VARIABLE DATA PRINTING -- Building the Variable Data Base

BY MARK SMITH

Technology Editor

Even as variable data printing (VDP) capabilities perennially failed to become the next big thing in the industry as a whole, the original business model for success has endured.

This archetype is an all-digital operation that identifies itself as a marketing communications firm and not as a printer. It sells solutions and offers marketing expertise to help clients identify opportunities and craft effective applications. The firm also boasts strong IT resources and is likely to offer design, mailing and fulfillment services. It may or may not track responses for clients.

A bit more variation has been seen within the target markets for this service. Clearly among the best prospects, though, have been companies that sell through dealers and distributors. Implementing template-driven, Web-to-print solutions enables such a company to empower its channel to do customized and personalized promotions while maintaining control over its brand identity.

Digital printing in general has had to overcome a bias for offset quality, but that has been much less of an issue for variable data applications. Early adopters have encountered several other barriers to adoption that have proved difficult to break down:

* Simply making potential users aware of the technology and how to exploit it.

* Convincing marketers about the return on investment since they are used to buying based on price per thousand.

* Database issues—clients not having the prerequisite customer data or databases in a usable format.

So where does variable data printing stand today? How far has the industry expanded beyond the now-classic business model? Most of the available market information remains anecdotal, but there have been some attempts to assess the market in more formal ways.

Rochester Institute of Technology's Printing Industry Center recently published a monograph of findings from a research project that sought to validate the models for digital printing success identified by a previous work. "Digital Printing Success Models: Validation Study" was written by Patricia Sorce, Ph.D. and administrative chair of RIT's School of Print Media, and Michael Pletka, an MBA student in RIT's College of Business.

The breakdown of markets for digital printing established by the research includes versioning, mail merge, personalization, transaction printing, Internet on-demand (or Web-to-print) and fully customized communications.

Three to Think About

According to the monograph, the three challenges cited most by the survey respondents were "a need to communicate the value of personalization to customers" (84.1 percent), "clients do not have a retention or customer relationship strategy" (82.9 percent) and "clients had poor data quality" (80.6 percent).

More than 70 percent of respondents indicated they offer a slate of support services that includes finishing, fulfillment, mailing, database management and creative services. Only 22.8 percent of respondents said they measure the success of VDP jobs for customers.

TrendWatch Graphic Arts (www.trendwatchgraphicarts.com) examined the market from the demand side in its "Variable Data Printing 2005: Creatives" study. It found that 38 percent of creatives reported producing VDP jobs in the past 12 months, with about half having produced a full-color job. Less than half (43 percent) of the survey sample expected their use of variable jobs to increase this year, however.

Interquest analyzed the North American and European VDP markets for its end-of-year market update, titled "Color Variable Data Printing: 2004 vs. 2003." It found that companies currently producing color VDP projects expect to see that business grow by more than 50 percent per year over the next three years.

As for anecdotal evidence of continuing expansion in the variable data marketplace, consider the following examples of two companies that are at least stretching the mold.

As its name still reflects, Orlando, FL-based Xerographic Digital Printing was founded as a walk-in copy center. It then evolved into an on-demand printer producing mostly black-and-white books and manuals before adding its first—soon followed by a second—Xerox iGen 3 digital color press last year.

The all-digital shop has grown into a $4 million operation and continues to do a significant volume of books and manuals. It still uses three Xerox DocuTechs for monochrome work, but the new color presses did replace two Xerox DocuColor 2045 copier/printer units previously used to print color covers and short-run jobs.

Co-owner Steve Ebanks says the company has been making a push into color one-to-one marketing applications, but had enough volume to justify adding two iGen3 presses without variable data printing. "Variable data is a piece of our business that we expect to grow significantly over the years, but we are not totally hanging our hat on it right now," he remarks.

Vacation resort companies have been early adopters of Xerographic's VDP capabilities, and it also has been carving out a niche within the car dealership market.

"I believe most businesses have the potential to do personalized marketing," Ebanks says. "One of our marketing approaches is to go after small businesses that sell something of higher value, such as cars, homes, vacations, etc. We even do work for a custom pool builder.

"I like the idea of working with smaller accounts and taking them from the beginning—starting with a concept and helping them build their businesses," he continues.

For a smaller mailer, say one that sends out between 1,000 to 5,000 pieces at a time, using variable data doesn't cost much more than a static piece, Ebanks asserts.

Smaller companies typically are not even aware of variable data marketing, so Xerographic ends up starting from scratch, reports the industry exec. "We are trying to open the door for these companies," he explains. "We can design a piece, and even do digital photography. We take care of the whole process, including mailing."

Most bigger companies are at least aware of VDP, but they present other challenges, Ebanks says. "I've been following variable data printing's development and doing some degree of it for almost 10 years. I always thought we would get much higher revenue per page," he observes. "Large accounts are where pricing hasn't met my expectations, since they shop around more."

Speaking from experience, the industry exec says marketers may even consider switching an existing program to a new supplier. Xerographic is currently working with a local time-share company to transition production of its variable data marketing program from a shop in the Boston area to its facility.

"When the company launched the program, no supplier around here did variable data printing. They'd like it to be produced locally," Ebanks says. "We can provide better service when we're physically close to a customer."

Xerographic also works virtually with clients in a Web-to-print workflow, currently via the online ordering and e-procurement capabilities of its iWay variable data solution from Press-sense Ltd. "We are investigating other software and will probably buy XMPie's PersonalEffects for its stronger variable data features," Ebanks notes.

Core Static Work

Having a solid base of static printing business is enabling the company to take one step at a time in scaling up its variable data infrastructure, reports the co-owner.

"We have in-house design capabilities and hired a staff marketing person to support our own marketing and to help clients. We currently outsource our IT, however," Ebanks reveals. "Mailing is the tougher part of the puzzle. We're buying quite a bit of equipment to expand our mailing capabilities."

Also in the works is a program that includes response tracking, which Xerographic is jointly developing with a company that does marketing for used car dealerships.

AccuLink, in Greenville, NC, is stretching the model for variable data success by virtue of the market it serves. It, too, started out as a retail copy center, operating under the name AccuCopy (changed in 2003) and serving the local university community.

"Printers started finding their way to us because of our capabilities," recounts Tom O'Brien, president. "By the early 1990s, services to the trade had become the biggest part of our business. That had never been a business model we thought about pursuing, but we decided to make the switch to working more directly with other printers and through print brokers."

Today, the company has no outside salespeople, yet did more than $10 million in sales last year. It expanded its services by acquiring a mailing shop and has grown organically to be both one of the largest thermographers and custom tab producers in the state, O'Brien says. The latter are outgrowths of its looseleaf work, including manuals and technical catalogs.

AccuLink has half-size web and sheetfed offset presses, but hadn't done any process color printing in-house until it installed a seven-color HP Indigo 3050 digital color press. "We do one- to three-color offset work, including pre-printed shells," the company's president explains. "We buy four-color offset outside."

Pre-printed shells can be imprinted on the shop's high-speed ink-jet system and also contribute to the volume of work produced on its four Kodak Digimaster 9150 monochrome printing systems.

According to O'Brien, better than 50 percent of all the sheets output by the HP Indigo 3050 are versioned, personalized or some combination of both. He concedes that being one step removed from the ultimate buyer can make it more challenging to offer variable data services.

"We work with a number of print brokers that recognize there is a valid market for it (VDP). They have confidence in their customer relationships so they are comfortable having clients call us direct and often will bring us in during the consultative stage of a project," O'Brien explains.

One of AccuLink's leading applications is for a broker that found a niche serving small financial services companies. It's producing more than 150,000 fully variable, color (on both sides) postcards a month for that client, he says.

"We're also doing work for some mailing houses that have looked at the technology and decided they're not quite ready to make the investment yet," O'Brien adds.

Varied Product Base

Other end products produced with variable data by the printer include short-run books, magazines, catalogs and even posters, in one case.

"One of the main reasons we bought this press instead of the competing technologies was because the HP Indigo is the only engine today that can print true PMS colors," the industry exec continues. "There is a lot of one-, two- and three-color, variable spot color work to be had that can be printed faster all digitally and in shorter runs than with pre-printed shells."

Having an online ordering system, which it developed in-house, helps make it practical for the company to work with brokers and other printers, O'Brien asserts. It has already developed close to 140 ordering sites that are branded for brokers, he says.

AccuLink invested in PrintSoft Americas' PreS variable data software two years before it bought the HP Indigo 3050 press with an eye toward getting into color work. The shop also uses the Yours Truly utility that came with the press since it has found the software to be an effective tool for quick jobs that its graphics department is able to process without involving the IT, he adds.

O'Brien expects the company's mailing shop to be an engine for future growth. "That business is growing rapidly and is both pushing work to and pulling work from the pressroom," he observes.