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Commentary & Analysis

Picturing a Profitable Future

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By WhatTheyThink Staff
Published: March 19, 2007

--- Real World Print Picturing a Profitable Future Digital Photo Books Bring in New Customers and Revenue By Brian Segnit March 19, 2007 -- Many print providers have already made all the investments they need to enter one of the most lucrative segments of the digital printing market -- yet they remain unaware of the opportunity. That opportunity: printing specialty photo products, such as photo books, greeting cards, calendars, date books, posters and various other alternatives to 4-by-6-inch and letter-size prints. Print providers accustomed to earning pennies per page for traditional printing are pleasantly surprised to learn that they can charge as much as $2 to $3 per page for some high-value digitally printed photo products. Do the math: margins can range to 120 percent, enough to change the calculation for justifying a digital color press. Do the math: margins can range to 120 percent, enough to change the calculation for justifying a digital color press. Until fairly recently, digital printing image and color quality was not sufficient for photo-based applications. But advancements over the years--including improvements in digital printing engines, the development of smaller toner particles, higher print resolutions, and enhancements to image processing software--have resulted in photo-quality digital printing. Many high-end digital color presses can deliver the print quality required for this market. Furthermore, many print providers already possess the skills and much of the infrastructure required for entering the fast-growing, high-value specialty photo market. This infrastructure can include an efficient production workflow and the capability to produce book blocks for photo books, wire binding for calendars and oversize prints for posters and collages. Many print providers already possess the skills and much of the infrastructure required for entering the fast-growing, high-value specialty photo market. Business success can come simply by targeting current customers, many of whom are waking up to the power of digital photo books, calendars and other specialty products in business-to-business applications. With additional planning and targeting, the business can potentially generate significant profit and become a powerful growth engine. The Shift to Specialty Products The initial source of the demand for specialty products is the mass of photographers who have made the transition to digital. In 2005, the number of camera images shot digitally surpassed film for the first time, and by last year, more than twice as many images were shot digitally, 21.7 billion to 8.8 billion, according to estimates from the Photo Marketing Association. InfoTrends estimates that 70 percent of all professional photos now are taken with a digital camera. 70 percent of all professional photos now are taken with a digital camera. Photographers take advantage of the digital platform to do more with their photos than film photography permits. They crop and adjust images on their computers, share photo slide shows on the Web, and choose from myriad printing options. Prints are no longer limited to standard sizes, such as 4-by-6 inches, or silver halide paper stocks. In fact, a wide range of light, heavy, slick and textured stocks are available in digital printing, as well as more novel substrates, such as magnets, synthetics and a new generation of transfers that retain the textile’s softness and flexibility. Don't miss Pete Rivard's article on the growing need for Photoshop ninjas who can get the most out of digital images The step up to specialty photo products begins with this range of options for producing a single print. Today’s most popular specialty items are photo cards and specialty prints, such as enlargements, framed photos and collages. But it is photo books and calendars that InfoTrends sees as having the greatest growth potential. The firm projects that the North American market for specialty products will grown at an impressive compound annual growth rate of 24.5 percent through 2010, surpassing $800 million in revenue. Competitors for this business include online services like Snapfish and Kodak Gallery, that have their own production centers; local and regional labs that are pioneering these specialty products; and powerful national retail chains, such as Wal-Mart. They are formidable competitors, but the market is still in an early adopter stage and the projected growth is significant --and can be captured with the right planning. Profit from Business Applications The advice Xerox gives whenever a print provider establishes a new service is to try it first with existing customers. Specialty photo products are no different. Consider what you can offer with your current equipment, then consider ways your present customers might use the products. Put together a plan and execute. The market is still in an early adopter stage and the projected growth is significant --and can be captured with the right planning. For example, if you service real estate companies, they may be interested in a photo book directory of all their agents. Individual agents may want to market themselves with a book showing all of the houses they’ve sold. Agents who focus on high-end houses --those listed at more than $1 million-- could dedicate an entire book to the features of a property. Spending $30 for a book to help bring in a $30,000 commission is a sound investment. Similarly, digital photo books can have applications with travel and tourism groups, sports teams, local historical societies and individual consumers for projects in genealogy, family histories and commemorating special life events and milestones. Photo personalization brings new value to the calendars traditionally distributed by non-profits, insurance agents and a range of other businesses. Other prime targets can include key segments of the traditional photo industry. Any retail or commercial photo lab using traditional silver-halide production is a candidate for digital photo print services that will complement their current offerings. Photographers see value in delivering a professional looking, digitally-printed proof book, and in producing wedding albums with large sheets printed on both sides, finished as a bound book. A relatively easy way to offer these targets a more complete range of specialty photo products is to license a turnkey service from an ASP (Applications Services Provider). For example, The Netherlands-based MyPhotoFun provides on-line creation software that includes templates for a variety of photo specialty products. The system integrates easily with existing Web sites, allowing print providers to get started in the photo business and consumers to easily create and lay out their digital photo projects using templates. Capture the Opportunity To maximize this opportunity, print providers need to be mindful of the challenges. First, they need to pay closer attention to image and color quality than a standard print run might require. Basically, this means adhering to a consistent level of quality control and diligently performing scheduled maintenance to keep the digital press precisely up to specification. For $2 to $3 per page, customer expectations are justifiably image quality-sensitive. Success will require print providers to pay closer attention to image and color quality. Just as importantly, print providers need to enter this market now to capture market share and service existing customers. Savvy firms are already building strong specialty photo businesses, and the high, early-adopter margins won’t last forever. Many of your existing customers certainly want these photo applications, and if you don’t fulfill them, your competition surely will. Print providers have little to lose by entering the specialty photo market -- often with the production equipment they already own -- and they have much to gain. It offers a bright picture of potential profit and growth.

 

 

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