The outlook for print in 2018 will be dominated by the four letters: GDPR. The optimists predict that legislation to prevent unwanted email and SMS messaging will result in brands and agencies turning towards print. The pessimists will claim that the impact will be to reduce marketing activity at least until how the Information Commissioners Office decides how to police the legislation which comes into effect on 25 May.
There has certainly been increasing awareness of the stipulations around the use of personal data, around what is and what may not be permitted. Speculation abounds that the ICO plans one or two high profile actions to ensure everyone stays in line and to set the boundaries of the legislation.
We prefer the more optimistic take and believe that GDPR will tilt the seesaw towards print away from online marketing, at least to consumers and named private individuals going about their browsing business with the expectation of not being stalked by recurring ads for something they have just purchased.
The direct mail sector needs the fillip. According to Prodcom figures from the government, the value of catalogue printing in 2016 fell to £214.6 million from £295.1 million a year earlier. The fall from £559.1 million spent on priced catalogues in 2008 is an indication of just much online shopping has grown in the decade.
Anecdotally 2017 was a much better year for direct mail as a new generation discovered the pleasure of an envelope to open. This was backed by research from the Royal Mail’s Marketreach group which showed how many people in a household interacted with a piece of mail over an extended time.
Now the Information Commissioner’s Office has confirmed that explicit permission is not needed to post a communication to a named individual.
That positive permission is required for electronic communication. The ruling states: “You won’t need consent for postal marketing… you can rely on legitimate interests for marketing activities if you can show how you use people’s data is proportionate, has a minimal privacy impact, and people would not be surprised or likely to object.”
It is not going to bring back the days of mass mailings, earning the unwanted ‘junk mail’ sobriquet, but lessons learned about how a printed piece can drive a customer to a website, where a purchase can be made, will rise.
Any revival in direct mail will not be on the scale of the resurrection of the printed book. Digital printing and digital supply chains have underpinned an expansion of the printed book according to Prodcom’s figures. A sector generating sales of £581.9 million in 2008 has grown to sales of £1.10 billion in 2016.
The definition of a book is broadening to include high end marketing material presented in a format between two covers, perhaps case bound and perhaps too with a printed cover or even a slip case. The longevity of a book and its cultural importance as something to gift, to keep and to return to, means it is hard to throw away and an attractively designed and printed book will be cherished.
As production runs have become shorter, there has also been a proliferation of small publishers, passionate about their titles in much the same way as those passionate about beer have spawned hundreds of craft breweries.
The general advertising material area remains one of the largest in UK print, despite the rise of email, internet and other forms of digital advertising. Flyers, posters, brochures, banners and more complex advertising products all remain popular, evidenced by the sales value reaching £1.45 billion in 2016, a dip from £1.49 billion the year before.
Over the longer term the fall is sharper – down from £2.08 billion in 2008.
The advertising world is bracing itself for a shape up as consultancy firm Accenture is starting to buy up creative agencies and is even rumoured to be prepared to buy WPP, the world’s largest ad agency.
Should that happen, other consultancy businesses will scramble to join the bandwagon and advertising may end up as another outsourced business service, perhaps to the detriment of print.
The flattening out of the decline in sales could be a sign that perhaps sentiments towards digital advertising are falling. However, if there are earthshaking developments as outlined above, predictions about ad spend on print will be that much harder.
Perhaps also spending is bottoming out because online print has made it simple and cheap to buy flyers and other simple advertising material, thus boosting consumption. The trend towards online print will continue, though there are signs too that the online print world is pulling back from the race to be the cheapest.
In 2018 many of the German giants will be promoting loyalty through discount schemes rather than pushing for the lowest prices. They have been stung by the post referendum shift in the exchange rate and by the rise in UK rivals.
There is plenty of expansion still for online print, even of the print, fold and cut variety. But there is more opportunity with higher value products which can achieve a better margin.
The online players which act as consolidators rather than manufacturers will drive this, exploiting the need that commercial printers have for volume to keep their prices low. If printers choose to sup with this devil a long spoon and steady nerves are needed.
The manufacturing online printers will also seek to drive up margins and prices through a wider choice of substrates, additional finishes and multi-section products with options on finishing, perfect binding as well as stitched brochures, for example. A generation of specifiers used to purchasing all manner of goods and services online will not balk at buying more sophisticated print products online once the risk has been mitigated.
The advertising and marketing business is also rediscovering, or in many cases discovering for the first time, how effective print can be. It is not about blanket marketing with volumes of paper to counter a minuscule response rate, but rather spending on design, message, targeting and impact to ensure a higher response rate within the budget. It is not spending more, but spending wisely.
Magazine printing remains one of the biggest print sectors in the UK, but is also not what it was. In 2008 the Prodcom value of magazines and journals was over £2.04 billion. In 2016 this had fallen to £1.48 billion, down on the £1.49 billion achieved the year before.
This can be seen in the ABC circulation figures for magazines which show a steady decline for most titles. Sponsored and marketing magazines, those published by supermarkets and other retailers, are an exception and have become the largest circulating magazines in the country.
In contrast general interest consumer magazines are suffering most while special interest titles have greater resilience. People like to read about their hobby whether building model railways, gardening or towing a caravan through the countryside.
There continues to be a shift away from business to business titles in print as the ad take declines thanks to the migration of recruitment advertising to the internet and the cost of distribution increases. There will be further closures in this sector in the coming year.
Local interest magazines remain buoyant particularly in rural areas, while the urban equivalent is the arty or lifestyle magazine created by small publishers for the millennial generation. These will demand high production values, interesting papers, bindings and added value processes.
The shrinkage in the sector has already claimed Polestar and last year, Headley Brothers. Further consolidation cannot be ruled out.
The stationery and functional print area has stood up better than most areas of print: the 2016 sales value was £1.10 billion, from £1.37 billion and around the same as the £1.15 billion in 2008. This underlines the popularity of business cards and the necessity of letter headed paper.
The transition from carbonless set invoices to those produced by an office printer had happened before 2008. Some areas of business still require business forms, but this has already shrunk and any further loss will scarcely be noticed.
There is evidence, through announced investments, that envelope suppliers are enjoying good conditions of late, backed up by the interest in papers chosen for their tactile properties as well as colour and performance. This appreciation of the role of creating an impact at the opening of an envelope is the print equivalent of artisan beers of gin and will continue.
The recession has fed into a flourishing of business start ups needing the basics of corporate design, product brochure, business cards, comp slips and so on. There are issues about where these fledgeling business source this, at least for the commercial printer. The convenience of online printing is winning.
The artisan drinks sector has fed print well in recent years, particularly for digital label printers. The number of craft breweries continues to rise and while in 2016 the value of beer sales fell back by £358 million, draft beer suffered more than bottled. Gin by contrast continues to ride the wave of success. Sales in 2016 increased £67 million in a year and are now three times what they were in 2009. In 2017 a further 50 gin distilleries opened to bring the UK’s population to more than 300 producers and amounting to 47 million bottles according to the Wine & Spirits Trade Association.
Many of these start ups are also planning to produce artisan single malt whiskies, but the longer maturation period for whisky means that this spirit has to remain in cask for a few more years before being bottled and labelled. In the meantime artisan rum is tipped as having growth potential.
This is supported by the Prodcom figures which show a steady increase in sales of self adhesive labels. In 2016 these had reached £774 million compared to £501 million in 2008. But the 2016 total was slightly down on the previous year’s total of £805 million. Some of this growth is attributable to a shift from wet labels which have fallen to £38 million in value, up from £36 million in 2015, but down over the decade from £52 million.
Flexo technology still dominates and analogue processes account for 93% of labels produced according to Finat. This will become 86% over the next five years. After flexo, digital toner printing is the second most important technology, with inkjet languishing behind the head start that the older digital technology has had. Toner, dominated by HP Indigo and Xeikon, is reckoned to account for 76% of digital press installations at label printers.
As a whole printed packaging is travelling in a different direction to much of commercial print. This is why Heidelberg is steering a course to achieve the same dominance in carton and label printing as it has enjoyed in commercial printing.
While converting less board in terms of weight, folding carton sales have grown from £875 million in 2008 to £1.1 billion in 2015 before slipping a little to just over £1.0 billion in 2016. The drop in weight can be attributed to lighter weight boards becoming more popular, to smaller formats or fewer units produced to end up as waste.
Demand for corrugated board packaging has mirrored this experience. In 2008 sales were worth just above £2.0 billion; by 2015, sales had become £2.5 billion before edging back to £2.49 billion in 2016. As internet shopping continues to increase demand for corrugated materials, some printed, some not, will continue to grow.
The results for 2017 will be interesting. The size of the sector also explains why technology companies are keen to develop inkjet machines for either direct to board post print decoration of corrugated sheets or to print on the top sheet to be laminated to the corrugated material at the point it is made.
Trade suppliers to printers are in a decline to match the general trends. Thus prepress services earned sales of £582 million in 2008, dropping to £435 million in 2015 and rising a little to £469 million in 2016. This includes block and die making as well as plate production, retouching and preparation for print.
Finishing services including fold stitch trim and binding rose in sales terms during 2016 to £222.7 million from £206.7 million a year earlier, though is down from the £325 million trade finishing produced in sales in 2008.
Security print, covering by stamps, chequebooks, bank notes, vouchers and other documents with a face value, was worth almost £1 billion in 2008 with sales of £934 million. By 2015, this had become £469 million and £401 million in 2016.
City printing has equally fared poorly. The production of report and accounts was worth £78.2 million for printers in 2008. As electronic filing and digital versions of report and accounts have been allowed, sales have dropped to £22.4 million in 2016, itself down on the £24.4 million the sector was worth in 2015.
Smaller sectors for printed products show mixed fortunes. The printed postcard market slipped to £6.9 million in print sales in 2016, almost 50% lower than in 2008 when the sales value was was £11.7 million. This can be blamed on selfies, Instagram and the like, but the effects of this led to the decision of J Salmon to close down.
Greetings cards have stood up better, thanks perhaps to online purchasing and the ability to carry a personalised message and a simple process for design and ordering. Prodcom figures put the print component of greetings card trade at £67.4 million in 2016 (£71.0 million). In 2008 the sector was worth £79.6 million to printers.
Calendars have been listed as a separate item for the first time and according to Prodcom in 2016 achieved sales of £1.13 billion. It will be interesting to see how this category develops and whether there is a revision to what is counted as this feels on the high side, even if the majority of pictorial calendars will have 13 leaves.
There is no doubt that personalised products that are ordered on line, greetings cards, photo products (calendars, phonebooks, canvases) and branded promotional goods are running against the digital tide. Again the emphasis is on quality to create differentiation and an emotional engagement with the customer.
This is percolating into luxury goods, where outer presentation packaging can be personalised along with the label, often ordered online. This will cascade through the ranks of products, but products that are too ephemeral are unlikely to receive the same treatment as a bottle of fine Scotch.
If not personalisation by carrying an individual’s name, beer brands, food producers, retailer and so on are going to use print in more interesting ways. The statistics do not capture this. This year’s World Cup will throw up plenty of examples of tie in promotions and experiential marketing.
This is a growing area as brands and the agencies that work for them create stand out print-led displays designed to engage with the consumer in an age where each is flooded by several hundred messages a day, yet can remember only a handful if any of those messages.
Where print can create some kind of response from a jaded consumer, a look over a piece of mail because it is printed on a tactile paper, a hesitation because of a floor graphic, a pause before a retail display or better someone picking up a product because of the intriguing way it has been packaged, it will win. Regardless of the sector, innovation and creativity are the watchwords for 2018.
Online printing is taking an increasing share of the flyers and leaflets market which is putting the squeeze on commercial printers.