50 per cent reported they offer interactive print of one form or another, 43 per cent offer variable content and 41 per cent some form of personalisation, albeit only a low level of SKUs are involved at present.

The Internet has both increased the opportunities for personalisation and also the competition to win that business, as customers no longer have to meet the printer and printers can compete in an ever-wider geographic market.

Customisation has added new products to the conventional list of personalised products (business cards, stationery etc) with items such as photo books and calendars for commercial printers and décor items for industrial printers.

Over 50 per cent of the panel’s commercial printers offer some products that are personalised, although some products involve a higher level of investment in specialist equipment and marketing to compete successfully e.g. photobooks.

Direct mail is offered by 51 per cent of the panel’s commercial printers and while there is plenty of evidence of a sharp decline in the total volume of direct mail, strategically targeted direct mail is growing.

Overall, printers need to get much closer to their customers and end users, to capture data and understand how personalisation can be relevant, timely and provide added value.

Managing with the Internet

Regardless of what you are printing or how, the Internet can assist printers in becoming more competitive. For example, it is fundamentally changing the way businesses are conducting their sales and marketing.

The drupa expert panel admitted to a very patchy adoption of such techniques as customer database management (just 34 per cent use it), website analytics (23 per cent) and social media (25 per cent) and only 17 per cent use these in integrated campaigns that are demonstrably the best way to exploit these techniques.

Turning to customer service and production, we have all been impressed with examples in our daily life of effective multi-channel ‘customer journeys’ as well as painful examples of the reverse. But how many printers have assessed their own company’s ‘customer journeys’ objectively?

Certainly 84 per cent of the drupa panel reported use of FTP/upload portals, but only 55 per cent use automated pre-flight testing and 44 per cent use digital asset management. Surprisingly only 47 per cent claimed integrated estimating, order processing and job bag production and only 21 per cent reported a fully automated order processing system from enquiry to invoicing.

As for other online business services, 68 per cent used online purchasing and 54 per cent of those with an MIS had remote access but less than half used online training, recruitment, business intelligence and credit checking. It is puzzling to see the low take-up figures for all these online aids to greater competitiveness and efficiency.

The print industry is in a period of unprecedented change driven by digital media, the Internet and changing consumer demand. This report highlights the need for change and demonstrates that most printers are changing more slowly than the world around them.

The technology is available to facilitate this change and there are many new exciting applications and growth opportunities to exploit. Printers just need to believe in the reality of a multi-channel digital future, change their mind-set and invest accordingly. – TradeArabia News Service