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Commentary & Analysis

In the Market for a Makeover

By Carro Ford November 3,

By WhatTheyThink Staff
Published: November 3, 2003

By Carro Ford November 3, 2003 -- Things were looking pretty good for direct mail printing until the late 1990s. Up 'til then, direct mail had been increasing every year, but the decline started as sexy Internet-based media captured the eye of marketers looking for the "next new thing." In 2001, the disintegrating economy, 9/11 events and the anthrax scare triggered a complete collapse of direct mail. Orders and campaigns vanished. Things couldn't look much worse, but after touching bottom, there's nowhere to go but up. Now direct mail printing appears ready to enter a hopeful new era. Beneath the churn of the past several years, the printing market has been remaking itself. The result is an intriguing new face for the industry. It has emerged stronger than ever, but commercial printers can still expect some real challenges as they try to stay relevant with their customers' needs. Opportunity Is Calling Marketers have learned that direct mail and the Internet can co-exist. Today more campaigns are linking printed materials to the Internet, so instead of being displaced, commercial printers are part of the equation. Someone might order a catalogue from a web site, or a direct mail piece might push a prospect to the web. Whether the demand comes from or leads to a web site, brochures still need to be produced. Societal influences continue to affect the look of the commercial printing market in other ways. With the telemarketing "Do Not Call" list making friends on state and federal levels (over 50 million Americans registered), companies are coming back to direct mail as a marketing tool, but they do so armed with the power of personalization. Personalized messaging in mail gives a good return without being intrusive or obnoxious, the undesirable qualities that got telemarketing kicked out of the party. Pushing Personalization Power Smart companies are pushing for personalized messaging in their mailed communication. With response rates that soar above static generic mail pieces and form letters, what's not to like? It's no surprise that marketers and commercial printers are taking note and taking action. "Industries most likely to gravitate to personalization are those with big-ticket applications, like insurance, healthcare, financial services and automotive," says Bruce Otte, worldwide solutions offering manager for IBM Production Printing. "One reason these industries have been successful early adopters is they already have existing customer databases of information on which to draw for personalization. Now they can use this new market information for cross selling and leveraging partnerships." Are You Ready? Otte notes that several categories of printers are also already positioned to aggressively pursue new corporate personalization business: * Commercial printers doing corporate collateral * Service bureaus doing transaction applications * Commercial printers focused on direct mail All have the advantage of prior experience with their corporate accounts. Now it's a matter of anticipating the next step in their client's own marketing and selling processes and providing services to support them. It Won't Be Pretty The market makeover is moving printers into a whole new direction, and some of the change won't be pretty. Success in the new order will require printers to break out of their traditional comfort zone. "Commercial printers will need to re-engineer their businesses to survive in this market," Otte says. "They must be ready to offer personalization services such as database management, campaign integration from an applications standpoint, and tracking and monitoring. Companies having success have already migrated in this way. For example, Vertis, a business unit of which used to be Webcraft, now has one-to-one campaign management as one of their strengths, although interestingly, they still have a lot of traditional offset business." Focus on the Data Headaches are likely as printers attempt the transition. "The physical printing and hardware will be responsible for just 10-15 percent of the headaches transforming printers will encounter," declares Otte. "85 percent of the difficulties will be pre- and post- management. To succeed, commercial printers will have to focus on the data." If done right, personalization can offer corporations a stronger return and more interactive relationships with customers. It's up to commercial printers to convince their customers that a) they should do it and b) the printer can handle it. Many commercial printers are turning to IT partners like IBM to help build and manage these new structures to support personalization opportunities. "It's no small undertaking. Organizations need to architect to where they want to be five years from now and consider how they will fund each stage. Each stage must produce a return on investment," says Otte. "Commercial printers who re-engineer their business to this model will have the best chance of surviving and thriving long-term."



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