dr. joe webb at print 09, september 14, 2009
DESCRIPTION
Presentation at Print 09, Chicago, on September 14, 2009, by Dr. Joe Webb, Director of Economics & Research of WhatTheyThink.com. The event was sponsored by manroland. PLEASE NOTE THAT THE AUDIO HAS NOT BEEN SYNCHRONIZED; slides must be advance by the viewer.TRANSCRIPT
1©2009, WhatTheyThink
2©2009, WhatTheyThink
Entrepreneurs Welcome: Opportunities in the
New Printing Industry
Dr. Joe WebbWhatTheyThink
Economics & Research CenterPrint 09, Chicago, September 14, 2009
3©2009, WhatTheyThink
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”
4©2009, WhatTheyThink
Long before recession, GDP was sub-par (Y-Y data)
5©2009, WhatTheyThink
Oncoming problem: expansion of money with no goods/services to absorb it
6©2009, WhatTheyThink
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
7©2009, WhatTheyThink
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?
8©2009, WhatTheyThink
Latest recovery indicators
9©2009, WhatTheyThink 9
9 quarters of negative real “growth”
10©2009, WhatTheyThink
11©2009, WhatTheyThink
Forecasts: 2 models, WTT opinion2009 = $86.5, 2015 = $58.0
12©2009, WhatTheyThink
More Entrepreneurship, Please
13©2009, WhatTheyThink
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
14©2009, WhatTheyThink
15©2009, WhatTheyThink
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
16©2009, WhatTheyThink
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)
17©2009, WhatTheyThink
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
18©2009, WhatTheyThink
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
19©2009, WhatTheyThink
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
20©2009, WhatTheyThink
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
21©2009, WhatTheyThink
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
22©2009, WhatTheyThink
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
23©2009, WhatTheyThink
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
24©2009, WhatTheyThink
Media Changes Create Entrepreneurial Opportunity
The difference betweenold and NOW
25©2009, WhatTheyThink
Permanence
• Old– A physical format– Stored, cared for, and known
• Now– Always available– Simultaneous deployment– Multiple formats
26©2009, WhatTheyThink
Portability
• Old– You can take it with you
• Now– Always connected– Content optimized (on the fly?) for different
formats of viewing devices
27©2009, WhatTheyThink
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
28©2009, WhatTheyThink
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
29©2009, WhatTheyThink
Reference point
• Old– Print as static reference– Reliable, authoritative
• Now– Gateway to other media interaction– Authority is based on repetition,
access and “branding”
30©2009, WhatTheyThink
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
31©2009, WhatTheyThink
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
32©2009, WhatTheyThink
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
33©2009, WhatTheyThink
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?)
34©2009, WhatTheyThink
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
35©2009, WhatTheyThink
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
36©2009, WhatTheyThink
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
37©2009, WhatTheyThink
Media choice can beboon for print businesses
38©2009, WhatTheyThink
Can’t get the big e-mail payback unless you keep lists clean
39©2009, WhatTheyThink
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
40©2009, WhatTheyThink
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
41©2009, WhatTheyThink
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
42©2009, WhatTheyThink
The rules for new media, and the new printing businesses
are not yet written
Entrepreneurs write themin their own style
43©2009, WhatTheyThink
QUESTIONS!
Dr. Joe WebbWhatTheyThink Economics &
Research Center