The Printing Industry’s Digital Transformation

Digital Printing

Transformation and Print Service Providers (PSP’s) are no stranger to each other.

Reinvention and adversity go hand-in-hand with them and their long histories, and currently they are in the midst of one of the most challenging adaptations in the memory of the industry to a new digital reality.

Of the companies that have not only managed to stay alive but are in the form of growth are attributing this to a few varying factors, either the securing of further clients, additional work from current clients or the ability to increase retention of existing business. In simple terms, they have pursued results over just favourable business conditions. With this has come many pressures and adversity as conditions have been more than difficult for commercial printers of late.

Industry Consolidation

Industry consolidation leaves us with a smaller pool of companies but with a higher degree of competition. The global recession of 2008 was the final nail in the coffin for many, and the ripple effects can still be felt a decade on.

Of the surviving entities, they took a significant dent in sales revenue within the first two years following 2008. What the crisis highlighted and amplified was nothing more than what was waiting in the wings, of a large and looming dark cloud on the horizon – The rise and impact of digital media.

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Recent stabilisation and, in some cases some growth, although mainly from the emerging market sectors, it cannot be ignored that the long-term outlook for print on paper demand is further decline, as backed by Smithers Pira with their outlook up to 2020. Over the past few years, this has helped to fuel mass consolidation in the market.

As I touched on before, fewer companies in the marketplace do not mean less competition, on the contrary, with a pie that’s getting smaller the competition for a piece of it becomes magnified.

The battle to stay ahead in a saturated marketplace on wafer-thin margins is far from easy and purely competing on price can be a risky strategy indeed. Moreover, with new entrepreneurs and more flexible new-comers from similar industries gathering are posing a threat that must be recognised if for no other reason that they will approach it without any baggage. Adopting new, different angles and techniques, not in the traditional manner that the industry is accustomed to. They are more open to innovation as they don’t carry a burden of legacy and expectation.

PSPs and Winning Strategies

So what strategy should a PSP take to become profitable again?

The formula is becoming valuable to your customer base. By diversifying to subsidiary services to consolidate and push on to higher profits.

However, this kind of transition requires deft strategic planning and superior execution to be able to realise digital’s opportunities and benefits rather than its threat.

There is a paradigm shift occurring in the mindset of communication service providers, printers and marketers. Where print was the ABSOLUTE means of communication, the industry is evolving to understand that print is merely a way of communication, however, neither better nor worse than the other methods.

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The ones that have prospered have done so from capitalising of servicing a broader range of their customer’s communications, print being part but not all of the equation.

The shift is highlighted by Idealliance stating that on average commercial printers total revenue will consist of just 32 per cent in 2018 with 68 per cent coming from other mediums such as database management, marketing services, mailing, web services and so on.

Idealliance 2017 State of Survey Report - Image Credit: Idealliance.
Idealliance 2017 State of Survey Report – Image Credit: Idealliance.

This has over doubled in six years meaning the companies are involved at a much earlier stage with the customers work, literally at conception stage through to application solutions.

Opportunities are apparent for companies who take the initiative to look outside the traditional perceived boundaries and look to new places.

The addition of digital media marketing and services to include alternative revenue streams with direct mail, labels, packaging, signage, the point of purchase are all growth segments that require new technologies and new ways of conducting business.

Advice for companies struggling with the transition is about strategic planning – Commercial printing is a changing industry moving from manufacturing to services. The only way to prosper is to re-train and to fulfil a broader range of servicing placing PSPs in a strategic partner role for the first time to your clients.

By adding value, you separate yourself in profit terms from the PSP’s that are struggling and breaking even in mini-price wars with little or no diversification of services.

Investing in Technology for Growth

To support profitable growth the need to invest in technology is paramount. To do this effectively is moving your infrastructure all digital. Workflow software supporting industrial grade output digital presses, limiting working hours is a smart investment, catapulting your designs into higher-margin brackets.

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Conclusion

Trends are changing, and a focus on these opportunities is where you grow. Short, on-demand, personalised print-runs have replaced the bulk of yesteryear. Multi-communication channels through new applicable media are where the future lies.

Concentrate in the right Areas – analysts expect Industry growth to break with the norm and come from shorter, on-demand and personalised print runs. As a business always be re-training and constantly re-evaluating, this is the key to success in the printing revolution.

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