2012 Hot Markets : Printing in a Mobile World

As 2012 unfolds, it will be the year of cross-media mastery—the smart management of the print-to-mobile (P2M) information chain. The imperative for printing industry companies is simple—grow laterally by enlarging their offering. Demand will grow by 4 percent or more in only nine of the top 25 hot markets for printing services. The remaining 16 will be level or reduce ink-on-paper spends, but buyers will dramatically increase their demand for front-end smart phone landings and back-end social media linkages.

In P2M, the four principal products will be smart-and-green packaging, very-large-format digital/screen printing, interactive offset/digital direct response pieces and, at the top, cross-media combinations of the foregoing, enabled by TXT messaging and QR code connections. GPS locationing and purchase/payment enablement could be added to the mix by year-end 2012.

The best market/product/geographical combinations detailed in the paragraphs that follow will ensure a comparatively Happy New Year in a deteriorating economy!

PACKAGED FOODS ($1.11T, +6 percent; with nearly $16B to print, 0 percent) will continue as the No. 1 buyer of print, but with cost restraints for the medium. De-packaging, line-choice contractions and brand consolidations will reduce overall demand for labels, flexible packaging and folding cartons. Double-digit increases in commodity ingredient costs will put pressure on food producers to starve printing prices. Expect to see more Sonoco/Tegrant-type packaging supplier consolidations as a result.

The biggest dried foods and snacks category buyer, Kraft (+17 percent), will split into two companies (snacks and groceries) in late 2012. Others, such as Fortune Brands (+9 percent) and Sara Lee (-3 percent), will do the same or sell off non-core brands, providing a blip in demand as product packaging and campaigns are reintroduced. Most other run-of-press (ROP), free-standing insert (FSI) and in-store promotional printing will have level demand. Smart packaging with nanotech features is appearing slower than anticipated as too few plants have the know-how and licenses to use these processes.

Related are No. 6-ranked BEVERAGES ($471B, +5 percent; with $10.4B to print, -4 percent) and No. 17-ranked FOOD SERVICE ($800B, +7 percent; with $5.6B to print, +6 percent). Metal decoration, screen printing, outdoor advertising and POS/POP will pour with waters and infused, new-age drinks such as PrimoWater (+>300 percent). A new segment will be home-
produced drinks introduced by Sodastream (+234 percent).

Event-driven and product-line extensions and mergers will shake and stir packaging and print POP and ROP in the wines and spirits segment. Campari (+23 percent) has made 16 acquisitions and plans to double U.S. advertising. Jack Daniels (+12 percent) and others will take leaps into P2M employing localized relationship marketing.

Beers/malt beverages will foam up as Budweiser (+4 percent) upgrades and expands its breweries in the 2012-2014 time frame. It will regain share by acquiring micro-brewer brands from Hawaii to Puerto Rico. Molson Coors (+2 percent) will raise in-store ad spending as it tries to gain space against Bud.

Also brewing will be coffees and teas where new enhanced brands, such as Organo Gold (+>300 percent), will become billion-dollar sellers with multimillions in print buys. Starbucks (+19 percent) will build new stores offering “evolutionary” pure juices. Signage, labels, coupons and FSIs will bubble forth. Mainstay carbonated soft drinks producers Coca-Cola (+13), Pepsico (+12 percent) and National Beverage (+4 percent) will be flat in their print buys.

Eating out is rounding up to two nights a week. Casual dining establishments will serve more nutritious entrées and promote dining “experiences” to outperform the fast food/take-out segment, as in Chipotle (+20 percent) vs. McDonald’s (+7 percent). Burger King (-6 percent) will reinvent its print-intensive Kid’s Crown program, freshen up its food offerings and speed up the remodeling of 12,300 stores.

Going upscale will be full-service restaurants, which are mostly regional and independent except for the largest—Darden (+8 percent). The print-to-mobile model for reservations, menus and directions will be appetizing for the printing industry as companies expand into setting up and managing VIP-themed events, loyalty programs and push messaging to opt-in diners.

FSIs, in-store and outdoor print will otherwise be lost to e-providers such as OpenTable (+43 percent), which only recently set up a mobile platform. Automated vending, reminiscent of “Automats” in days’ past, will reappear (with screen and package printing benefiting) as next-gen machines prepare complex recipe foods and beverages both on-site and remotely by mobile request. Combined, the three foods/beverages sectors should eat up 15.6 percent of total print in 2012, concentrated in the Midwest, Northeast and Southeast.

At No. 2 will be MEDICAL/PHARMACEUTICALS ($450B, +4 percent; with $13.5B to print, -3 percent), though less print will be dispensed. Generics will out-scrip proprietary drugs in the pharma/wellness space where the Teva/Proctor & Gamble joint venture will skin the game for packaging, ROP and POS. Biotechnology will be the only big print prescriber as major anti-aging breakthroughs hit the baby-boom marketplace from the likes of Allergan (+18 percent).

Inclusive is No. 9-ranked HEALTH PROVIDERS ($3.1T, +4 percent; with nearly $9B to print, +6 percent). Hospital consolidations will resuscitate name-change branding and collective—almost surgical—marketing. Direct mail with QR code/TXT links to mobile content will revive fee-for-service patient traffic, including preventive testing. Out-of-home screen and grand-format digital printing will also increase as hospitals and practices combine and change names. Health, overall, will demand 11.3 percent of the total print volume, concentrated in the Northeast and North Central regions.

Related is No. 15 PERSONAL CARE ($382B, +4 percent; with $5.7B to print, -1 percent). Consumer demand will remain flaccid as with most discretionary spending. A lack of new mass-marketed fragrances will depress packaging, FSI scent strip and POS print. Diptyque (+>300 percent), an imported brand from Europe, will build out custom perfumeries—a possible new trend in very personalized care. Sector leader Estée Lauder (+12 percent) will lead print usage for cosmetics, hair, skin and sun care products and introductions.

This category will continue as the biggest buyer of magazine advertising. Look to anti-aging direct seller NuSkin (+78 percent) as distinct from low-growth Avon (+3 percent), both likely takeover targets for opposite reasons. Low-growth mainstays in sanitary/hygiene products—such as Unilever (+4 percent) and Church & Dwight (+5 percent)—will scramble to acquire smaller players and, therefore, optimize their supply and distribution chains.

Animal care is leaping up as consumers apparently care more about their pets than themselves. Petco (+13 percent) is the pedigreed player in this $55B category. Drug retailers CVS (+13 percent) and Walgreen (+7 percent) will continue a print-rich ad war as big-box discounters take market share. Best offerings are heatset web FSIs, coldset ROP and in-store large-format sheetfed printing. The Northeast and North Central regions dominate this 2.9 percent of total print production.

Withdrawing to No. 3 will be BANKING/INSURANCE ($3.73T, +2 percent; with $11.2B to print, -16 percent). Commercial bank re-branding is slowing, with few name changes and build-outs expected in 2012, so debit the demand for signage, forms, checks and sheetfed collateral print. Direct mail will rise as banks push “rewards” programs to encourage debit card use at the same time hidden fees are reintroduced. Regional banks and credit unions are the best prospects for promotional print, especially in the aftermath of the viral “Occupy” and “Withdraw” protests against big banks.

The charge/credit card segment is issuing prepaid incentive cards for gas and other special purposes, and will introduce new installment products this year. Mastercard (+27 percent) is outspending Visa (+13 percent) in POP signage, direct mail and, of course, card production, and Discover (+69 percent) will build momentum as it challenges the two leaders. Some money-center banks may follow; Capital One (+15 percent) in branding its own cards with heavy swipes of print.

In insurance, both property/casualty and life companies will continue a global merger cycle as they languish with zero growth. New 21st century product lines must be introduced, including large-scale catastrophe coverage. The big insurance brokerages such as Aon (+51 percent) and Marsh & McLennan (+11 percent) will be the only improving print buyers as they promote human resource outsourcing and on-site risk management rather than commodity-priced and negotiated insurance. A positioning lesson for printers and print brokers?

Related at No. 16 is INVESTMENT/BROKERAGE ($1.15T, +4 percent; with $5.7B to print, 0 percent). Stock brokerages and mutual funds will maintain their print volumes in market newsletters, direct mail solicitations, offering circulars and other narrow web and sheetfed work. Stock and bond offerings will run up with many falling short. Prospectus printing and ROP “tombstones” will continue to proliferate as demand for capital exceeds supply by perhaps a factor of four.

Stock brokerages and mutual funds will go long on print, especially in personalized direct mail and digitally printed viewbooks. Novel equity-derived products will be featured. JP Morgan Chase (+11 percent) should rise at a 2.8-times multiple of the market in print because of its ongoing five times the industry average investment in our medium. The three financial sectors will approach 9.3 percent of total print demand, concentrated in the Northeast and West.

No. 4 is PUBLISHING/NON-NEWSPAPER ($78B, -6 percent; with $10.9B to print, -10 percent). Book publishing in print will decline as e-books correspondingly rise at a nearly one in 10 displacement rate. J.K. Rowlings’ move to www.pottermore.com and then onto digital books is indicative of the new publishing model where print is an incidental option.

Amazon (+17 percent) will become the biggest de facto book-format publisher with its Kindle on “Fire.” Barnes and Noble (+23 percent) will launch its “Nook” best-in-class 7˝ tablet “to reach readers like no one else.” Still, the retailer expects to sell 300 million physical books, on par with 2011.

Professional and academic publishing are declining as online learning replaces the classroom-and-textbook tradition. Pearson (+3 percent) and McGraw-Hill (-3 percent) continue to pursue personalized e-content as a more profitable opportunity than print. Periodicals will continue to lose ad pages and revenues at a 6 percent to 8 percent pace, even as interactivity and mobile engagement applications are attempted with group ventures such as the five publishers collaborating on Next Issue.

Only 3 percent of magazine printers provide cross-media management and, to date, not very well. Valassis (+16 percent), the integrated FSI publisher/printer, has it right with its RedPlum cross-media products “in-home, in-store, in-motion.” American Greetings (+8 percent), too, will grow at double its competition in greeting cards, driven entirely from mobile and social media apps, links and pushes. Overall, the publishing sector will comprise only 5.5 percent of total print, primarily in the Northeast.

In technologies, TELECOMMUNICATIONS ($1.4T, +9 percent; with $10.9B to print, +1 percent) will be No. 5 and continue heavily in transit, in-store, outdoor, newspaper FSIs and ROP advertising as dual-core competition in tandem with or between wireless carriers and device-makers powers up. AT&T (+19 percent) will be the first billion-dollar print buyer in the category after it combines with another major player. Verizon (+5 percent) will be close behind.

New 4G entrants dialing up print will include the Windows Mango and other fruity brands, including tablets from Nokia (-13 percent), Sony (-5 percent) and others. However, Research In Motion (-11 percent) may be Torch-ed and Sprint (0 percent) sprain as market shares fade. Mobile aggregated apps with fast click-throughs will subordinate the nearly one million single destination apps that clutter and clog device displays. Out-of-home print is the most relevant way to reach users on the move.

COMPUTERWARE ($673B, +9 percent; with $9.0B to print, -9 percent) logs in at No. 8. Promoting the sales and uses of mobile “apps,” and connections via QR codes and TXT messaging will be an opportunity. Google (+38 percent) mobile paid-click growth and the acquisition of Motorola Mobile will move it ahead of Oracle (+8 percent) and behind Microsoft (+6 percent) in revenues and as the second biggest category buyer. Its Crome group and Adobe will flash forward to HTML5. This single-plug-in creative suite for application development, animation and interactivity is now the standard and a must-learn for our industry to capture a share of cross-media revenue.

Global per-capita demand for data will increase exponentially from 3GB to 11GB by 2015. Developed countries are already there. Data centers will proliferate as Red Hat (+45 percent), Juniper (+25 percent) and others challenge the “G-Force” in what will be converged supercore hosting. Solid-state computing will replace the silicone chip and affect every aspect of knowledge management and distribution. Crashing will be the PC hardware-related participants. Canon, Xerox, Hewlett-Packard and Lexmark are at zero growth in the computer sector, as will be Dell as it sells fewer than 40 million machines.

No. 20 ranked, but with the largest print demand increase, is ELECTRONICS ($769B, +7 percent; with $4.2B to print, +16 percent). Apple (+135 percent), with its iPhone 4S, iOS 5 update and the introduction of voice-activated artificial intelligence apps will make smart devices the biggest print buying category. Most print-condensing will be the iCloud, DropBox and other sub-terabyte data storage evaporations into the cloud. Direct mail, outdoor advertising and FSI solicitations for these “free” repositories of customer data will drive this category.

Don’t miss out on this transformational event! The three technology sectors will account for 12.3 percent of total print demand and will be centered on the Coasts.

Level at No. 7 is REAL ESTATE ($1.9T, -6 percent; with $10.1B to print, +1 percent). New and resale residential housing will continue to sink as the shadow inventory of nearly two million empty homes, not yet for sale, are foreclosed and repossessed during 2012. Some 350,000 new homes are predicted to be sold this year, but the prices will drop by more than that 4 percent unit increase.

Open web and sheetfed printed home-buyer guides will proliferate, as will signage and P2M during the four years it will take to clear the (over) $400B glut. Adding in resales, a total of 5 million homes could change owners, but again at lower prices because of boomer down-sizing and a substantial reduction in household formations. Commercial real estate is in worse shape, mostly owing to retail where occupancy rates are down by one-third. Mall operators are marketing for traffic with co-op publications and FSIs. Real estate will account for 5.1 percent of all print with no geographic concentration.

AUTOMOTIVE ($1.89T, +3 percent; with $8.9B to print, +4 percent) at No. 10 will ride into an annualized 13.5 million vehicle market. General Motors (+5 percent) and Ford (+4 percent) will idle as hybrid and electric vehicle sales sputter. Toyota (+8 percent) will step on the gas pedal following production (and advertising) disruptions in 2011.

There will be more redesigned and new models introduced this year than in the entire last decade, revving up print POS, bind-in inserts, ROP, showroom floor graphics and collateral. OEM decal and glove compartment manuals will also accelerate.

Exotic low-priced recreationa/off-the-road vehicles, such as the John Deere (+5 percent) Gator will be introduced, fueling outdoor ads, signage and bind-in inserts. The car rentals segment will consolidate to three companies as peer and co-op car sharing gains popularity in urban and university areas.

Auto parts/repairs will continue to see double-digit growth led by AutoZone (+12 percent), which will add more than 100 stores in this year for a total of nearly 5,000 locations. The big car dealers/showrooms will show improvement, as more new and used cars are sold. Carmax (+11 percent) and AutoNation (+9 percent) will demand ROP and FSIs. The automotive sector will drive 4.5 percent of all print with no geographic concentration.

At No. 11 is TRAVEL/HOSPITALITY ($830B, +4 percent; with $7.5B to print, +5 percent). Print marketing, including the sale of airplane wraps, will be embraced by more airlines/air carriers. Spirit Airlines (+18 percent) is the fastest growth firm in the category.

Passenger traffic is expected to be flat because of fewer flights, chronic schedule disruptions, smaller airport abandonments, and the prospect of huge tax and fuel surcharge increases onto ticket prices. When the latter are subtracted out, airline revenues are in decline. Print in-flight products and POS spending will continue to fall, especially at post-merged UnitedContinental (+4 percent).

Hotels and resorts will fare better as occupancy rates return to pre-recession RevPAR (revenue per available room). Starwood (+9 percent) and Marriott (+8 percent) are revamping many properties, checking-in with more spending on outdoor ads, ROP, reward direct mail, rack brochures and in-room amenities.

Cruise lines are sailing steady with waves of sheetfed and heatset catalog and poster printing. Royal Caribbean (+13 percent) and Carnival (+12 percent) run the category.

The travel planning/reservations sector will fly high. Priceline.com (+24 percent) and its online followers will move to mobile platforms, as with the Orbitz (+20 percent) three-click app for one-stop air, hotel and ground arrangements. Travel agencies will be acquired or franchised as the online brands go retail. Decals, screen signage, outdoor and transit ads, direct mail and large-format POS will be demanded by mid-2012. This sector will book 3.8 percent of total print, concentrated along the East Coast and upper Midwest.

GAMING/WAGERING ($663B, +3 percent; with $7.5B to print, +6 percent) pays out at No. 12. Caesars (+4 percent) will continue as the biggest buyer of CRM personalized print among the casinos and on-track/off-track betting parlors, forcing all other players to ante up, especially Las Vegas Sands (+20 percent) and Wynn (+12 percent), as they repatriate Asia profits and rebuild or redesign domestic operations. Casino décor, signage, small-format digital and narrow coldest web direct mail printing, plus outdoor and digital POS, will come up big.

Three new casinos will be opened in the new year in Vegas and Atlantic City. OEM print for gaming equipment will hit the jackpot as Williams (+25 percent) and others introduce networked gaming systems and premium participation portals; not your grandma’s slots.

On the other hand, state/provincial lotteries will scratch-off print at zero growth and a reduced print spend, except for outdoor and POS promotions of electronic games. In the pot will be 3.8 percent of all print, with no geographical concentration beyond Nevada.

At No. 13 is FASHION ($566B, +2 percent; with $7.3B to print, -8 percent). Print will be on the hanger as Google offers “circular-style” advertising similar to ad inserts in newspapers. Macy’s (+4 percent) will be among the first users of retail l fashion. Multiple pictures and type may be accessed through searches and clicked on for detailed information and purchase. Our medium must counter with prêt-a-porter (ready-to-wear) QR codes and TXT messaging in a P2M sequence that includes push-message follow-ups and transactional capability. The FSI and catalog printers are otherwise passé.

Apparel makers will continue en-vogue as VF Corp. (+23 percent) and followers acquire hot brand names and take them global. Footwear, especially, will be print-intensive in ROP, catalog and in-store marketing. Tony Shin (+56 percent) and Zappos (+40 percent) are on their toes. Designed in U.S.A. in-store and on-product print should be de rigueur.

Marked down is discount fashion with the demise of Syms and others as shoppers prefer big box retailers. TJX (+9 percent) measures tall because it is positioning, with print, as a fashion brands-for-less destination. With many chains cash-strapped, China apparel makers will begin buying, or possessing, blocks of stores. Fashion, overall, will be the second largest demander of periodical and catalog advertising, accounting for 3.7 percent of all print, concentrated in the Northeast, Midwest and West.

ENTERTAINMENT ($888B, +5 percent; with $5.9B to print, +7 percent) raises the curtain at No. 14. Streaming media sales (+24 percent) will kill store/mail rentals (-18 percent) as Ultraviolet (+234 percent) and other startups ultimately replace DVDs. Netflix (+20 percent) will control more than one-third of high-definition online video, just behind YouTube. Video on demand (VOD) will reach 5 billion views per day as HD compression reduces bandwidth to allow robust content traffic. Walt Disney (+7 percent) will again be the biggest print buyer, followed by the National Football League (+8 percent).

In recorded entertainment, music consolidations like the Vivendi Universal deal (+6 percent) and Sony (+2 percent) acquiring EMI’s music and publishing Internet arm, respectively, will invigorate re-releases and print packaging. Live concerts/events will take on new life as performances are promoted virally and streamed live to IP fixed and mobile audiences. Rave reviews for printed posters, outdoor, handouts, programs and event-themed merchandise. LiveNation (+3 percent) will be a smash hit at its more than 100 owned entertainment venues. This sector will engage 3.0 percent of total print, concentrated in the West and Northeast.

Two cross-over sectors are No. 18 DISCOUNT RETAIL ($1.3T, +5 percent; with $5B to print, 0 percent) and No. 19 HOME IMPROVEMENTS ($733B, +5 percent; with $4.9B to print, +13 percent). Big box stores such as Kohl’s (+7 percent) anticipate increased sales and employment in 2012, but there will be no corresponding rise in FSIs, catalogs and other print.

Wal-Mart (+5 percent) is 50 percent of this category, and is near total build-out domestically. Existing locations will be made into super centers with more, not fewer, items. Increased spending for in-store signage and localized FSI print will be to support the opening of nearly 300 stores overseas.

Target (+8 percent) will have Canada in its bulls-eye with a major build-out, but not until 2013. Household repairs/refurbishments has a much better foundation for print. Because of the 2010 Census, the leaders are moving away from and to metro areas that lost and gained population, respectively. Lowes (+7 percent) will close 20 under-performing stores and build 24 new ones! Home Depot (+2 percent) will reposition itself into a more virtual operation, encouraging pre-orders via Web and mobile storefronts. Bad for print is a planned cutback in FSIs and ROP usage. Together, these two sectors will be 5.0 percent of all print, with no geographic concentration.

SECURITY/PROTECTION ($220B, 1 percent; with $4.1B to print, -1 percent) is locked in at No. 21, as terror threat assessments ease, troops return from foreign engagements and violent crime rates stay down. Property protection leader Tyco (0 percent) will search for new businesses to catch fire. Only data/document integrity/security will continue as a buyer of transit and business-to-business direct response, led by Symantec (+14 percent) as it expands into managed security services. This sector will secure 2.1 percent of total print, with no primary geography.

LEISURE ACTIVITY ($189B, 0 percent; with $4.0B to print, +10 percent) will rank No. 22 with a substantial increase in advertising, and the remaking of aging parks and destinations as with Six Flags (+9 percent). Digital grand-format graphics for walls, rides and other decorations and displays will queue up, as will promotional hand-outs, FSIs, discount coupon books and other print-intensive traffic builders.

LOGISTICS/FREIGHT ($670B, +7 percent; with $4.0B to print, -7 percent) is No. 23. Shipping volume will stay level, which speaks volumes about the flat economy, so the only “growth” will be energy surcharges. The sector’s largest printing buyer, the U.S. Postal Service (-4 percent), will reduce service and again raise rates. What an opportunity for our industry to occupy these facilities and offer mail and enhanced services! UPS (+8 percent) and FedEx (+11 percent) certainly will do so as they expand into printing brokerage, mail co-op and forwarding, money transfers, etc.

GOVERNMENT/FEDERAL AND STATE ($6.2T, +3 percent; with $2.5B to print, -15 percent) is No. 24. With all Cabinet departments and Congressional agencies taking massive cuts, the GPO will become the “gutted” printing office. Job tenders will be down by one-half and competition will be too intense to benefit suppliers’ bottom lines.

At the state level, unfunded liabilities and bailouts of bankrupt municipalities will force the privatization of driver’s manuals, maps, brochures, fishing licenses and most every type of “official” printed handout. Less than 3.1 percent of all print will be from government, concentrated in the Mid-Atlantic region.

At No. 25 is ELECTIONS/POLITICAL ACTION ($11B, +380 percent; with $1.7B to print, +500 percent). Screen, sheetfed and digital signage, ad premiums, newsletters, flyers, transit and outdoor ads are among the biggest print spends to gain votes. Political action (PAC) advocacy and attack campaigns will also proliferate with direct mail, ROPs and FSIs.

Off the list in 2012, respectively, at No. 26, No. 27 and No. 28 are HIGHER EDUCATION, RELIGION/CHARITY and BUSINESS/PROFESSIONAL SERVICES. Collectively, these sectors have slashed print spending, but remain significant buyers at more than $3B in mostly sheetfed, cold web and small-format digital printing buys.

All together, the 25 largest market sectors should constitute more than 93 percent of total print purchases.
As overall industry demand declines by nearly 3 percent, managements must identify, and then execute on, three or more market category matches. Selling smart in 2012 is an imperative. PI

About the Author
Now in its 33rd year, Vincent Mallardi’s “Hot Markets” is the longest, continuous forecast of the printing industry by sector, region and product. The complete “Hot Markets 2012-2013” edition is available for purchase by contacting the author at vince@pbba.org.