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Special Report

Faith in Numbers - The Changing Demographics of the Printing Industry Reflect its Many Challenges and Opportunities

by Richard Romano

November-December, 2005
For the past few years, the steady and at times dramatic decline in the number of printing establishments has caused a considerable amount of anguish among the industry’s galaxy of manufacturers, suppliers, vendors, and researchers. However, understanding not only why the industry is contracting but also why it expanded in the first place can help give the industry and its support network some ideas for coping with these demographic changes.

Two TrendWatch Graphic Arts Special Reports—the 2005 Printing Industry Forecast (November 2004) and the 2005 Graphic Arts Market Demographic Profiles (February 2005)—identify the forces driving the industry (for good or ill) and spell out the challenges the industry and the firms that serve it have to face and point out the opportunities that could potentially await those firms willing to pursue them.

Don’t Know Much About History?
Concern over declining industry demographics only date from the 2001 recession, but the decline itself is the continuation of a trend that began over a decade ago. Historically, the number of printing establishments reached its peak in 1990. According to A.F. Lewis Information Services’ GraphSTATS, from 1983 to 1990, the number of printing establishments grew by 41 percent. However, between 1990 and 2000, the number of establishments fell by 15 percent, as the industry shed more than 5,500 commercial and quick printing firms—and this was during the economic boom. From 2000 to 2004, the number of establishments fell by more than 3,400, a decline of 11 percent.

Why the decline? The laws of supply and demand. The number of establishments in any industry is a function of the level of demand for what that industry produces. When demand is high, the number of establishments rises to meet that demand and when demand is low, the number of establishments shrinks, as the industry cannot support as many establishments. The printing industry is no different; the number of printing firms is driven by the level of demand for printed materials.

It’s no secret that what has been impeding demand for print since the 1990s is electronic media—the Internet, PDFs, and other fast, cheap, and effective (read: non-print) means of document distribution are increasingly favored over print.

Drivers of Demand
However, the question to ask isn’t “why the lack of demand for print now?” but rather, “what drove the expansion of the industry in the late 1980s?”

In 1984–85, publishing came to the desktop, making print-ready documents relatively easy and inexpensive to create. At the same time, advances in offset press technology made it economical to print full-color documents. When the desktop publishing revolution met the color printing revolution, the demand for print skyrocketed—until shot down by the emergence of the Internet. Even though there was no shortage of advertising and marketing work to hype all those dot-coms in the 90s, what were being hyped were electronic alternatives to print. This led to the ebbing of the demand for print.

Today, we are in need of a revolution that will make people really want to print things again. What are the odds of that happening? Killer Apps…Or Killer Naps?
TrendWatch Graphic Arts reports identify niches within the industry that could potentially be the “killer apps” the industry needs to spur demand for print.

Digital printing emerged in the mid-90s to slake the “huge untapped demand” for short-run color printing. Was there any? At the time, no. However, things change, and by fall 2004 (according to TWGA survey data), four out of ten print and prepress firms offered digital printing services in-house. (A further 22 percent offered digital printing services, but outsourced it.) Short-run printing is becoming desirable for print clients, not only because it’s inexpensive, but also because the “media mix” (the swirl of print, Internet, television, cable, PDAs, signage, mobile telephones, etc.) has created a marketing environment in which every print has to count. Thus, a carefully targeted approach to mailings is preferable to the “saturation bombing” common in the days of yore.

This leads us to “personalized, customized, variable-data, or other types of targeted printing.” Variable-data printing has received a lot of play in the trade press. Not that it’s overwhelmingly popular, but the best examples of the technology make great stories, especially when they’ve yielded response rates in excess of conventional print mailings.

Elsewhere, we can’t discount packaging as one of the bright spots of the industry—after all, it’s one of the few printing applications that are in no danger of being replaced by electronic alternatives. One-fifth of TWGA’s fall 2004 Printing survey respondents said they offer packaging printing as part of their service mix, the vast majority of it offset-printed. While packaging is a hard business to get into (harder to get into than some packages…), niches abound, and we see more and more commercial printers looking for opportunities there.

Start the Revolution With Me
What will be the next revolution to spur demand for print? Digital printing? Targeted printing? Packaging printing? Probably all of the above—and more. Just as communication is now a swirl of many media serving fragmented niche audiences, so, too, will the printing industry comprise a mélange of small niche applications. The key will be to develop a strategy that focuses on what print—or, rather, media—customers truly need. Those needs may even involve non-print media services. Can the savvy printer get a piece of this action? And how can industry suppliers help printers with the challenges of exploiting these niches?

These are the questions we need to be asking, not “How many shops did we lose this year?”

Richard Romano is a writer/analyst for TrendWatch Graphic Arts www.trendwatchgraphicarts.com. TrendWatch Graphic Arts provides the only ongoing, regular market and industry trends based on original research with business owners and executives. TrendWatch Graphic Arts is a unit of Reed Business Information, a division with Reed Elsevier Inc.