insights into the future and end use analysis

7/29/2019 Insights into the future and end use analysis

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RemembeR a yeaR ago ?Will our industry have a uture in 5, 10 or 50 years rom now ? Is our industry being replaced by something

else ? Is digital media the new way people will access inormation and companies will

choose to communicate ? Our aim last year was precisely to try to nd an answer to

these undamental questions by building an understanding o the dierent trends a-

ecting each one o the paper end uses. In order to accomplish that we ocused on

understanding every single driver behind each trend by using a ramework in which

6 actors were considered: End Use trends, Digital Media, Economic trends, Environ-

ment, Demographics and Advertising Expenditures.

At the end o our study we concluded that although the outlook or the paper industry

is challenging, we still have reasons to believe that it has a bright uture i we ocus

on the right opportunities and conront challenges on a positive manner. We identiedCoated Papers as the group with the best positive trends going orward. We also men-

tioned that the economic crisis pushed companies to adopt multimedia approaches

as a way to keep budgets under control but also has helped companies realize that

multimedia channel approaches are much more successul and normally bring higher

returns on investments.

Will our industry survive the next 5 to 10 years ? We strongly believe so. Will it survive longer ? Is our industry

being replaced by something else ? Although we are seeing some erosion avoring other media channels, es-

pecially digital media, we dont believe paper is being ully replaced by it. What we are experiencing now is the

eect o a natural process companies are going through to embrace multimedia communication approaches.

This adaptation is one o the main reasons or the migration out o paper. This migration will neither be a non-

stop phenomena nor a ull abandonment o paper, the uture o our industry lies in between these two extremes.

ouR focus foR this yeaRs studyWere all our questions answered a year ago ? Mostly, but the world we live in is in constant change and we elt

the challenges we were acing last year might have evolved or changed. In addition to this, the deeper under-

standing we gained rom last year exercise open our minds to a new set o questions such as:

fHow digital media is aecting consumers ? And companies ?

fWhat is the role the current economic environment is playing on our industry ?

fIs the paper industry the only commodity industry suering rom decline in demand, over-capacity

and tough competition ? I not, what can we learn rom other industries ?

fIs digital media the only disruptive trend on our industry right now ?

fHow companies are coping with the situation ? (Including entire value chain)

This years End Use analysis will not ocus merely on updating and/or repeating what has been already learnedand discovered a year ago, but instead we will be ocusing on fnding answers to this new set o questions. Our

outmost objective is to build an understanding on where are we heading as an industry and how companies are

adapting their strategies and behaviors to ace that uture and secure a place in it.

As a consequence, and considering that what has been discovered a year ago in relation to end use trends is

still valid, this years study is much less ocused on detecting specic trends per end use ocusing only on the

changes we have detected rom a year ago and put them into context again.

TableofContent

TABLE OFCONTENT 2

1 . I NT RO DU CT IO N 3

2. METHODOLOGY 4

3. MEGA TRENDS 5

3.1. ADVERTISINGTRENDS 7

4. TRENDS PER END USE 8

4 . 1. E ND USE D E SCR IPTION 8

4.2. BOOKS 9

4.3. MAGAZINES 10

4.4. CATALOGUES 12

4.5. CORPORATE COMMUNICATIONS 13

4.6. OTHER PROMOTIONAL PRINT15

4.7. ADDITIONAL TRENDS DETECTED FROMTHE INTERVIEWS: 17

5. CONCLUSIONS 18

- 1 -confidential

End Use TrendsReport June 2011

executive summaRy


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What has changed fRom last yeaR ?

a WoRd on ad-spend tRends

Looking only at the latest Zenith Optimedia orecast the situation doesnt look that bad. Global advertising

expenditure is orecasted to grow 4.3% in 2012, 5.3% in 2013 and 6.1% in 2014. In the Euro area adspend is

shrinking rapidly in problematic countries like Italy, Spain, Portugal and Greece. Elsewhere in Europe adspend

is rather fat with the exceptions o Austria, Finland and Germany where there is a small rate o growth pretty

much in line with infation. For the years to come, European adspend trends look a bit more promising than

2012 with a 2.3% growth in 2013 and a 3% increase in 2014.

When it comes to the dierent media is clear that Internet

is by ar the astest growing medium. According to Zenith

Optimedia Internet will grow on average 16% per year be-tween 2011 and 2016. On an additional note, Social Media

advertising on sites like Facebook, Twitter and LinkedIn ac-

counted or almost 15% o all Internet display adspend in

2011. Zenith Optimedia expects social media advertising to

grow at an average rate o slightly above 30% over the next

three years, achieving an 18.5% share in 2014.

According to the media agency, the rise on Internet adspend

has come at the expense o print. Between 2001 and 2011 the internets share o global advertising rose by

14% while newspapers share ell 12% and magazines 5%.

Newspapers share is still expected to keep declining whereas Magazines, the erosion is expected to stabilize

by 2014. Ater internet, the second clear winner on the chart above is Television which has been able to main-tain its share more or less stable (rom 39.7% back in 2010 to a projected 40.4% in 2014) in an environment o

general adspend growth, helping the medium to benet rom the overall growth trend.

How does this adspend development picture compare to the one we presented a year ago? In general it is

very similar, TV and Internet were already showing the best growth rates rom all media channels. I theres

a dierence its coming basically rom print. Print is showing a slightly more negative outlook this time when

compared to a year ago when a more stable development was assumed to be the case, starting earlier than

2014 as is expected this time.

Megatrends


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fr i dr i t fr

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Nothing compares to print when introducing new

products and/or stepping into new markets. Higherpaper qualities are expected to be used in the uture.

Personalization together with digital print are major

trends beneting paper consumption. Regulations and

overexposure to digital media might also benet print

Trends still very positive on the

short term especially ater thecrisis. On the long run systematic

threats will diminish the value o

this end use

d m Symbiosis between print and digital do exist, but in thelong run these symbiosis will help more people migrateto digital media. Social Networks, Mobile Advertising

and Online will signicantly reduce paper consumption.

Digital media will also support cost reduction initiatives

Negative outlook on the short

term somehow compensated bycompanies relying on traditional

(trusted) channels ater the crisis.

Outlook becoming more negativeas companies try new alternatives

e

r

During the recession recovery period companies were

using more promotional print to stimulate markets and

retain customers. Ater this period actors such as highinfation and economical instability (e.g. Portugal) mak-

ing companies be cautious

On the short term the current eco-

nomic conditions creating a slight

depressed outlook. As economiesand situation recovers, the impact

rom economic trends diminish

er Corporate Social Responsibility being more importantthan Ethical Consumerism since its companies acting

proactively the ones creating the slight negative trend.

This actor being less importantor companies agendas during 09

-11. nevertheless a negative trend

over all the orecasted period is

oreseen

dr-

People still eeling more comortable with traditional

channels or promotional purposes. Increase o people

living in urban areas and income per capita enlargingcompanies customer base

Very positive trend during the pe-

riod ater the nancial crisis peak-

ing around 2012. Ater this pint asteady (minor) positive impact is

oreseen

Advertising

trends

The negative trends aecting magazines and newspa-

pers impacting inserts & supplements normally distrib-

uted through them. Stable budgets (at least or print)

together with higher paper qualities (and prices) helpingcreating the negative trend

Very negative on the short term

(2010 2011) coming rom higher

paper prices. On the long run a

much smaller negative trend willprevail

otheR pRomotional pRint


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Very diering trends within this end use. Annual reports

clearly going online and being more concise and

targeted (meaning less paper consumption). Meanwhilecompany brochures and especially customer maga-

zines are proven to be eective somehow balancing

the overall picture or paper consumption

A steady decline is expected on

this actor mainly coming rom

companies being more critical onthe what, who and how much they

communicate

d m Main sector impacted by digital media is Annual Re-ports, not only by the migration rom paper to digital but

also rom the on demand printing possibilities oeredby digital media. Cost savings and immediate availabili-

ty as the main reasons or the adoption o digital media

A negative trend has been detected

rom the start o our orecast. This

negative trend is rapidly increasingas more and more people sees the

benet o adopting digital media

e

r

The driver or companies to communicate is notstrongly linked to the economy situation but more to le-

gal requirements, corporate image and branding. Slight

economic growth increasing the amount o companies

communicating, but impact is minor.

There was a signicant recoveryater the nancial crisis in the year

2009 but ater that the impact will

stay rather small but positive

er Corporate social responsibility & Ethical Consumer-ism having a negative impact on corporate commu-

nications. Companies more careul on the image theycreate by the way they choose to communicate.

Theres a slight negative trend

since the beginning o the ore-

casted period. During the recoveryperiod, this trend slows down, but

picks up again ater 2013.

dr-

Very minor positive trend coming rom more people liv-ing in urban areas and exposed to corporations target

population. Ageing not playing a signicant role

No signicant impact is oreseenduring the orecasted period

ar

r

Although adspend as such plays little role on this enduse, corporation budgets are considered inside this

actor. We believe that during 2010 budgets remained

stable whilst paper price increased aecting volumes

and pushing more companies to try digital media,which at the end keeps the negative trend on the long

term

Ater the 2010 2011 paper priceeect, the negative trend reduces

to the normal -0.5% or the remain-

ing o the orecasting period.

coRpoRate comunications


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catalogues

fr i dr i t fr

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Catalogues as end use are still being used by compa-

nies and will be around or some time. Big catalogues

being replaced by small personalized ones. Person-alization helping control costs and improve eciency o

the end use. Magalogues will not become a signi-

cant trend

Catalogue evolution already hap-

pening & changing to a negative

trend in 2014. On the long runcatalogues will strongly migrate to

online and to other channels & end

uses or companies to push brands

d m Printed catalogues heavily aected by online versions.Symbiosis between print and online catalogues is vital,

but heavily impacting catalogue paper consumptionPrint = pushing brand awareness, creating buying

need. Online = provide details and serve as selling

channel.

Slightly negative during the next 2

years but as digital media becomes

more accepted the impact growsexponentially. Social media (or any

other new development) will erode

catalogues as end use in the uture

e

r

Economic crisis help catalogue business. As more

people spend more time home they looked to entertain

themselves and improve their homes. 2010 was the

year or Coming back to normality

2010 especially a good year or

catalogues as companies needed

to stimulate markets ater the nan-

cial crisis. 2011 onwards economynot playing a signicant role

er Catalogues or high end products less aected bysustainability than more generic ones. Consumer Ethi-cal consumerism clearly pushing or less catalogue

circulation

Economic crisis pushed sustain-

ability out o consumer heads, butaround 2012 onwards this actor

retakes its relevance

dr People used to the ways companies communicateswith them. Rising income and increasing amount o

people living in urban areas having a positive impact on

catalogues

Eect on catalogues slightlyincreasing with time but always

remaining a small contributor when

compared to the other actors

ar

r

In general advertisers avoring other end uses as they

are more relevant or end consumers (e.g. magazines).

Given the act that adspend on catalogues is not high,the impact rom will be lower than other actors

Although advertising budgets had

remained stable, paper prices go-

ing up recently created a reductionin paper volumes. Long term trend

less negative


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Printed magazines still perceived as infuential and

more ecient medium than digital magazines. Qualityo magazines will increase thanks to digital media .

Special interest magazines showing positive trends

End use trends being very positive

in the short term, but as morepeople adopt new technologies,

trends on printed magazines will

fatten out.

d m Symbiosis between digital and print helping to developmagazines on the short term on the long run, the

adoption o digital media is expected to erode printed

magazines. Digital magazines live rom brand imagecreated by paper magazine

Mild positive in the short term,

going or mild negative on the long

term. Trends ater 2015 is to grow

more negative.

e

r

This actor not having a real impact on the orecasting

window overall. GDP growth rates although positive orEuro zone not being perceived on magazines

Slight positive impact rom current

economic condition depressingcommercial print. Some ad spend-

ing migrating to magazines

er Sustainability not having a direct impact on paper.Ethical consumerism will have a slight negative im-

pact on # issues per title and pagination. Paper waste

reduction (over issuing) will be reduced in the uture.

No major impact on the short term

but as more people and companies

become ethical consumers/pro-

ducers, the impact will grow

dr-

Interesting trends ound on young generations reading

more magazines than older generations. Also more

people living in urban areas increasing access tomagazines

Big positive impact on the short

term but as technology and busi-

ness models around digital mediaevolves the impact will diminish

ar

r

Adspend allocated to printed magazines suered dur-ing the crisis and the ear is or companies not to comeback ater having tasted digital media. Paper price

increases together with fat adspend budgets causing

lower paper volumes.

Business models around digital media not ully devel-oped yet but getting there

Slight negative impact now but ex-pected to increase in the mid term.Long term is expected to stabilized

but on a much lower base than

today

magazines


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Very stable industry. People not changing their book

reading behaviors as ast as in magazines. Higherpaper qualities are expected also. Digital print will help

publishers optimize costs translated into less paper

consumption. Book prices in decline especially since

the nancial crisis

End Use trends being positive in

the short term but becoming nega-tive around the year 2013 (tipping

point) due to systematic negative

infuences rom digital media, digi-

tal print and demographic changes

d m IPad being a higher threat to pape than e-readers. Printon demand with positive eects on the long term. Cost

o producing e-books still high but will decrease alongwith technology improvements and market develop-

ments. Long-tail theory supporting digital media

adoption

Slight negative during the rst 2

to 3 years becoming clearly more

negative around 2013. Develop-ment o business models being the

main explanation o this trend

e

r

During the crisis there was not to much decline but also

not much rebound is expected in the coming years.

People buying more books due to increased time spentat home

Current economic situation slightly

helping to keep post-recession

readership. This eect will diminishast ater 2012

er Sustainability not having a clear impact on books. Pub-lishers (and people) select the paper depending on theimage the book needs. CO2 emissions will become a

hot topic in the uture

No real change is oreseen during

the orecasted period. Governmentlegislations might have a signicant

impact in the uture o books

dr-

Books are less demographically impacted than otherend uses. Changes to the end use will come more rom

structural changes like government legislative actionsrather than changes in readership behavior

No signicant impact is oreseenduring the orecasted period. Age-

ing will play a small positive actorater 2015

ar

r

Adspend plays a small role in books compared to other

end uses

No signicant impact is oreseen

during the orecasted period

books

insights into the future and end use analysis

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