Dr. Joe Webb at Print 09, September 14, 2009

1©2009, WhatTheyThink


Entrepreneurs Welcome: Opportunities in the

New Printing Industry

Dr. Joe WebbWhatTheyThink

Economics & Research CenterPrint 09, Chicago, September 14, 2009


Agenda

• Quick overview of the economy

• “Entrepreneurs Welcome”

• 9:40 break

• Q&A until 10am

• 10:15 manroland booth #1129 for complimentary copies of “Renewing the Printing Industry”


Long before recession, GDP was sub-par (Y-Y data)


Oncoming problem: expansion of money with no goods/services to absorb it


Stagflation is here

• CPI since December 2008 is 4.2%– ISM Manufacturing inflation report very discouraging

• GDP might be slightly positive in Q3,but not worth noting

• Employment worsening– Workforce is shrinking, hours stagnant

• Unemployed + underemployed + discouraged = 16.8%

– Employment is now at December 2003 levels– Employers reluctant to hire when regulatory environment is

cloudy and uncertain

• Productivity is rising when GDP is not– Creates more slack in economy, so no hiring


But wait… there’s more!

• Trade skirmishes– China: tires; new tariff on US poultry?– Canada: stimulus money country of source

requirements– Mexico: truck drivers; new tariffs on 40 US

products, mainly agriculture

• Change in role of dollar– China diversifies– UN considers issues: worldwide currency?


Latest recovery indicators

9©2009, WhatTheyThink 9

9 quarters of negative real “growth”



Forecasts: 2 models, WTT opinion2009 = $86.5, 2015 = $58.0


More Entrepreneurship, Please


What’s changed in 2+ years

• <3 years ago...– no iPhone– no Twitter– Facebook was

obscure web site

• In mid-2009– 30+ million iPhones– 50 million+ 7/2009

Twitter users who accessed site

– 250+ million Facebook users

– Facebook Mobile 65+ million users 8/2009



Entrepreneurs Welcome:Yeah, right

• Why would anyone want to invest in a declining industry?– No one will lend to us

• No niches with high growth rates

• Replacement technologies are rampant

• Environmental preferences and regulations limit upside


What is entrepreneurship?

• Many definitions– Activity of organizing, managing, or assuming

risks of a business or enterprise (Webster’s)– The practice of starting new organizations…in

response to new opportunities (Wikipedia)– A process that creates something new,

different; changes or transmutes values (Drucker)

– Innovative acts that create dynamic disequilibrium (based on Schumpeter)


Does it matter?

• Is entrepreneurship… – Everyone?– An exclusive few?– Permanent, transient or an event?

• What is “innovation”?– An essence of newness– Different application of an “old” idea


When things don’t make sense

• Differences in beliefs and realities– Economic functions of an industry– Assumptions about it– Values and expectations of customers– Rhythm and logic of processes

• It always helps to be maladjusted


Are printers entrepreneurs?

• Very few are, same as everyone else• Are printers just channels / expressions of

technological innovations made by others?• Limitations

– Capital locked in equipment appropriate for a different business period: lags market shifts

– Profit generation is lacking• Necessity is the mother of more lease payments

– “All printers are the same” more justified than ever– Focus on production processes as means of escape


What is the focus?The medium or the businesses?• Is “demand for print” relevant?

– Diverse and numerous media environment– Is there a “demand for communications”

• Why are print businesses formed?– A pre-existing need for printed goods that

changed in favorable ways when demographics changed

• Tradition thrives until alternatives arrive

– There is a lack of new print business formation at this time


Entrepreneurs Welcome:No kidding!

• The new focus is on the printing business– Equipment has always been an expression of

strategy, competence, expectation and desire

• Major shift is in process– Grasping at straws?

• Marketing services, ancillary services• Perpetuates existing processes in most companies

– The great shake-out• Weak demand, recession

• What’s next? – Maybe we should focus on the clients


Primary concept

• Entrepreneurial strategy increases chances of success when it starts with the users– Enhance profits or provide efficient costs– Objectives and progress criteria– Client’s target audience preferences

and needs


Entrepreneurs Welcome:That’s me!

• No one way to succeed…– …except to defy industry traditions

and accepted measures of mediocrity

• Non-advertising media growing– The “rules” are still being written– Media interactions still being learned

• Measurement obsessed– No one really knows what ROI is

until they see it– Change formats and messages as measurements

unfold


Media Changes Create Entrepreneurial Opportunity

The difference betweenold and NOW


Permanence

• Old– A physical format– Stored, cared for, and known

• Now– Always available– Simultaneous deployment– Multiple formats


Portability

• Old– You can take it with you

• Now– Always connected– Content optimized (on the fly?) for different

formats of viewing devices


ROI

• Old– Function of design, content, and budget

• Now– Deployment related– Social and other media have low cost barriers

• “Lower bar” than traditional media• Content creation is cheap in relation to advertising


Cross or integrated media

• Old– Serial creation and deployment– Print production created imaging baseline

• Now– Integrated and parallel production– Integrated and parallel deployment– Integrated and parallel measurement


Reference point

• Old– Print as static reference– Reliable, authoritative

• Now– Gateway to other media interaction– Authority is based on repetition,

access and “branding”


Media selection

• Old– The medium is the message

– Communicator in full control of medium selection and economics

• Now– Information user has dynamic choice

– Saturation with relentless consistency is the message

– Obscurity is the enemy

– Obscurity the risk of single media


Personalization

• Old– Variables were selected by the communicator – Based on historical data

• Now– A choice made by the recipient– Historical data + real time actions of recipient


What do printers see?

• Demanding users with tighter budgets

• Prices and costs out of alignment

• Green ambiguity

• Confusing communications– “They’re just not buying print like they used to”– Twittering behind their backs

• Is it the inane messages of teens


Harsh realities

• Print prices not keeping up with inflation, but costs are

• Recession and budget cuts justify new behaviors of clients

• Equipment investments critical for recalibration of industry economic structure– Installed base does not match market needs– Unwinding through bankruptcies and closures?

• Flexibility is limited when management backs itself into a corner (via debt?)


Entrepreneurs Welcome:Sign Me Up!

• Entrepreneurs create new business;Others just get old business

• Risk is a choice; indecisiveness is a risk– Businesses that can be planned with precision

are usually stagnant industries– There is always a tension between strategy

and daily decisions in a changing marketplace


Building blocks of the new printing business

• Corporate employment will be austere– Outsourcing opportunities:

• Credibility? Staffing? Services?

• Small and mid-size business lack communication capabilities– New media is an entry point, a lever for new print

• Multiple media is essential communications strategy– Even for the most mundane items

• Network new skill resources, not employees


The correct roleof “ancillary services”

• Services that if added may one day stand on their own with high value-added– Not just “billable tasks”– Strategic, not opportunistic

• Retainer-based content development, management, deployment, and measurement services

• Why task-based “ancillary services” are tempting– Prices keeping up with inflation– Non-print growing +1%/yr while print –2-3%/yr


Media choice can beboon for print businesses


Can’t get the big e-mail payback unless you keep lists clean


How to do it: simplified case

• E-mail blast from well-designed data base– Has mailing addresses and e-mail addresses

• Collect bounces next day and mail post card– “We recently tried to contact you, but your

e-mail address did not work… you missed our latest sale”

• Mention new product in past category purchase, etc.

– pURL or QR to go to record update page

– Incentive to update

• Constantly recruit additional targets


Stay on top of new media

• Smartbrief.com– Many free e-newsletters for social media,

interactive media, advertising businesses– Also e-newsletters about small business,

and many other industries, topics

• Ad:tech shows– New York 11/4-6/2009– San Francisco 4/20-22/2010


How we grow again

• Worry about print businesses, not print media

• Print’s costs must continue to fall• Print’s value will be judged in relation

to other media– make the other media successful,

and print becomes part of new media

• New media become a jumping-off point for new print consumers– Retainer services are the best of the “ancillary” class


The rules for new media, and the new printing businesses

are not yet written

Entrepreneurs write themin their own style


QUESTIONS!

Dr. Joe WebbWhatTheyThink Economics &

Research Center