Commentary & Analysis
Is There Consolidation in your Future?
By Carole Alexander September 6,
By WhatTheyThink Staff
Published: October 6, 2003
By Carole Alexander September 6, 2003 -- “Printers won't go out of business, but will consolidate.” This was Frank Romano's prediction at the end of a luncheon talk he gave at Graph Expo. Consolidation was possibly worth thinking about admitted one printer at my table who described himself as, “too set in my ways to get into all the new stuff, but too young to retire.” And for another who expressed concern about the high cost of ‘keeping up.' “As the rate of growth slows for print,” said Romano, “there will not be enough for all. But printers will not go out of business. They will merge and consolidate. Small printers, those under $3 million, he noted, will then have the financial strength necessary to invest in “all the stuff necessary to compete.” Romano, Professor at RIT School of Print Media, paved the way to his conclusion by discussing the Ten Critical Trends he thinks are determining how the printing industry will operate in the years ahead. Citing “fundamental changes in the way people are dealing with information,” he pointed to the Digital Generation of kids who learn mostly by watching and listening instead of reading. Were it not for viewing on computer screens instead of printed pages, Romano estimated that 1.5-2 trillion Internet pages per year would have previously been printed. But it's not just the kids—it's all of us. To show how “ubiquitous” computing has become, the majority in the room owned up to having a combination of cell phones, PDAs, digital cameras, cell phones with Internet access, laptops, desktop computers, etc., and a fondness for memory chips in new products--as well as in their pets. It is not difficult for any of us to see the popularity of electronic usage continue to grow 10 years out. Further, we live in a wireless world , says Romano. “Preferring not to be tethered to cables,” his students sit in class and send email to each other on their laptops (the up-to-date version of pass-the-note.) The number of cell phones has already exceeded land lines and, Romano suggests, with devices are being combined—cell, digital camera, Internet—the cost of ownership will become reasonable for almost everyone. One Internet site alone, eBay, which Romano calls “a giant flea market” has taken away dramatically from classified advertising. While the State of Wisconsin declared they are not printing anymore, but putting material on the Web, saving $23 million. With his usual understated exaggeration, Romano predicts we will some day be “giving out computers like we give out food stamps today” so everyone can keep up. Print areas that are declining, such as journals and magazines, reflect our lessened time to read. And for most of us, the Internet and emails are taking part of that leisure time. Romano said an important implication of this Digital Age for printers is that marketing by their customers will require multiple media, not just print. Some 70% of print applications have been for some type of marketing. These applications will now will be competing with the Internet and new types of electronic advertising, The 51 million people who don't want to be called by telemarketer are supporting print and other media, but the type of marketing that will be effective is also changing. Mass media marketing is out, and a profiled, targeted approach is in (13 times more effective.) The key will be “aiming well,” which Romano calls “stochastic selling,” so the areas of growth for printers will be direct mail, variable data and databases. One obstacle to direct marketing, however, is what Romano calls “the mail conundrum.” As printers have decreased the cost of printing pages, and passed on those savings to customers, postage costs have been steadily rising. Marketers look at both the cost of printing AND postage. As a further impediment, the PO will continue raising prices since their revenues are decreasing due to electronic transmission. (Editor's Note: The U.S. Post Office has said they do not anticipate raising postage rates until 2006. We'll see!) This luncheon group had to admit we were all playing a role in decreasing print by preferring online investing, online banking, online shopping etc. “Because marketing will have to use all channels,” says Romano,” print will help in certain ways with certain products in certain markets.” Simply put, the electronic train has left the station. We're all on it. But to be part of it in the best possible way, printers should be looking at all their options.