Inket Summit 2017 Advisory Board Shares Trends and Takeaways

Marco Boer

Marco Boer, IT Strategies
Inkjet Requires Culture Change

Nearly 10 years after the first introduction of high print quality inkjet printing systems, the production inkjet segment continues to sustain growth rates most other printer segments can only dream about. While many of the new equipment sales are still replacing monochrome continuous-feed toner printers, technology innovation in both graphics-like print quality and cut-sheet production printers are opening up access to new first-time buyers.

While buyers of production inkjet technology have become a lot savvier, and one might develop the opinion that production inkjet technology is mainstream, penetration of digital printing technology across all print applications — document, publishing and packaging — remains low. According to a major study commisssioned by NPES and conducted by IT Strategies, production inkjet technology accounts for only about 1.9% of all pages printed in North America.

What’s noteworthy is not the low penetration of inkjet printed pages, but rather the momentum of growth of inkjet pages. Since production inkjet’s market introduction, effectively inkjet’s page volume output share has more than doubled every five years. In comparison to conventional (offset, flexo, gravure, screen) and even toner-based digital technologies, there is no better alternative for growth in the production printing industry.

There were three types of prospective buyers of production inkjet printers attending this year’s Inkjet Summit: Those transitioning from toner to inkjet for productivity/cost savings and application expansion reasons; those who acquired inkjet previously and have found themselves requiring additional capacity (often faster than expected, through market share gain and offset page replacement); and those waiting for near output quality equivalence to offset, as well as a lower equipment acquisition cost.

The challenge facing all of these prospective buyers is often less technology related (there are no “bad” production inkjet printers; all are far more reliable than users have come to expect from other printing technologies), than business model and culture related. To thrive with production inkjet, print providers need to move away from the legacy business model of offering the highest print quality at the lowest price per piece to a business model of sellable print quality with high-value content at a reasonable price. The impact upon deploying production inkjet into a print shop goes well beyond a technology change.

The impact of changing culture upon deployment of production inkjet is difficult to quantify in advance. Most of the attendees’ questions, therefore, centered upon more tangible questions. The No. 1 group of questions on people’s minds still centered on technology. There is so much innovation in ink, substrate, inkjet printhead, software and finishing technology that the ability to meet and discuss with nearly all providers of these technologies in a single location makes the Inkjet Summit more desirable than any other event in the printing business.

Page Volume Market Share Trends by Technology (Click on chart to enlarge)

Interestingly different from previous Inkjet Summits, the second largest group of questions this year focused on understanding business models — what is required to sell high-value, often variable content. Of course, understanding the economics and ROI also plays a big role. The challenge in understanding ROI with inkjet production printers is more complicated than most segments, as there are so many variables to consider. There are very few identical installations of production inkjet printers, due to the wide variation in productivity and quality options, as well as software and finishing options. This can be frustrating for potential buyers, especially those who want to apply legacy ROI business models upon production inkjet systems. If the cost of inkjet ink is the first concern of a prospective buyer, that buyer is probably not quite ready for production inkjet.

If one were to ask an attendee the most important takeaways from the three action-filled days of Inkjet Summit 2017, I’m confident he/she would say as follows:

• Inkjet just runs ... prepare to handle the downstream challenges.
• Digital print is about data ... about IT and workflow investment... about new revenue.
• The business model changes ... from cost of print to cost of response ... inkjet helps create new pages that would not have existed before.

With technology, business model and economic innovation continuing at an ever-faster pace, Inkjet Summit 2018 is bound to continue as the most important event in the production inkjet business in North America.

Barb Pellow

Barb Pellow, InfoTrends
Inkjet Drives Direct Mail Success

In a world full of instant gratification and digital devices, print service providers are asking, “What is the future of direct mail?” Data indicates the future is bright for direct mail that is highly relevant and part of an integrated omnichannel experience.

Each year, InfoTrends publishes an application forecast that explores the growth in digital page volume for specific applications. InfoTrends projects that overall digital print volumes in the United States will increase by 4% through 2020, but some applications are expected to outgrow that rate quite noticeably. Both direct mail and catalogs (see Figure 1 on the next page) are poised for significant digital page volume growth — catalogs are projected to increase by 22 billion impressions between 2015 and 2020, while direct mail will grow by more than 12 billion impressions.

Figure 1: Fastest-Growing Digitally Printing Applications by Absolute Page Volume (Click on chart to enlarge)

According to DMR Stats, we live in a world where every day:

• 269 billion emails are sent with a 3.1% click-through rate
• 2 million blog posts are written
• Individuals spend 50 minutes on Facebook, Instagram or Messenger
• 864,000 hours of video are uploaded to YouTube

Marketers must face the challenge of connecting with customers who are experiencing “digital fatigue.” Direct mail is an ideal vehicle for cutting through the clutter in today’s overcrowded marketplace. According to InfoTrends’ study, “Direct Marketing Production Printing and Value-Added Services,” all age demographics have a higher propensity for opening and reading direct mail instead of an email. The most interesting data point from this study is that digital natives — millennials —were especially likely to prefer direct mail to email!

Even more importantly, millennials indicated that direct mail had a higher probability of getting them to take action than an email message (see Figure 2 below).

The critical component with getting consumers to open direct mail is relevance. Today’s consumers know what they want, and they know what they like! The messaging should be personalized based on the recipient’s interests or previous purchases. Direct mail is also more effective if it is part of an integrated customer experience — the piece should be enhanced with QR codes, augmented reality or interactive elements that integrate with digital devices. Print service providers must develop a portfolio of services that supports a data-driven, omnichannel approach to direct mail.

At the recent Inkjet Summit, Peter Barzach, VP of operations at Data-Mail, and Martin Aalsma, president and COO at Documation, discussed how inkjet technologies can deliver the customized communications that today’s consumers demand while also creating an omnichannel experience.

Figure 2: Are you more likely to read an e-mail with a sales/promotional offer or look at a piece of direct mail? (Click to enlarge)

Data-Mail Inc. is a family-owned and operated business that was established in 1971. Today, the firm provides services to blue chip clients in the financial services, retail, publishing, health care, telecom, insurance and high-tech sectors. The organization has 500,000 sq. ft. of production facilities and mailed more than 1.5 billion pieces last year. Its services portfolio includes offset printing, envelope manufacturing, data processing, sheetfed and continuous-feed inkjet printing, personalization, cross-media support, lettershop, and Web tracking and reporting.

When asked about the types of inkjet applications that his company produces, Barzach explained, “We provide customers with rule-based logic that pulls in variable content in a high-speed, continuous-form environment. We can change salutations, photos for demographic appeal, special offers and affinity partners based on past purchases, then integrate the mail piece with interactive elements. While every print technology has its place, inkjet gives us higher uptime and speed than cut-sheet alternatives, while also featuring lower costs for consumables and maintenance.

“Both the quality and stock gamut for inkjet have significantly improved over the years. Unlike offset technology, inkjet doesn’t have the lengthy makereadies or films, plates and photo chemicals. It has proven to be the best choice for highly variable versions in short- to mid-range runs. With continued improvements in ink capabilities and costs, inkjet technology is on track for handling much longer runs,” he said.

Documation has been a part of the print world for more than 20 years.
The company’s bread and butter has been printing for associations and publishers. Along with associations and publishers, Martin Aalsma highlighted, “Inkjet technology has enabled Documation to efficiently move into the world of 1:1 communications and direct mail. Our staff now includes creative designers for microsites and landing pages, as well as list management, data management and analytics services.”

According to Aalsma, there were a number of key considerations in the evaluation of technologies and applications when Documation began its inkjet journey. Ink management, quality, range of substrates, RIP capacity and finishing were all integral factors in the inkjet equipment acquisition decision-making process.

Aalsma offered a number of recommendations for those who are making the move into the inkjet/direct mail space. He noted, “Your designers need to be well-educated about how to design for inkjet. This includes ink coverage and ink cost. Salespeople must be educated on how to articulate the value proposition for targeted direct marketing and drip campaigns. Last, but not least, print service providers need to evaluate operational considerations, especially finishing.”

Today’s marketers understand the importance of 1:1 conversations with clients. Targeted communications can drive real business results.

This year’s Inkjet Summit provided tremendous insight into how today’s service providers can help deliver relevant mail that leads to an omnichannel relationship.

Elizabeth Gooding

Elizabeth Gooding, Insight Forums
State of the Transaction Market

With the Inkjet Summit in its fifth year, it’s not surprising that the transaction printing segment would have a mix of people buying inkjet for the first time, as well as people looking for their second, third or even 10th device. After all, transaction printing companies were the early adopters of production inkjet accounting for nearly half of all inkjet installations through 2010. What I find interesting is the difference in focus between first-time buyers and “next-time” buyers.

Based on questions posed online, during the event and in my own consulting interactions, many “next-time” buyer participants have a very different approach than they did the first time they bought inkjet. Next-time buyers want to do more with their inkjet device. They are often looking for higher quality in terms of resolution, ink composition and finishing to support moving into “transitional printing” that offers enhanced brand support and components of direct marketing.

These buyers were also looking at solution areas such as:

• Workflow and output management software
• Composition or “Customer Communications Management” software
• Paper options to balance quality and ink usage
• Sheetfed production options

Many said that they wished they focused on those solution areas the first time around. While some next timers were simply looking to increase their production throughput, the majority were trying to do more and do it better.

By contrast, many first-time buyers represent smaller companies than the early adopters and are primarily concerned with inkjet risk factors like having enough volume to be profitable. They may have existing equipment that is paid for and works fine, making it difficult to justify the decision on the basis of cost savings alone. These companies run the risk of being left with “Yestertech” — equipment designed years ago that is durable and functional but lacks the competitive capabilities of newer technology.

This is the new risk factor, being left behind as current competitors adopt new technology and new competitors emerge from different segments.

Just as transaction printers are adding direct marketing capabilities with inkjet, some direct marketers are sizing up the transaction printing segment, and even commercial printers have started to get into the variable data game if inkjet is part of their bag of tricks. According to IT Strategies, there are approximately 600 continuous inkjet devices installed across 250 sites in North America. That’s a lot of inkjet-driven competition, even before considering the impact of sheetfed inkjet.

The FOMO Factor
Both first-time and next-time buyers suffer from fear of missing out (FOMO): What if I buy now and a faster, cheaper, better machine comes out in six months? While extensive R&D dollars continue to pour into inkjet, the FOMO factor is minimized by “forklift-free” upgrades. Many OEMs are actively supporting their customers in enhancing existing technology with speed upgrades, new ink sets and other quality improvements that work on the same device footprint.

This is not a philanthropic exercise on the OEM’s part; it’s good business. These types of upgrades enable more inkjet pages, create a barrier to competitors entering the account and also minimize the market for second-hand equipment, thereby slowing new equipment prices from trending downward.

So, while there are fewer reasons to put off a decision, there are also few good reasons to rush. Buying an inkjet printer for the first time or the next time requires strategic thinking. Buyers should have well-documented, capability-focused requirements that apply to software and materials handling as well as printing and finishing. Particularly when it comes to software, more complete requirements can result in better bids and lower professional services estimates.

Consider the long-term view with your buying considerations. You may have a book of business that can cost-justify the transition to inkjet, but also consider the potential volumes that could transition after that, and new business opportunities that could create necessary economies of scale. Being strategic requires more work, but can pay off in multiples.

Move as quickly as you can with your inkjet evaluation while considering your strategic options, avoiding errors in calculations and giving yourself time to socialize the decision with key stakeholders. There is an ancient Greek adage that loosely translates to “Make Haste Slowly” and this is my advice to those evaluating inkjet today.