It’s a challenging environment out there for printing companies, which long have been—but may no longer be—the magazine publishing company’s most-important class of supplier.
Folios are declining, trim sizes are being reduced, frequencies are being cut and e-media for some publishers is emerging as the strategic core of their businesses. Pressure on print pricing is enormous. To avoid being viewed as a commodity, as a purely cost-based decision, printers have for years relied on customer service and perception of print quality.
That may no longer be enough. Given the climate, FOLIO: recently surveyed the industry’s suppliers for their perspective on whether and which new types of services were necessary. Consider this remarkable quote from one of the industry’s best-known printing companies:
“Many ancillary areas are necessary to offer our print customers, even if they are not money makers initially or ever,” says Dan Weber, vice president of sales for Publishers Press. “It has become extremely tough for printers to hang on to the customers they have, because of price-conscious buying, aggressive printers, and tough times. Great customer service and quality don’t cut it anymore, so we need more hooks and substance to try to be a one-stop business provider—a partner that is attempting to squeeze out costs in the process of print and everything that comes with it. We did not get into digital magazines and co-mail to make a profit, but would be nice to get to a break-even, and that looks to be achievable.”
Weber was addressing his own company’s perspective, but without question was also reflecting an industry point of view. At a recent off-the-record lunch, a president of another printing company said pretty much the same thing—that printers must expand their relevance to publishers beyond merely printing their magazines, but that making money on a new array of services was a big challenge.
Polling the Printers
FOLIO: developed a survey to ask printers what services they offer, how long they’ve offered them, and whether they make money from them.
We asked about old favorites like digital asset management, which have been discussed for years but which also have never found widespread adoption. We asked about digital magazines, which have gained enormous traction despite predictions four or five years ago that they were a transitional technology. We asked about co-mail, which is a service most printers know they need to provide (even though only a few did prior to 2007). And we asked about far-afield services such as layout and Web development.
What we found was striking. We sent surveys to 20 printers, and eight responded by presstime. Of the eight, all but one offers digital asset management. All but one offers digital magazines. Six of the eight offer page-layout services. Four of the eight offer Web development services. All of them offer co-mail. Four offer content development services. And seven offer page-production services.
What’s more, most have offered most of these services for years, in some cases, decades. “In the mid-1990s, we had a marketing campaign with the tagline, “Oh, and we print, too,” writes Claire Ho, marketing communications manager at Quad Graphics. “That remains true today.”
Who’s Making Money?
In a comparison of all of the respondents, the most telling juxtaposition is profitability, which slips even among the services that are most commonly offered. While seven companies offer asset management, only three are profitable. “Digital asset management has not been, to my knowledge, viable in our part of the market, which is serving the small-to-mid-size publisher producing one or two medium-to-long run magazines,” says Barry Long, digital services coordinator at American Press. “Asset management seems to make sense for larger organizations, and only when they maintain the process internally, not outsourcing.”
Quad Graphics’ Ho has a different perspective. “As far as demand, we see more and more customers extend the value of their assets through repurposing and automated page flows,” she says. “Asset management systems are the enabler to make this happen.”
While seven of the responding printers offer digital magazines, only four are profitable. Still, printer-respondents report that digital magazine demand is increasing.
All eight of the respondents offer co-mail services, but only four actually make money. Printers typically take one of two approaches: Offer co-mail capabilities in-house or contract with third parties. American Press takes the mixed approach. “We have successfully co-mailed off-line with industry provider ALG, which serves printers and mailers whose businesses does not justify the expense of installing lines within their own shops,” says Paul Grieco, vice president of sales. “We have been successful co-mailing in-line, too, when the product mix justifies merging lists and binding and mailing two or more products.”
Quad is one of the printers that reports making money. “In 1986, we introduced the industry’s first co-mailing machine,” Ho says. “Demand for co-mailing is skyrocketing.”
Demand By Market
Both the data and the accompanying comments suggest that brand extensions for printers are highly dependent on the sector of the industry served. Large, long-run titles may have little need for co-mailing services, but significant need for sophisticated imaging and prepress services. High-frequency magazines may need high-end production-management solutions. Smaller publishers may need ad-creative services.
Beyond digital magazines, some growth areas are emerging. One is page-production services, which are common in the scientific and medical journal market. And another would appear to be Web development, on the logic that if the printer is handling a publisher’s content for a print magazine, then it might also provide content-management service for the Web. But so far, that has not gained much traction. Only half of the respondents offer Web development services and only two make money from it. Notes Publishers Press’ Weber, whose company offers neither page-layout services or Web development: “Making up pages and Web sites gets too much into design.”
Content-development also falls into this peripheral area. “It’s not usually popular in the magazine market, but very well utilized by our Marketing Solutions Group customers,” says Quebecor World’s vice president of marketing Marilynn Jacobs.
In the end, though, the pressure for printers to diversify in ways that have a significant impact on revenue will continue to build. And printers that don’t risk being commoditized in the near future.
As Fry’s sales and operations manager Elizabeth Bellis puts it, “These services are a logical extension. All have been developed based on customer interest. We encounter many publishers who haven’t considered using these services. As we interact, they realize the advantages.”
A Look at Printers’ Ancillary Services
Many printers offer a variety of related services. Publishers may not know of many of them. And printers have not cracked the code yet for monetizing these business extensions.