“Digital Printing: Transforming Business and Marketing Models,” an educational report offered by Digital Printing Reports, opens with the statement, “The importance of digital printing has nothing to do with the technology — its costs, its output capabilities, or the applications it can produce . . . It’s about transforming how you think about marketing.”
It’s a bit of an inflammatory statement. After all, for printers, technology has been how they’ve defined themselves for decades. In fact, one of the most active discussions recently on the LinkedIn discussion group called Digital Printing was titled, “What’s the difference between a printer and a copier?” In posing the question, the asker started an online fistfight drawing a volume of responses, the likes of which is rarely seen in such groups.
Participants in the discussion basically fell on one of two sides of the issue. There were those who defined press versus copier based on technology (speed, printing tolerances, colour consistency, imaging process, inks) and those who made the identification based on operation and use (application, operator skill, tolerance for downtime, service contract).
In the end, individual views appeared to be determined by which issues were the most pressing for each participant in their businesses at the time. What they need determined how they made the evaluation.
Changing Standards of Evaluation
What a change from the early years of digital printing. At that time, the difference between toner and ink was distinct and the discussion centered squarely on technology and cost per piece. Over the years, two things have changed. First, the speeds, quality and reliability of digital production have improved, making that technological dividing line far less important than it used to be. Second, we have an entirely new generation of creatives and marketers who have grown up in the age of the Internet, mobile marketing and social media for whom it’s less about how print is produced and more about where it fits as part of an increasingly complex media pie.
This takes us back to Digital Printing Reports’ statement that the importance of digital printing has nothing to do with the technology, but rather its place in marketing. “Although that [importance] starts with technology,” the report clarifies, “the important thing is not digital printing technology itself, but the way it can be combined with other technologies to create broader solutions that make a real difference in how you market your products, communicate with customers and present your brand.”
Does this mean that technology isn’t important?
Of course not. The key is to match the press and its technical specifications and cost structure to the type of applications you (or your client) intends to produce.
Especially for those in the market to purchase a press, however, the explosion of options in the marketplace drives home just how diverse and specialized this technology has become. There are myriad machines in each production class, and the numbers keep growing with dry toner, liquid toner, magnetography, xerography, MICR, low- and high-volume inkjet, low-volume presses, high-volume presses, single-colour presses, 10-colour presses, presses with inline coating and hi-fi colour, sheetfed machines, webfed machines, high-volume dual-engine sheetfed competing in the webfed space.
What Dividing Lines?
Not only are the options dizzying, but the advances in technology also make the dividing lines far less clear than they used to be.
For example, the decision between sheetfed versus web used to center around volume, but in the mid-range of the market, new dual-engine machines are blurring the line. For example, the Xerox’s iGen4 220 is rated for up to seven million impressions per month. That’s not so different from the webfed Xeikon 8000, which is rated for up to nine million impressions. In such cases, other factors completely unrelated to production speed, such as the frequency of stock changes, will play a deciding role.
Today’s machines offer resolutions ranging from 300 dpi to 2400 dpi. Even inkjet has reached into the high-resolution world with Fujifilm’s 1200-dpi Inkjet digital press. If you could gauge print quality by resolution alone, this would be great. But you can’t. Image quality can be affected by everything from the size, shape and consistency of the toner particles to the size and shape of the dots. For this reason, a 600-dpi press may not produce a less acceptable image quality than a 2400-dpi press. At 600 dpi, for example, Océ’s multi-level, variable dot resolution produces halftones specified at 141 lpi, but that appear to be closer to 1200 dpi.
Because of these advances in technology, you can now find a press that can do pretty much anything. This is why it’s not the technology itself that is now important, but the applications. Print shops that have been the most successful with their digital press purchases started with their applications and customer needs, and then worked backwards.
Even something like rated press speed can be application-dependent. Depending on your ink coverage, colour requirements, page size, substrate weight and other factors, rated press speed can vary dramatically from what’s on the spec sheet. A press that runs black-and-white and 4-colour at the same rated speed may work just fine for a shop serving the general commercial marketplace, but not one whose customer base has a high percentage of non-profits. For this shop, a press with greater productivity (and therefore cost efficiencies) with 1-, 2-or 3-colour may be a better choice, even if the rated speed for 4-colour is lower.
Other hidden application-dependent specs include substrate weight and paper handling which, again, can be application-specific. Although there are exceptions, heavier stocks (as well as specialty stocks, like linens and synthetics), for example, will require most presses to run more slowly. Likewise paper handling. Many presses handle the paper on the inside of the press differently. This determines what stocks the press can run and what finishing can run inline with the press. Some presses can print lightweight paper like 40 gsm, for example, but will not connect with an inline stacker. If you need both (lightweight stock and inline connectivity) and purchase the press based on stock weights alone, you’ll be out of luck.
Even more than offset technology, digital has become simply a means to an end. If you don’t have a solid understanding of your customer base and the applications you’ll be producing, the explosion of choices and the sophistication of “digital” production itself won’t do you any good. It’s like having a snow plow without snow tires or owning a Lamborghini in New York City. It looks great but, in terms of functionality, it could be all but useless.
Talking Technology With Marketers
Not that technology is irrelevant. After all, it’s the technology that drives the marketing applications. That’s why, although most marketers are not looking for a technological discussion, Digital Printing Reports identifies six areas where digital press technology is relevant to the average marketer. The challenge is to frame — not the technology itself — but the marketing implications of this technology in a way that is recognizable as immediately relevant from the marketer’s perspective.
In “Digital Printing: Transforming Marketing and Business Models,” the author calls out the following six characteristics and frames their marketing implications as follows:
- • Like colour copiers, the per-piece cost is constant, regardless of the length of the run.
- • Each page can vary 100 per cent in content.This means you can produce pieces unique to each recipient.
- • Digital presses are not limited to paper substrates only. Some of these machines are able to run film and foil, labels, magnetic substrates and even folding cartons.
- • Digital presses are not limited to short-run production. High-speed black-and-white laser printers and high-speed, 4-colour inkjet presses are capable of producing runs in the hundreds of thousands to the millions. Although inkjet used to be limited to 300 dpi, that is rapidly changing. Today, some machines reach 1200 dpi.
- • While most devices are CMYK, some presses are capable of producing 5-, 6- and even 7-colour. Presses optimized for film and foil generally offer white.
- • Coating options are exploding. Coating on digital press output is becoming more common. A limited number of presses, such as the NexPress, HP presses, and Canon C1 , offer toner-based coating (primarily for cosmetics) as an ink station on the press. Others offer more traditional options for spot and flood coat both inline and offline.
The focus is not on toner versus ink, dot patterns or gradients. It’s on how the basic characteristics of the press impact what the marketer can do. For printers used to listing speeds and resolutions, this is an entirely different way of framing their capabilities.
Positioning Digital Press Output
As a printer, if you aren’t discussing technology, how do you sell digital printing to your clients? By talking about how the capabilities of digital output can change the way they think about marketing. For this reason, we can look at digital printing as a series of individual application categories, focusing on the benefits and positioning of each.
Digital Printing Reports breaks down these categories as follows:
- • Short-run printing
- • Versioning
- • One-off, personalized follow-ups
- • Automated fulfillment
- • Personalized URLs
- • 1:1 print personalization
- • Transactional and transpromotional
- • Web-to-print
- • Publishing
Even these categories are overly broad, but the author suggests that if digital printing is going to be sold, it needs to be presented — at minimum — from one of these perspectives, if not broken down more finely. Printers (or their marketing and sales teams) need to understand the internal dynamics of these application categories and how specific vertical market issues impact them. Have case studies for the client or prospect’s vertical market at the ready so they can envision how these marketing strategies would directly impact them.
How Do You Measure Success?
Yet another of the lessons learned from the digital printing marketplace is that attendant with these applications, however, is the need to guide marketers into evaluating the success of these campaigns differently from how they have in the past. For years, printers have been advised to do this by educating their clients about improvements in response rates from segmentation, personalization and other digitally-driven marketing techniques. As these markets have matured, it is becoming clear that response rates aren’t enough.
For example, when Friendly Honda, a New York car dealership, wanted to boost traffic for its annual spring sale weekend, it turned to personalized URLs. In addition to strategies designed to attract the general public, it used a personalized postcard and an offer to win a free iPod as an incentive for existing customers to take an online survey about their interest in purchasing a new or used car. Once logged in, the customers were asked a variety of questions about their preferences in cars, and the information was forwarded to the sales team for follow-up. Although the response rate may appear to be low (1.68 per cent visiting their personalized URLs and 1.12 per cent completing the online survey), the dealership sold 84 cars that weekend. Total unit sales were nearly double the previous sales records for the prior weekend — 40 more cars. Suddenly, that “low” response rate of 1.12 per cent looks pretty good!
Likewise, a self-promotion campaign from Diji Integrated Press in Tampa, Florida, produced a 1:1 campaign that first surveyed prospects, then used the information gained from the surveys to help its salespeople craft a pitch that was extremely relevant and meaningful to them. Among top executives, the response rate to the initial campaign was “only” 1.49 per cent. But this was a 21 per cent lift over its direct marketing averages, and the conversion rate for the campaign was 73.9 per cent. The high conversion rates were attributed largely to the excellent information gathered from the surveys. The result? Low response rate, but fabulous ROI.
Moving Beyond Response Rates
Because so many highly-successful programs have “low” response rates, it’s becoming clear that response rates alone are not sufficient for determining the success of these campaigns. Other measures, such as conversion rate, dollars per sale, ROI and LCV — even other factors affecting the bottom line, such as ability to speed turnaround on the payment of invoices — are more relevant.
Response rate is an important first gauge of success since it reflects how favourably recipients view the initial marketing message by picking up the phone, redeeming a coupon or doing whatever else the marketer wants them to do. It is not an entirely sufficient measure, however, because not every lead will convert into a sale, but it is a good first leading indicator.
Is a three per cent response rate a good thing or a bad thing? It depends on a lot of factors, including what the marketer was receiving before. If the marketer was previously getting a 1 per cent response rate, 3 per cent is a 200 per cent improvement. Especially for businesses selling high-value goods, this 200 per cent can be incredibly lucrative. You see this in a lot of case studies from banks, where response rates are typically very low. While 1:1 response rates may still be in the single digits, the long-term value of obtaining new customers means that this campaign was tremendously profitable.
Cost per Lead
Marketers are used to thinking about print marketing in terms of cost per piece, but a more solid measure is cost per lead, or how much it costs to get each person to respond in some way. For example, if you print 100,000 mailers and get a one per cent response rate, at $0.36 per mailer, each lead costs you $36.00. If, on the other hand, you print 10,000 1:1 (personalized) mailers and get a 12 per cent response rate, at $1.26 per mailer, each lead costs you $10.50. Thus, if you are measuring by cost per piece, 1:1 costs more. If, you are measuring by cost per lead, it costs one-third less. Thus, whether or not this campaign is more expensive depends entirely on which method of evaluation you use.
This is the percentage of people who not only respond to the campaign, but who follow through and convert to sales. You can have a 38 per cent response rate, but if only 6 per cent of those convert to sales, that’s only 2.3 per cent of your original list. If, on the other hand, you get a 12 per cent response rate but a 60 per cent conversion rate, that’s 7.2 per cent of your original list — nearly four times higher.
Cost per sale
Not every lead converts to a sale, so if the relevance created by digital-printing-driven applications like 1:1 personalization creates better matches between recipients and the pitch, your conversion rate will often be higher. At a 30 per cent conversion, a 1 per cent response rate for static direct mail might end up being 0.3 per cent. At a 50 per cent conversion, a 12 per cent response rate for 1:1 printing might become 6.5 per cent. When you take into account not just the inquiries but the percentage of respondents who actually convert to sales, the numbers (and the cost equation) can change yet again.
Revenues per sale
Relevance plays a role here, as well. Better-matched products and services and more engaged respondents are more likely to generate higher revenues than traditional campaigns. If the average sale from a traditional campaign is $100.00, it would not be unusual for a 1:1 campaign to average $140.00 or more. In side-by-side tests, this is born out repeatedly.
Lifetime Customer Value
Marketers will often slice and dice databases by the value of the customer, or how much they contribute to the bottom line. This is a figure that can be calculated on a sale-by-sale basis, a monthly basis, a yearly basis or a lifetime basis. Loyal customers who purchase from a company over and over again have enormous lifetime value (LCV), so the loyalty of the customer gained through any marketing program plays heavily into the cost-benefit equation.
Return on Investment
Once you take into consideration all relevant costs and revenues, you can calculate the overall ROI. These numbers are more difficult to come by, since few marketers track their costs as well as they track response rates. When they do, however, the ROI for 1:1 printing is often found to be exponentially higher than the value from the lift in response rates alone. Why? When you take into consideration all of the other metrics — relevance increasing conversion rates, increasing sales per visit or purchase and lifetime customer value — even a small lift can translate into huge gains in ROI once everything is factored in.
Other bottom line savings. Increased revenues aren’t the only way to calculate your boost to the bottom line. The ability to get people to respond more quickly to offers, the increased clarity of invoices that speeds payment or reduces calls to call centres and the ability to design documents more quickly using the online tools of web-to-print are all real savings to the bottom line that must be included in any ROI calculation.
Doesn’t Matter Unless You Sell It
It’s a great irony that, in the printing world where technology has always been king, it’s not really about technology anymore. It has come so far as to make it almost a moot point. Technology is there regardless of what you are trying to do. Now, it’s a matter of matching the technology to the application. That starts with a detailed knowledge of the customer and the application. It’s a complete reversal of the way printers are used to doing things.
But it’s a necessity
Print is no longer print. It’s simply a tool in a large and expanding marketing toolset. Unless printers understand and embrace all that this means, the technology will almost be a moot point.