Dr. Joe Webb at Print 09, September 14, 2009


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Presentation at Print 09, Chicago, on September 14, 2009, by Dr. Joe Webb, Director of Economics & Research of WhatTheyThink.com. The event was sponsored by manroland. PLEASE NOTE THAT THE AUDIO HAS NOT BEEN SYNCHRONIZED; slides must be advance by the viewer.

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Dr. Joe Webb at Print 09, September 14, 2009

  1. 2. Entrepreneurs Welcome: Opportunities in the New Printing Industry Dr. Joe Webb WhatTheyThink Economics & Research Center Print 09, Chicago, September 14, 2009
  2. 3. Agenda <ul><li>Quick overview of the economy </li></ul><ul><li>“ Entrepreneurs Welcome” </li></ul><ul><li>9:40 break </li></ul><ul><li>Q&A until 10am </li></ul><ul><li>10:15 manroland booth #1129 for complimentary copies of “Renewing the Printing Industry” </li></ul>
  3. 4. Long before recession, GDP was sub-par (Y-Y data) ‏
  4. 5. Oncoming problem: expansion of money with no goods/services to absorb it
  5. 6. Stagflation is here <ul><li>CPI since December 2008 is 4.2% </li></ul><ul><ul><li>ISM Manufacturing inflation report very discouraging </li></ul></ul><ul><li>GDP might be slightly positive in Q3, but not worth noting </li></ul><ul><li>Employment worsening </li></ul><ul><ul><li>Workforce is shrinking, hours stagnant </li></ul></ul><ul><ul><ul><li>Unemployed + underemployed + discouraged = 16.8% </li></ul></ul></ul><ul><ul><li>Employment is now at December 2003 levels </li></ul></ul><ul><ul><li>Employers reluctant to hire when regulatory environment is cloudy and uncertain </li></ul></ul><ul><li>Productivity is rising when GDP is not </li></ul><ul><ul><li>Creates more slack in economy, so no hiring </li></ul></ul>
  6. 7. But wait… there’s more! <ul><li>Trade skirmishes </li></ul><ul><ul><li>China: tires; new tariff on US poultry? </li></ul></ul><ul><ul><li>Canada: stimulus money country of source requirements </li></ul></ul><ul><ul><li>Mexico: truck drivers; new tariffs on 40 US products, mainly agriculture </li></ul></ul><ul><li>Change in role of dollar </li></ul><ul><ul><li>China diversifies </li></ul></ul><ul><ul><li>UN considers issues: worldwide currency? </li></ul></ul>
  7. 8. Latest recovery indicators
  8. 9. 9 quarters of negative real “growth”
  9. 11. Forecasts: 2 models, WTT opinion 2009 = $86.5, 2015 = $58.0
  10. 12. More Entrepreneurship, Please
  11. 13. What’s changed in 2+ years <ul><li><3 years ago... </li></ul><ul><ul><li>no iPhone </li></ul></ul><ul><ul><li>no Twitter </li></ul></ul><ul><ul><li>Facebook was obscure web site </li></ul></ul><ul><li>In mid-2009 </li></ul><ul><ul><li>30+ million iPhones </li></ul></ul><ul><ul><li>50 million+ 7/2009 Twitter users who accessed site </li></ul></ul><ul><ul><li>250+ million Facebook users </li></ul></ul><ul><ul><li>Facebook Mobile 65+ million users 8/2009 </li></ul></ul>
  12. 15. Entrepreneurs Welcome: Yeah, right <ul><li>Why would anyone want to invest in a declining industry? </li></ul><ul><ul><li>No one will lend to us </li></ul></ul><ul><li>No niches with high growth rates </li></ul><ul><li>Replacement technologies are rampant </li></ul><ul><li>Environmental preferences and regulations limit upside </li></ul>
  13. 16. What is entrepreneurship? <ul><li>Many definitions </li></ul><ul><ul><li>Activity of organizing, managing, or assuming risks of a business or enterprise (Webster’s) </li></ul></ul><ul><ul><li>The practice of starting new organizations…in response to new opportunities (Wikipedia) </li></ul></ul><ul><ul><li>A process that creates something new, different; changes or transmutes values (Drucker) </li></ul></ul><ul><ul><li>Innovative acts that create dynamic disequilibrium (based on Schumpeter) </li></ul></ul>
  14. 17. Does it matter? <ul><li>Is entrepreneurship… </li></ul><ul><ul><li>Everyone? </li></ul></ul><ul><ul><li>An exclusive few? </li></ul></ul><ul><ul><li>Permanent, transient or an event? </li></ul></ul><ul><li>What is “innovation”? </li></ul><ul><ul><li>An essence of newness </li></ul></ul><ul><ul><li>Different application of an “old” idea </li></ul></ul>
  15. 18. When things don’t make sense <ul><li>Differences in beliefs and realities </li></ul><ul><ul><li>Economic functions of an industry </li></ul></ul><ul><ul><li>Assumptions about it </li></ul></ul><ul><ul><li>Values and expectations of customers </li></ul></ul><ul><ul><li>Rhythm and logic of processes </li></ul></ul><ul><li>It always helps to be maladjusted </li></ul>
  16. 19. Are printers entrepreneurs? <ul><li>Very few are, same as everyone else </li></ul><ul><li>Are printers just channels / expressions of technological innovations made by others? </li></ul><ul><li>Limitations </li></ul><ul><ul><li>Capital locked in equipment appropriate for a different business period: lags market shifts </li></ul></ul><ul><ul><li>Profit generation is lacking </li></ul></ul><ul><ul><ul><li>Necessity is the mother of more lease payments </li></ul></ul></ul><ul><ul><li>“ All printers are the same” more justified than ever </li></ul></ul><ul><ul><li>Focus on production processes as means of escape </li></ul></ul>
  17. 20. What is the focus? The medium or the businesses? <ul><li>Is “demand for print” relevant? </li></ul><ul><ul><li>Diverse and numerous media environment </li></ul></ul><ul><ul><li>Is there a “demand for communications” </li></ul></ul><ul><li>Why are print businesses formed? </li></ul><ul><ul><li>A pre-existing need for printed goods that changed in favorable ways when demographics changed </li></ul></ul><ul><ul><ul><li>Tradition thrives until alternatives arrive </li></ul></ul></ul><ul><ul><li>There is a lack of new print business formation at this time </li></ul></ul>
  18. 21. Entrepreneurs Welcome: No kidding! <ul><li>The new focus is on the printing business </li></ul><ul><ul><li>Equipment has always been an expression of strategy, competence, expectation and desire </li></ul></ul><ul><li>Major shift is in process </li></ul><ul><ul><li>Grasping at straws? </li></ul></ul><ul><ul><ul><li>Marketing services, ancillary services </li></ul></ul></ul><ul><ul><ul><li>Perpetuates existing processes in most companies </li></ul></ul></ul><ul><ul><li>The great shake-out </li></ul></ul><ul><ul><ul><li>Weak demand, recession </li></ul></ul></ul><ul><li>What’s next? </li></ul><ul><ul><li>Maybe we should focus on the clients </li></ul></ul>
  19. 22. Primary concept <ul><li>Entrepreneurial strategy increases chances of success when it starts with the users </li></ul><ul><ul><li>Enhance profits or provide efficient costs </li></ul></ul><ul><ul><li>Objectives and progress criteria </li></ul></ul><ul><ul><li>Client’s target audience preferences and needs </li></ul></ul>
  20. 23. Entrepreneurs Welcome: That’s me! <ul><li>No one way to succeed… </li></ul><ul><ul><li>… except to defy industry traditions and accepted measures of mediocrity </li></ul></ul><ul><li>Non-advertising media growing </li></ul><ul><ul><li>The “rules” are still being written </li></ul></ul><ul><ul><li>Media interactions still being learned </li></ul></ul><ul><li>Measurement obsessed </li></ul><ul><ul><li>No one really knows what ROI is until they see it </li></ul></ul><ul><ul><li>Change formats and messages as measurements unfold </li></ul></ul>
  21. 24. Media Changes Create Entrepreneurial Opportunity The difference between old and NOW
  22. 25. Permanence <ul><li>Old </li></ul><ul><ul><li>A physical format </li></ul></ul><ul><ul><li>Stored, cared for, and known </li></ul></ul><ul><li>Now </li></ul><ul><ul><li>Always available </li></ul></ul><ul><ul><li>Simultaneous deployment </li></ul></ul><ul><ul><li>Multiple formats </li></ul></ul>
  23. 26. Portability <ul><li>Old </li></ul><ul><ul><li>You can take it with you </li></ul></ul><ul><li>Now </li></ul><ul><ul><li>Always connected </li></ul></ul><ul><ul><li>Content optimized (on the fly?) for different formats of viewing devices </li></ul></ul>
  24. 27. ROI <ul><li>Old </li></ul><ul><ul><li>Function of design, content, and budget </li></ul></ul><ul><li>Now </li></ul><ul><ul><li>Deployment related </li></ul></ul><ul><ul><li>Social and other media have low cost barriers </li></ul></ul><ul><ul><ul><li>“ Lower bar” than traditional media </li></ul></ul></ul><ul><ul><ul><li>Content creation is cheap in relation to advertising </li></ul></ul></ul>
  25. 28. Cross or integrated media <ul><li>Old </li></ul><ul><ul><li>Serial creation and deployment </li></ul></ul><ul><ul><li>Print production created imaging baseline </li></ul></ul><ul><li>Now </li></ul><ul><ul><li>Integrated and parallel production </li></ul></ul><ul><ul><li>Integrated and parallel deployment </li></ul></ul><ul><ul><li>Integrated and parallel measurement </li></ul></ul>
  26. 29. Reference point <ul><li>Old </li></ul><ul><ul><li>Print as static reference </li></ul></ul><ul><ul><li>Reliable, authoritative </li></ul></ul><ul><li>Now </li></ul><ul><ul><li>Gateway to other media interaction </li></ul></ul><ul><ul><li>Authority is based on repetition, access and “branding” </li></ul></ul>
  27. 30. Media selection <ul><li>Old </li></ul><ul><ul><li>The medium is the message </li></ul></ul><ul><ul><li>Communicator in full control of medium selection and economics </li></ul></ul><ul><li>Now </li></ul><ul><ul><li>Information user has dynamic choice </li></ul></ul><ul><ul><li>Saturation with relentless consistency is the message </li></ul></ul><ul><ul><li>Obscurity is the enemy </li></ul></ul><ul><ul><li>Obscurity the risk of single media </li></ul></ul>
  28. 31. Personalization <ul><li>Old </li></ul><ul><ul><li>Variables were selected by the communicator </li></ul></ul><ul><ul><li>Based on historical data </li></ul></ul><ul><li>Now </li></ul><ul><ul><li>A choice made by the recipient </li></ul></ul><ul><ul><li>Historical data + real time actions of recipient </li></ul></ul>
  29. 32. What do printers see? <ul><li>Demanding users with tighter budgets </li></ul><ul><li>Prices and costs out of alignment </li></ul><ul><li>Green ambiguity </li></ul><ul><li>Confusing communications </li></ul><ul><ul><li>“ They’re just not buying print like they used to” </li></ul></ul><ul><ul><li>Twittering behind their backs </li></ul></ul><ul><ul><ul><li>Is it the inane messages of teens </li></ul></ul></ul>
  30. 33. Harsh realities <ul><li>Print prices not keeping up with inflation, but costs are </li></ul><ul><li>Recession and budget cuts justify new behaviors of clients </li></ul><ul><li>Equipment investments critical for recalibration of industry economic structure </li></ul><ul><ul><li>Installed base does not match market needs </li></ul></ul><ul><ul><li>Unwinding through bankruptcies and closures? </li></ul></ul><ul><li>Flexibility is limited when management backs itself into a corner (via debt?) </li></ul>
  31. 34. Entrepreneurs Welcome: Sign Me Up! <ul><li>Entrepreneurs create new business; Others just get old business </li></ul><ul><li>Risk is a choice; indecisiveness is a risk </li></ul><ul><ul><li>Businesses that can be planned with precision are usually stagnant industries </li></ul></ul><ul><ul><li>There is always a tension between strategy and daily decisions in a changing marketplace </li></ul></ul>
  32. 35. Building blocks of the new printing business <ul><li>Corporate employment will be austere </li></ul><ul><ul><li>Outsourcing opportunities: </li></ul></ul><ul><ul><ul><li>Credibility? Staffing? Services? </li></ul></ul></ul><ul><li>Small and mid-size business lack communication capabilities </li></ul><ul><ul><li>New media is an entry point, a lever for new print </li></ul></ul><ul><li>Multiple media is essential communications strategy </li></ul><ul><ul><li>Even for the most mundane items </li></ul></ul><ul><li>Network new skill resources, not employees </li></ul>
  33. 36. The correct role of “ancillary services” <ul><li>Services that if added may one day stand on their own with high value-added </li></ul><ul><ul><li>Not just “billable tasks” </li></ul></ul><ul><ul><li>Strategic, not opportunistic </li></ul></ul><ul><li>Retainer-based content development, management, deployment, and measurement services </li></ul><ul><li>Why task-based “ancillary services” are tempting </li></ul><ul><ul><li>Prices keeping up with inflation </li></ul></ul><ul><ul><li>Non-print growing +1%/yr while print –2-3%/yr </li></ul></ul>
  34. 37. Media choice can be boon for print businesses
  35. 38. Can’t get the big e-mail payback unless you keep lists clean
  36. 39. How to do it: simplified case <ul><li>E-mail blast from well-designed data base </li></ul><ul><ul><li>Has mailing addresses and e-mail addresses </li></ul></ul><ul><li>Collect bounces next day and mail post card </li></ul><ul><ul><li>“ We recently tried to contact you, but your e-mail address did not work… you missed our latest sale” </li></ul></ul><ul><ul><ul><li>Mention new product in past category purchase, etc. </li></ul></ul></ul><ul><ul><li>pURL or QR to go to record update page </li></ul></ul><ul><ul><li>Incentive to update </li></ul></ul><ul><li>Constantly recruit additional targets </li></ul>
  37. 40. Stay on top of new media <ul><li>Smartbrief.com </li></ul><ul><ul><li>Many free e-newsletters for social media, interactive media, advertising businesses </li></ul></ul><ul><ul><li>Also e-newsletters about small business, and many other industries, topics </li></ul></ul><ul><li>Ad:tech shows </li></ul><ul><ul><li>New York 11/4-6/2009 </li></ul></ul><ul><ul><li>San Francisco 4/20-22/2010 </li></ul></ul>
  38. 41. How we grow again <ul><li>Worry about print businesses, not print media </li></ul><ul><li>Print’s costs must continue to fall </li></ul><ul><li>Print’s value will be judged in relation to other media </li></ul><ul><ul><li>make the other media successful, and print becomes part of new media </li></ul></ul><ul><li>New media become a jumping-off point for new print consumers </li></ul><ul><ul><li>Retainer services are the best of the “ancillary” class </li></ul></ul>
  39. 42. The rules for new media, and the new printing businesses are not yet written Entrepreneurs write them in their own style
  40. 43. QUESTIONS! Dr. Joe Webb WhatTheyThink Economics & Research Center