Commentary & Analysis
Variable Data Printing Gains New Footholds, Part 1
by George J.
By WhatTheyThink Staff
Published: July 19, 2004
by George J. Whalen Why would anyone expect "printers" -- who are skilled in a totally different, form of printing mission -- to rush headlong into the unfamiliar territory of VDP? July 19, 2004 -- For years, variable data printing (VDP) has been the topic of a great many articles, presentations, exhortations, discussions, analyses and prognostications. The oft-repeated message has been: "One day, printers will truly understand the huge marketing potential inherent in VDP. They will adopt it and be able to interest their customers in it." Despite the ocean of commentary poured-out in pursuit of this goal, VDP has been slow to make its way into the graphic arts market. The key to "why?" may be that the VDP message originally sent to the perceived market had almost nothing to do with the VDP medium! Despite its name, variable data printing really ought to be thought of as an information technology that uses a digital press --which can change what it prints from one sheet to next -- for output. It's primarily a unique way of using the digital press to create sequential print runs of one, in which the content of each printed output item varies in step with a data stream from a digital database. When you think about it that way, VDP is about as different from reproduction printing (a mass-manufacturing process, even if done with digital presses) as it's possible to be. So, one may ask, why would anyone expect "printers" -- who are skilled and experienced in a totally different, more-traditional form of printing mission -- to rush headlong into the technically unfamiliar territory of VDP? The short answer is that a majority haven't, and with good reason. Few printers have been able to make the enormous leap from "running a digital press" to "selecting lists and databases and programming a VDP job" to "marketing VDP as a solution that clients understand and really know they want." Phew! What a bunch of awesomely challenging tasks! It is little wonder that VDP has been so slow to take hold at the grassroots level, considering the know-how, programming and marketing skills needed. Yet, VDP is now slowly gaining a foothold. An increasing number of shops are using the world wide web for customers to order short-run digital printing, because of the substantial reduction in transaction cost. Even the simplest world wide web based system involves customer data entry. Hence, there must be a database at the printer. With the passage of time, the rise of more sophisticated competition, and the increasing database technology savvy of printers, more and more of them may find their way into doing VDP. So, even if it has not yet fully realized the nirvana so breathlessly predicted for it by digital press marketers, there can be no doubt that VDP is catching-on. The thanks go to the printers, entrepreneurs and their collaborators who have hung-in there and said: "I'm gonna make this thing work!" VDP growth is also being driven by a special group of multi-discipline consultants we call "the enablers," which we will discuss shortly. "Research indicates that the success of VDP is directly related to proper technology, a honed business model, vision and creativity." Within Graphic Arts Industry segments, a new Trendwatch Graphic Arts (TWGA) study, entitled: Variable Data Printing: Maturing In All The Right Places records the progress-to-date made by this technology in four segments: commercial printing; the creative segment; publishing; and packaging. Vince Naselli, former TWGA Director notes, "Research indicates that the success of VDP is directly related to proper technology, a honed business model, vision and creativity." So, VDP in the industry appears to still be the province of those who have the savvy to envision novel uses for printing driven by data, and to build and refine salable business applications around its unique capabilities. It's nothing at all like the business of "reproduction digital printing." TWGA says that 13% of all graphic arts firms now rank VDP as a key sales opportunity for their businesses. Among current digital printers, VDP ranks high in rainmaking potential, with 27% scoring it a key business opportunity. Of significance, the findings in the TWGA study are that the size of a printing business has a bearing on the prospects for its adopting and succeeding with VDP. Looking at respondents' interest in variable data technology by shop size, TWGA notes: Both very small and very large shops feel VDP is less an opportunity for them. Very small shops do not have the skills, capital, and other resources needed to acquire and establish VDP solutions and to market variable data workflow. Very large shops do have these capabilities, but they are dedicated to a much greater extent to traditional print manufacturing. So, among larger printers, whose revenue comes mostly from volume offset workflows, VDP would seem to be more a distraction than an opportunity. This leaves mid-sized shops, which appear to represent a just-right "Goldilocks" scenario for growth in VDP. These shops have sufficient resources and staffing to afford and implement VDP operations, as well as the focus and flexibility to design, market and sell VDP applications. VDP In Commercial Digital Printing. The TWGA study suggests that the majority of 'have not' digital printers remain mired in a "manufacturing mind-set" and really don't seem to know how to market or sell the VDP capabilities of their digital presses. The minimum ticket-of-admission to VDP is a digital color press. Focusing-in on its survey data, TWGA notes the evolution of two groups of digital printers: the 'haves' and the 'have nots.' The 'have nots' are the digital printers who have stuck to traditional, reproduction printing with their digital presses and have either not embraced VDP, or not yet figured-out how to integrate it into their businesses. The TWGA study suggests that the majority of 'have not' digital printers remain mired in a "manufacturing mind-set" and really don't seem to know how to market or sell the VDP capabilities of their digital presses. The 'have nots' were more likely to have experienced a revenue decline in the economic downturn. The 'haves' using VDP are now way-ahead of the pack of 'have not' digital printers. The 'haves,' on the other hand, are digital printers who have layered a new sophistication in information technology onto their print capabilities, as well as investing in what it takes to support and market VDP. Through doing so, some 'haves' managed to maintained revenue stability, or actually generated increasing revenue during the recent weak economic times -- because they (including creatives who work as their partners) have been able to secure customers actively wanting to do "return-on-investment (ROI)-based marketing." As their marketing budgets shrank during the downturn, these customers found that targeted VDP enabled them to predict the ROI of a promotion with far higher confidence than could traditional direct-marketing methods. More sales could be made at lower cost. Because of this, the 'haves' using VDP are now way-ahead of the pack of 'have not' digital printers. The more-complex applications and decision-support capabilities of VDP have simply made it possible for the 'haves' to serve a wider customer base than traditional 'have not' digital printers. Also, the wide choice of VDP applications provided by the 'have' printers are now causing them to be the ones pushing suppliers for upgrades in software and data-handling solutions, as well as for more flexible and capable bindery options, faster digital presses and other improvements. This means that the VDP 'haves' are increasingly driving development by suppliers to the entire digital printing segment. VDP is printing driven by information and intelligence. It has moved out of the print shop and into the marketing department. Let's take a look at how some commercial print operations are implementing VDP solutions. The importance of these cases is how they demonstrate that VDP is taking on a life of its own as a "system level" application. So, driven by the "mass customization" concept, it is blossoming as a form of printing totally separate and distinct from traditional "reproduction printing." VDP is printing driven by information and intelligence. It has moved out of the print shop and into the marketing department. PIP Printing, a privately owned nationwide U.S. printing franchise business headquartered in Mission Viejo, CA now covers virtually all states, boasting over 400 locations. PIP has embraced VDP as one of its leading sales opportunities. Founded in 1965 as a quick printer, the company began franchising in 1968. PIP began pushing VDP as the century turned, looking for a differentiating business that would also be a new high-growth market for its franchisees to serve. GAMIS was then predicting that VDP sales would be about $2.6 billion in 2001, growing to around $6.3 billion by 2004. The individual PIP franchise shops where the ink meets the paper, fit the "just-right" mid-size shop model suggested by TWGA. A PIP spokesman says, "We are good at applications like mail-merge; color, one-to-one variable data printing is the next level. There is no lack of technology. It's there. The issue is raising business awareness of what VDP can do for them." PIP's corporate team has focused on training franchisees throughout the U.S. to develop new strategies to sell VDP and other new services to the small and medium-size businesses that are the core of PIP's customer base. K/P Corporation, a privately owned U.S. printing business founded in 1929 boasts revenues in excess of $100 million and has 12 facilities employing 570 people. K/P Corporation provides a wide range of fulfillment, mailing, VDP and printing services that it says help customers to implement complex marketing and communication programs. K/P leverages VDP technology to enhance its services and streamline digital transactions. It has grown to become one of the leading consulting fulfillment program management companies of its kind in the U.S. To overcome the problem of higher costs of one-to-one variable data printing compared to traditional offset (typically, 24 cents a piece for VDP, versus a few cents for offset), K/P uses a hybrid system. To help customers reach their goals, K/P helps customers select lists and tailor a message to target a narrow audience, rather than a specific individual, as in one-to-one VDP. K/P then produces and fulfills information to the target audience, measures the response rate, and analyzes the ROI of the project. The approach works particularly well in Customer Relationship Management (CRM) and enables K/P to tailor subsequent messages for the client for better and better impact in the target audience. Choice Communications, a VDP supplier based in Richmond, VA has been selling variable data printing for more than 10 years, making it one of the most experienced shops in the business. The company's approach is consultative and its sales staff has the know-how to work with customers to refine their programs, comb-out the real prospective customers, evolve a narrow database of prospects with the highest likelihood of success, and to structure the graphics and offers to appeal to those prospects. Shutterfly Inc., Redwood City, CA, USA, is an online digital printing company, with the end user providing text and digital images to customize the products. Shutterfly offers three different VDP products using HP Indigo's line of digital offset presses: greeting cards, calendars and note cards. Each of these products have their own unique ordering patterns and variable data content. The presses are calibrated to be colorimetric devices and are part of a fully automated printing workflow. Image processing is broken down into non-real-time and real-time processing, which are both performed on a bank of low-cost image rendering servers functioning in parallel. Image data is written in the native image format of the presses. The company's proprietary color management workflow, called ColorSure, is a combination of both proprietary algorithms and production processes, designed to keep the presses running continuously by constantly adapting to the changing color reproduction behavior of the press. Color monitoring patches are automatically scheduled at fixed time intervals and scanned. Special color calibration targets are also scheduled at fixed intervals and continuously scanned. Over the next couple of weeks, we'll look at the database conversion technology behind VDP and how companies in the creative, publishing and packaging markets are successfully implementing VDP applications. 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