Digital Prepress--The Need to Diversify

Digital prepress houses are recognizing the need to diversify and invest in additional value-added services. Topping the list, for some, is on-demand digital printing.

BY MARIE RANOIA ALONSO

In February 1994, William Staar found himself on the cover of Printing Impressions magazine. At that time, Staar was a strategic influence in his family's $7.3 million digital prepress firm. The company, Noral Color, which has since been purchased by a larger graphic arts service provider, was co-founded by Staar's father, Norman Staar.

In 1994, William Staar represented a new breed of commercial printing executive. He was powered by the intrinsic desire to modernize. He was bent on making his family's digital prepress operation the most elite, digitally savvy digital prepress operation in the Chicago area.

Staar pushed for the adoption of a digital photography studio. He had his sights set on positioning the company to become a "needs fulfillment" organization—from concept and design to digital prepress fulfillment.

For Staar, the potential for digitizing and expanding the world that was modern digital prepress seemed limitless. Today, Staar's visionary momentum is alive and well at DreamColor, the Chicago-based digital prepress and digital printing operation, at which he serves as president, along with partner, Vice President Darren Nykaza.

With roots that stretch back to Noral Color, DreamColor is a 17-employee, full-service prepress house that operates as a multi-capabilities print provider—with two Heidelberg Quickmaster DI digital presses and one Heidelberg Speedmaster 74 DI under its roof. DreamColor accepted delivery of its half-size SM 74 direct-imaging press late last month.

Embracing Change
"As we watched the traditional boundaries between prepress and press erode, we decided to embrace the changes," Staar reports. "Taking advantage of the latest advancements in digital printing technology, we have tapped into an entirely new market and transformed into a stronger, more responsive graphic arts service provider for our clients."

Staar believes digital printing is an opportunity that will only grow for the proactive digital prepress operation. "We gain direction by talking with our customers and listening to their needs," Staar states. "We know that our clients are looking for solutions providers—beyond digital prepress—and that is why we extended our capabilities, created a streamlined digital workflow and took on the marketing challenges and benefits of direct-imaging technology."

The management team at Media Graphics shares Staar's attitude. Media Graphics, a traditional digital prepress firm operating for nearly 25 years in Chicago, also saw the need to modernize and market itself for new business by investing in digital printing technology. The buzzword at Media Graphics during its search for the right digital press was diversification: The company had to diversify if it wanted to offset any business slide of its prepress work.

Catering to the publishing community, Media Graphics wanted to bring a digital press aboard that would give the company a value-added service to offer its print buying community. While weekly and monthly trade publication digital prepress work was the lifeblood for Media Graphics, the executive team at the prepress firm was convinced that offshoot services, such as the printing of customized reprints and short-run special interest publications or test-market periodicals, could provide a new revenue stream.

In November 1998, an Agfa Chromapress 32i joined the prepress firm. John Matyasik, the company's founder, was convinced digital printing was right for his business. Today, the Chromapress accounts for 20 percent of the company's work.

"The move to digital printing is the big picture move for many prepress providers," says Matyasik. "Diversify, with digital, or die—that seems the reality most digital prepress firms must contend with as the necessity for digital prepress operations evolves with the times."

PRESSING OPPORTUNITIES:
Maximizing the Value of Digital Printing—
for Anyone Interested In Diversifying

The terms digital printing and printing on-demand (POD) have become synonymous in the minds of many in the industry. However, this association is not universal, as many "on-demand" printers with conventional short-run presses will quickly point out. The variable imaging capabilities of digital printing have expanded the array of applications for the technology, and many suppliers and consultants are hoping to profit from these new developments.

But where are the real opportunities for the print providers and customers who are called upon to make the significant investments in digital printing? Ultimately, the return on those investments depends upon two factors: the value of the digital printing application to the print customer and the consumer, and the potential market demand for the application. These factors can be used to examine the array of digital printing opportunities confronting the industry today.

Dollars-and-cents Benefits
The industry has been inundated with case studies highlighting the benefits of digital printing. Eventually, however, print providers and customers must convert the benefits into value in dollars and cents. When everything is considered, the real value of digital printing can be expressed in just two dimensions: targeting and time. The targeting value of digital printing refers to its ability to reach a selected market segment with information that is most appropriate to that segment. The segment may range in size from several thousand consumers down to the "segment of one" that has become the Holy Grail of interactive marketing. Most of the vendors and industry commentators have focused on the targeting capabilities of digital printing.

Unfortunately, the industry has generally underestimated the more important dimension: time. In simplest terms, the time value of digital printing refers to its ability to provide up-to-date information to the consumer without delay. For example, investment brokerage firms place high value on the delivery speed for marketing materials, prospectuses and research reports to prospective customers, whose propensity to buy a particular investment has been shown to have a lifetime of only a few days. On the other hand, for many years, the book publishing industry placed little real value on speed of delivery to the consumer. Delivery times for books not carried in retail stock averaged three weeks. Today's Internet book retailing is raising consumers' expectations for immediate delivery of a vast selection of titles—and is also raising the value of digital printing.

In digital printing, time is money.

One of the highest-value applications of digital printing is in marketing response management. In contrast to direct-mail advertising, marketing response management is production and fulfillment of marketing materials at the prospective customer's request in connection with a specific purchase decision. The materials may include printed items (such as letters, brochures, datasheets and catalogs), as well as nonprinted items such as samples, videotapes, CD-ROMs and promotional incentives.

The challenge is to manufacture and fulfill the specific items requested by the prospective customer—on-demand, and often in run lengths down to one, since each request is likely to be different from the next. As fully digital printing continues to grow, some vendors and printers with significant business interests in offset production have tried to position digital color printing only for those high-value, variable-print niches that do not compete with their core business. However, it would be a mistake to conclude that digital color printing will depend upon variable printing applications for growth.

Economically Paced Growth
Variable printing aside, two factors will pace the growth of digital printing over the next two years. The first is economics. Significant cost and productivity improvements have been made in the monochrome segment on high-speed sheetfed machines, such as the DocuTech 6180, as well as webfed presses such as the Océ DemandStream 8090DI. These advances are bringing digital printing into new mainstream markets, such as book publishing. On the color front, Xeikon and

Indigo have incorporated cost and productivity improvements that move digital color printing out of the "high-value niches" of the past and position it more competitively against offset in publication and commercial POD.

The second factor pacing the growth of digital printing is the shift in the service model. Notwithstanding its general characterization as POD, most digital color printing today is in the push model. On the other hand, digital printing will always have the highest value in pull applications, which are truly synonymous with POD. The higher transaction frequency and the expanded range of services raise challenges in POD operations. However, as more print providers move to this model, digital print volume and profit will grow together.

Information for this article was supplied by Dr. Mark W. Fleming, a 20-year veteran of digital printing. Fleming is the president of Naperville, IL-based Strategies on Demand, (www.strategiesondemand.com), which provides market research and management consulting services to print providers and equipment manufacturers worldwide.