The digital transformation of the Printing Industry

The digital transformation of the Printing Industry Print Service Providers (PSPs) are no strangers to transformation. With a long history of reinvention and overcoming adversities, they are once again adapting to the new digital reality. Among companies that are growing, a clear majority attributes their growth to securing more clients, more work from current clients or increasing client retention. In other words, what moved them forward is their active pursuit of results, and not general favorable business conditions that otherwise would have helped everyone in theory. This change carries a certain weight since business conditions have been harsh for commercial printers. Industry consolidation leads to fewer companies, but more competition Many printers did not survive the 2008 recession, whose effects we still feel ten years on. The ones who did took a severe hit in sales, almost $300K the first two years of the 2008 crisis. The crisis also amplified something that was already in the making, the negative impact of the rise of digital media. Despite the recent stabilization and some growth, mainly from emerging markets, the long-term trend is further decline for print on paper demand, according to Smithers Pira. This has led to record industry consolidation in the past few years. But, fewer companies (23 percent fewer in the US) does not mean less competition. With the pie getting smaller competition has heightened. To stay relevant in a saturated market with extremely thin margins, many compete on price, which is a risky strategy. Furthermore, agile new-comers and players from adjacent industries can pose a serious threat, if only because they don’t do things how they were always done. They are flexible and willing to innovate because they are not weighed down by legacy systems and processes So, what can be a winning strategy for PSPs? The answer is to become more valuable to their customers. Diversification into various ancillary services usually correlates to higher profits. But, this will require strategic and operational excellence that will view digital as an opportunity and not a threat. From printers to marketing and communication service providers There is an important mind-shift taking place here. Where print used to be THE means of communication, the industry now comes to terms with the fact that print is A means of communication, not inherently worse or better than the rest. Capitalizing on this shift implies that PSPs need to be able to satisfy a broader range of their clients’ communication needs including, but not limited to, printing. According to Idealliance, commercial printers expect that, on average, 32 percent of their revenue in 2018 would come from something other than printing (mailing, fulfillment, database management, marketing services, Web service, etc.). This is twice more than in 2012. This means companies will be getting involved sooner in their clients’ work, from concept creation right up to cross-channel application solutions. There is a lot of opportunity to be found for the ones willing to look in places other than the familiar ones. Adding digital media and marketing services or expanding to growth segments (packaging, labels, signage, direct mail, point of purchase) or markets will require new skills, new technology and new ways of doing business. Three advices for the digital transformation of the printing industry

Think strategically about your business – Commercial printing is transitioning from a manufacturing to a service business. Fulfilling a broader range of services puts PSPs well on the way of becoming strategic partners to their clients. This is the result of focusing on adding value and it is what separates high-profit PSPs from the ones just breaking even.
Invest in technology to support profitable growth – Move to an all-digital printing Digital infrastructure, digital presses and workflow software form the top three of capital investments done the last three years. Expanding into higher-margin design and composition work will also require investment in digital technology.
Focus on the right opportunities – Growth in the industry is expected to come from short-run, on-demand, and personalized print runs. Personalized communication that makes use of all applicable media is the future, according to research from Idealliance.