Commentary & Analysis
Where Is The Profit In Variable Data Digital Printing? Part 2
by George J.
By WhatTheyThink Staff
Published: October 20, 2003
by George J. Whalen Last week George Whalen gave us something to think about in why variable data printing has not taken off and gained wide acceptance. This week he tells about companies that have found success with VDP and why you should be following their example. –Noel Ward October 20, 2003 -- According to the TWGA report, VDP should not be looked upon as a viable application for the commercial printing industry, as it is structured today. It's not for printers who want to dabble, or who think they will do “a little VDP on the side.” (An expensive education lies down that path.) On the other hand, the TWGA report says that commercial printers who want to make VDP a large part of their business can do so if they are prepared to make a substantial commitment and move into what amounts to a completely different industry . Stories of genuine success with VDP are to be found among printers who did that, and heavied-up in IT, design and marketing expertise, in order to nail-down ongoing VDP work for pharmaceutical, financial services, telecommunication and utility companies; or, among service bureaus who worked backward from their data handling and processing expertise, to become digital printers capable of VDP production. These are the nuclei of the “new companies” mentioned earlier. Truly phenomenal successes have been achieved by such companies using VDP. They have patiently figured-out how to successfully run substantial programs for their large, repeat-order clients. The long-term work has rolled-in, and so have the profits. These companies look upon their investment of time and money to make VDP work as proprietary know-how or “trade secrets” So, they've been delighted that stories of their successes have largely gone untold. That is why, through industry media, commercial printers have learned nothing about what such companies have achieved with VDP. Instead, the printers have merely gotten an occasional PR story about one or another small commercial printer's foray into doing an odd VDP job. Fed on that scant diet, readers easily dismiss such stories as “the norm” for VDP. Is it any wonder, then, that printers have not been motivated in great numbers to get into VDP technology? VDP, if thought of at all by printers, has been considered a mere footnote on the page of digital printing. But, how different has been the view of the early-adopter printers and service bureaus who were quick to see the advantages of VDP, made the commitment to change, and had the large customers to do jobs for. They continue to grow and expand today, as real (but still largely untold) success stories. Who are they? The TWGA report profiles Custom Data Imaging of Canada; Banta Integrated Media; and Applied Digital Technology's APT Digital . And, there are other “up-and-comers” in VDP. In each of these companies, consultative and client-support “added-value” services are prominent features. These are “solution provider” companies whose businesses are very different from commercial printers. Most of these companies specialize. For example, New England-based BFS Business Printers (fromerly known as Benjamin Franklin Smith Printers ) offers offset, on-demand and VDP printing and mailing solutions to help build and solidify relationships between businesses and their customers. The firm particularly targets financial services institutions. In a recently produced, highly variable 16-page mutal fund document, BFS maintained reader-friendly dynamic data personalization using VDP on an average of 60% of the report's pages. Content included colored graphs and charts as well as text, all of which were unique to the asset allocations of each individual client. An advanced technology lettershop that uses VDP for personalized message production is Contemporary Communications. It bills itself as a specialist in personalized direct mail marketing , custom database management and programming , advanced fulfillment operations and marketing strategies for successful mailings of any size. Then, there's Royal Impressions, which positions itself as a one-to-one marketing communications specialist, offering customized marcom solutions across the web, e-mail, print, and call centers. The firm not only offers digital printing and VDP, but full offset print production as well as large format, bindery, mailing and fulfillment services. On the other hand, Printing Plus concentrates on providing the support services its clients need, including design, prepress, VDP, print-on-demand with online ordering, printed goods warehousing, fulfillment and mailing. The e-online order entry catalog interface is one of the slickest ways we've seen for customers to re-order jobs via the web, conveniently from their computers. In the United Kingdom, Print for Business,Ltd. (dba: print.uk.com) offers hard-to-find specialty services (how about cinema ticket advertising and credit card printing, for example?), as well as direct-mail and many other design, production and mailing services – as well as digital printing and VDP. The company also personalizes and packages web and sheetfed color work. Where The Profits Are The common ingredient in the success stories of the solution-provider firms doing VDP seems to be that they are risk-accepting and welcome “change,” seeing it as an opportunity. By embracing and adding digital printing to their portfolio of services, then making the effort to study VDP and discover every possible way that this new capability could help its clients, the winning firms found ways to add new value to key client relationships with their customers. This involves being willing to serve as a “consultant” to the client. To do that, these firms have gone the distance to gain the know-how and expertise needed. They have added IT staffs and systems, data handling and data security functions, as well as design and marketing faculties. Their willingness to take risks and change their organizations to be able to successfully engage in the new business opportunities has brought them rewards and success. This is really quite extraordinary behavior. Most businesses, whether printers or service bureaus, tend to be risk-averse, prefer to “stick to their knitting,” shun change and do only “what they know,” when the customer orders it. In contrast, as said earlier, the businesses that “make it” in VDP tend to be risk-embracing and ready to do whatever it takes to serve their clients. They see themselves as “partners” in serving the ultimate customer and helping their clients to succeed. This is a much different business picture from the one painted by the digital press marketers when VDP was young. Then, too much focus on the “gee-whiz” technological capabilities of VDP implied that all a printer had to do was buy a digital press, install the VDP software and hang up a sign offering this wondrous new form of printing. That has proven to be the wrong business model. The New Business Model Clearly, it has taken time to evolve the new business model that really works. VDP's success has come slowly and with little publicity. It has required considerable thought and effort on the part of gifted practicioners, who have had to look beyond the digital printing technology to see the real opportunity. Companies that offer VDP printing are problem-solvers. They do not merely provide “printing,” but custom solutions to their client's marketing or business challenge. So, the value they bring to their relationship with a client lies in the new action options the client gains by having access to their counsel, technology and service. One additional point is that VDP works best when it is part of a total program of integrated marketing communications. So, those companies that have successfully created their place in VDP and established consultant-based relationships with clients now find that they increasingly have the additional opportunity to develop Internet-based, e-mail-based, call center-based and, possibly, other print-based marketing elements of the client's customer relationship management and marketing communications programs. While this affords a prime opportunity for future growth, it also places these companies squarely on a collision course with traditional advertisingagencies, which have long jealously guarded their consulting relationships with clients. One may ask, why haven't the agencies foreseen this convergence of functions with the new-breed companies? And, why haven't the agencies extended themselves to become the foremost expert consultants in VDP and Internet-based marketing? The answer may well be “Marketing Myopia.” In the annals of marketing, a special place of honor goes to Theodore (Ted) Levitt, who wrote a keenly insightful article entitled “Marketing Myopia,” published in 1960 by the prestigious Harvard Business Review . In it, Levitt analyzed reasons for American railroad bankruptcies in the early 20 th century. He declared that the prime reason that the railroads had failed was that they shortsightedly believed they were in the “railroad business,” and so, only regarded other railroads as competitors. In much the same way, advertising agencies think of themselves as being in the “advertising agency business,” and so, only regard other agencies as competitors. Actually, the railroads were in the transportation business. Thus, they were blind-sided as cars, trucks, buses and airlines sprang-up to become competing forms of transportation that drained-away the railroads' passengers and cargo revenue base. The railroads never saw it coming. They looked, but couldn't see. In like manner, agencies need to have their foresight checked, else they too will suffer the ill-fate that wrecked the railroads. And, there's a message here for digital printers, too. The companies that have succeeded in VDP are those which defined their businesses with their key clients at its very center. They made meeting that client's needs and providing solutions to the client's problems their first, passionate priorities. So, they were willing to change and do whatever it took, to be the client's first choice of solution-providers. These companies do not think of themselves as “being in the printing business,” since this would limit them to being manufacturers of printed goods. Rather, they believe they are in the business of providing solutions that their client needs, in order to satisfy its customers. This broader definition means that they can engage in developing integrated marketing solutions of every sort – a much wider and potentially more profitable business. So, the companies making profits in VDP today define themselves with the client at the center and exist to provide marketing communications support and customer relationship marketing services to the client. This insight is offered to inspire reappraisal of the way VDP has been promoted by press marketers, and how it has been thought of by digital printers. It explains why such an intuitively useful tool as VDP seems to have languished in the commercial printing market, while it is silently succeeding in the new forms of solution-provider businesses that provide marcom and CRM support to clients. 1 The TWGA report cited herein may be purchased from Trendwatch Graphic Arts, a unit of Reed Business Information, through its web site: www.trendwatchgraphicarts.com.