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© 2004, WhatTheyThink.com
Sponsored bywww.WhatTheyThink.com
Hosted by WhatTheyThinkSponsored by MAN Roland
© 2007, WhatTheyThink.com
Presented by:Dr. Joseph Webb, DirectorWhatTheyThink.com Economics & Research CenterGraph Expo, ChicagoSeptember 11, 2007
Graphic Arts 2017: A Speculative Look Ten Years from Today
© 2007, WhatTheyThink.com 2
Agenda
A look at the economy and commercial print Graphic Arts 2017 The 9:40 Pause Questions and Answers
before we begin…
© 2007, WhatTheyThink.com 3
Audio Chart of the Week - FREE
Chart of Industry Trend or Topic Weekly 3 to 6 minutes Wide range of topics from
content creation and technology to end-use markets and more
Use the chart in internal presentations
© 2007, WhatTheyThink.com 4
Management, Marketing, and Economic Notes - FREE
“Blog”-like comments about latest news A lot happens between
weekly columns Sometimes I just vent
“Road Warrior” Comments and
recommendations about personal computing and communications technologies
© 2007, WhatTheyThink.com 5
Economics & Research Center - FREE
ERC Industry Snapshot Updated just hours after new
industry data are published Data
Shipments, capacity Imports/exports Employment Postal weights and pieces
Markets Content creation & printing Paper US & Canada
© 2007, WhatTheyThink.com 6
Wednesday, September 26 Webinar
The economy and the subprime aftermath Forecast for Q4-07, 2008, and 2009 Hot and cold: trends that are, and aren’t,
driving the business What we know isn't so: a look at industry common
wisdom. Is it still wise? .... and Dr Joe's Fall Reading List Signup online at WhatTheyThink.com
© 2004, WhatTheyThink.com
Sponsored bywww.WhatTheyThink.com
Hosted by WhatTheyThinkSponsored by MAN Roland
© 2007, WhatTheyThink.com
The Economy & the Outlook for Print
© 2007, WhatTheyThink.com 8
The Overall Economy
Real GDP Y/Y basis Q1-06: 3.31% Q2-06: 3.23% Q3-06: 2.37% Q4-06: 2.60% Q1-07: 1.55% Q2-07: 1.92%
© 2007, WhatTheyThink.com 9
Economic Conditions
“Subprime” fallout Froth is out of credit markets Discipline to lending? Housing stimulus to economy
disappears for minimum of 18 months, possibly more
Budget cuts in financial institutions
Search for cost savings
Future inflation worries ease No recession
No significant growth, either Business investment cools Overseas markets strong over
long term, always volatile Future tax rates still uncertain Fed is about to ease (9/18)
© 2007, WhatTheyThink.com 10
Employment in Key SegmentsJuly 2006 July 2007 August 2006 August 2007
Printing, all 633.5 629.2 634.4 628.5 Printing, production 446.5 446.3 447.0 446.4 Publishing 902.9 906.6 902.6 905.1 Periodicals 146.5 146.2 146.9 Newspapers 358.3 350.6 357.6 Graphic design 70.0 72.0 71.3 Ad agencies 462.9 468.9 465.3 Direct mail 68.1 67.2 68.8
July 2006 July 2007 August 2006 August 2007Printing less production 187.0 182.9 187.4 182.1 Publishing, ex-newspaper 544.6 556.0 545.0 Agency + design 532.9 540.9 536.6
© 2007, WhatTheyThink.com 11
Do Commodity Prices Matter?
1967 CPI = 624494.6
917.9
© 2007, WhatTheyThink.com 12
Commerce Department has Updated Printing Shipments Data from 2003-2007
© 2007, WhatTheyThink.com 13
© 2007, WhatTheyThink.com 14
Old Habits Die Hard: Stop Looking for GDP as Indicator of Printing Shipments
0.7%
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Printing as a Percentage of U.S. GDP
Based on Bureau of Economic Analysis, U.S. Commerce Department data© 2007, WhatTheyThink Economics & Research Center
© 2007, WhatTheyThink.com 15
Updated Print Forecasts• Conservative model:
– 2007: $103.1B– 2008: $102.1B– 2009: $101.2B
• Aggressive model:– 2007: $96.8B– 2008: $87.6B– 2009: $80.8B
• GDP model using +2.5% GDP growth rate):– 2007: $101.1B– 2008: $99.0B– 2009: $96.8B
• WTT 2007 ERC forecast • $102.0B, -$1.5B, -1.5%– Likely to be revised down– No political campaign bump– Slower growth of direct mail
and direct marketing– 2008: $102B
– The “last” print campaign?– 2009: $ 99B
© 2007, WhatTheyThink.com 16
Encouraging Profits Report for Q2-07It’s Not What You Make It’s What You Keep
$90
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$106
$114
$122
$130
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$ Billions of Inflation-adjusted IndustryShipments, 4-qtr moving total
$ Billions of Inflation-adjusted ProfitsBefore Interest & Taxes, 4-qtr movingtotal
Profits peak Q2-1999 to Q1-2000, $14.16B
Profits bottom Q1 to Q4 2001, $2.98B
Latest data, Q3-2006
to Q2-2007, $5.15B
PRINTING INDUSTRY SHIPMENTS & PROFITS©2007, WhatTheyThink.com
© 2004, WhatTheyThink.com
Sponsored bywww.WhatTheyThink.com
Hosted by WhatTheyThinkSponsored by MAN Roland
© 2007, WhatTheyThink.com
Graphic Arts 2017… Finally!
© 2007, WhatTheyThink.com 18
Agenda: 2017
Economic, demographic, technological trends that will create the graphic arts and content creation business
How many printers? workers? designers? publishers? What communications needs will emerge, grow, decline? Where will jobs and opportunities be? Getting ready
© 2007, WhatTheyThink.com 19
Advertising Age: Lies, Damned Lies and Ad Predictions As any media researcher will tell you, the concept of
using benchmark reports and forecasts is intended to serve as less of a crystal ball and more of a hype-driver for emerging technologies and market trends. Sept. 3, 2007 issue
© 2007, WhatTheyThink.com 20
Steve Forbert: Sounds Like an Executive ?
I don't wanna see no fortune teller,I'd rather do without predictionI'll see it when it's all around me,Hey, what's the hurry?
Sweet Love that You Give
Jackrabbit Slim, October 1979
© 2007, WhatTheyThink.com 21
Forecasting is not very difficult, because it’s about the future
Forecasting long-term and very short term are easy Timing is always the most difficult to predict;
underlying trends are usually right Easy to forget that all actions have reactions
Those penalized by change have a habit of adapting to new situations Not all things can be foreseen; but context can Change is residue of thousands and millions of daily
buyer-seller decisions, not the acts of a single company or even a single industry
Just because it is possible does not mean it is marketable
© 2007, WhatTheyThink.com 22
Why Forecasting with Quantitative Models Alone Can Be Dangerous
Pink line:Forecast based on actual data ending in 2000
Blue line:what actually happened
© 2007, WhatTheyThink.com 23
The Best Forecasts are Always Judgmental
Statistical forecasts or forecast models are springboards for discussion
Remember, this is “a speculative look” Almost anything can be justified by a
consultant with a good vocabulary
© 2007, WhatTheyThink.com 24
Economic trends U.S. government policies that constrict long term
growth and wealth creation seem certain post-2008 election, leading to slow growth economy, stagnant business investment
Developing countries, even “old Europe” decreasing taxes, especially corporate rates
Communications reduce “friction” between economies, increasing transactions, putting new emphasis on logistics and transportation
Emerging economies significantly increasing wealth beyond their natural resources More sophisticated monetary systems Increase in service economies
Economic and monetary policy influence of U.S. and Europe ebbs
© 2007, WhatTheyThink.com 25
Technological Trends Rampant connectivity at declining costs Richer communications, with more video Mobility is habit-forming
Supercomputers in one’s hand, and nobody knows it Storage becomes “free” Instant access to information and content, anywhere,
anytime, anybody, any format, with printing optional E-commerce a normal course of business for everything
© 2007, WhatTheyThink.com 26
Considerations
Technology and adoption do not move in lockstep More alternatives chase same resources, solve same problems
Technology and profits are rarely simultaneous All technologies are two-sided
Internet competes with print Creates and expands opportunities for print businesses
© 2007, WhatTheyThink.com 27
U.S. Population Trends
2002 2007 2010 2015 20200-14 21.1% 20.2% 20.0% 20.2% 20.1%
15-24 14.1% 14.2% 13.9% 13.0% 12.6%25-44 29.3% 27.6% 26.8% 26.3% 26.2%45-64 23.1% 25.4% 26.2% 26.0% 24.9%65-79 8.9% 8.9% 9.2% 10.7% 12.3%
80+ 3.4% 3.7% 3.8% 3.9% 4.0%Total Population 100.0% 100.0% 100.0% 100.0% 100.0%
2002 2007 2010 2015 2020US Population 287.7 301.1 308.9 322.4 335.8
Average age 36.1 36.9 37.3 37.9 38.6
Source: U.S. Census Bureau
© 2007, WhatTheyThink.com 28
Content Creation Markets
Employees Establishments >50 Emps/estab Freelance Total Workers2005 60,188 16,516 86 3.6 82,942 143,1302007 60,000 17,175 87 3.5 90,620 150,6202012 59,500 19,320 87 3.1 109,825 169,3252017 58,750 21,465 87 2.7 129,025 187,775
Employees Establishments >50 Emps/estab Freelance Total Workers2005 413,509 38,640 1,317 10.7 111,524 525,0332007 391,655 39,070 895 10.0 121,300 512,9552012 356,185 43,745 120 8.1 139,215 495,4002017 320,710 54,345 90 5.9 159,775 480,485
Graphic Design Services
Advertising Agencies
© 2007, WhatTheyThink.com 29
Technologies Re-Shape PublishingEmployees Establishments >50 Emps/estab Freelance Total Workers
2005 158,843 7,846 618 20.2 14,115 172,9582007 157,350 8,220 620 19.1 15,420 172,7702012 156,000 9,110 630 17.1 18,690 174,6902017 154,500 10,005 640 15.4 21,960 176,460
Employees Establishments >50 Emps/estab Freelance Total Workers2005 83,555 3,359 292 24.9 4,140 87,6952007 83,690 3,800 290 22.0 4,525 88,2152012 81,260 5,035 320 16.1 5,480 86,7402017 78,825 6,740 380 11.7 6,440 85,265
Employees Establishments >50 Emps/estab Freelance Total Workers2005 25,047 1,321 69 19.0 475 25,5222007 22,930 1,320 69 17.4 520 23,4502012 17,640 1,315 65 13.4 630 18,2702017 12,350 1,310 60 9.4 740 13,090
Periodical Publishing
Book Publishing
Miscellaneous Publishing
© 2007, WhatTheyThink.com 30
Publishing’s Future
Monetization of content remains a serious issue Critical beyond publishing; content needs to create value
Contrary to popular belief, the Internet has limited space “Shelf space” is part of the Internet, too
Small publishing grows and grows and grows Redefinition of publishing as a business
Severe downsizing of infrastructure
© 2007, WhatTheyThink.com 31
Is This Too Optimistic for Newspapers?
Monetizing content remains mysterious and unpredictable Newspapers become magazines; magazines become newspapers The “deadline” or “press time” grows meaningless
Employees Establishments >50 Emps/estab2005 380,144 8,395 1,231 45.32007 374,365 8,145 1,120 46.02012 355,890 7,380 775 48.22017 337,420 6,540 535 51.6
Newspaper Publishing
© 2007, WhatTheyThink.com 32
Where Have All the Printers Gone?
Employees Establishments >50 Emps/estab2005 657,759 34,385 2,827 19.12007 609,540 32,595 2,700 18.72012 491,850 28,130 2,405 17.52017 374,165 23,660 2,105 15.8
Commercial Printing and Printing Services
On-demand printing is a weak competitor to computer screens Mobile computing of all types continues to reduce reliance on print Are there really opportunities in non-print media? Digital printing has market value because of its inherent integration
with communications and information storage and transmission
© 2007, WhatTheyThink.com 33
Evolving Nature of Business
Globalness for more aspects of business, even the smallest “Digital proximity”
Production is still becoming global, creation and content has not; that will change
Increase in global specialization of labor, capital and ideas Interconnectedness becomes more evident
© 2007, WhatTheyThink.com 34
Rising Global Wealth Effects
Decreased birth rates Increased interest in environmental issues Longer & healthier lifespans Increases in services compared to manufacturing Increasing demands for information, of greater variety
and wider means of access
© 2007, WhatTheyThink.com 35
What communications needs will emerge, grow, decline? “Managing” content is not the issue; deploying content is Reaching desired targets is not as important as having targets find
the content Search is a natural way of finding information now Social networking “fad” will pass; easy to confuse the tool with a centuries
old trend to associate with others of similar nature New trend: lifelong social communications? – “digital neighbors”
Bewildering number of access devices is not a call for standardization, but a bewildering number of standards iPhone is culmination of past events, a new building block
© 2007, WhatTheyThink.com 36
Where will jobs and opportunities be?
Decrease in sales jobs now evident in economic data “Internationalizing” content and deployment Content creation with new tools, in new formats, in new
markets: “newness” is always a market-changing trend Specialization in multiple media applications,
implementation and deployment
© 2007, WhatTheyThink.com 37
Getting ready
Create and encourage curiosity Play in the new communications and new media
Be the gadget guru for others It’s only cool if you can create unforeseen uses
Media rules are being re-written every day The Geico-ization of media strategy
Rules may change, but the objectives do not Long-term profitability and innovation never go out of style
© 2004, WhatTheyThink.com
Sponsored bywww.WhatTheyThink.com
Hosted by WhatTheyThinkSponsored by MAN Roland
© 2007, WhatTheyThink.com
THANK YOU!Questions?
© 2007, WhatTheyThink.com 39
In Search of Dr. Joe… and others…
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