Catalog and Publication Outlook : Moving Forward CautiouslyDecember 2010 By Julie Greenbaum
"Other customers are driving more frequent news or feature articles to complement their monthly editions, as well as selling reprints in both electronic and hard-copy form."
On the postal front, publication and catalog printers were relieved when the Postal Regulatory Commission (PRC) denied the U.S. Postal Service an exigent rate increase on Sept. 30. According to the Affordable Mail Alliance, the increase would have meant a massive rate hike above the rate of inflation. The USPS has since filed an appeal, at press time, challenging that decision in court.
USPS deflection penalties were also an issue this year, and many printers and publishers had to find solutions to help magazines retain their automation discounts. Marcoux says that while RR Donnelley worked with many of its magazine customers to minimize the impact, the penalties did add unexpected costs for some tabloid publications.
"The continued migration to Intelligent Mail will offer a solution for publishers to convert from traditional Address Correction Service (ACS) to the new Free ACS systems, providing reductions in postal-related expenses, especially for larger publishers," says Marcoux. "To further cut down on postal expenses, there continue to be efforts to increase the utilization of co-mail pools, both for short-run publishers' titles, and for longer-run publishers' supplemental mailings. Trim sizes have also been reduced, especially for many of the 9˝ titles that are now going back to a more traditional, standard size."
Many print-based publishers have also opted for paper basis weight and grade reductions, while others that mail outside of the United States are exploring the use of digital editions to reduce their international mailing costs and to deliver product faster.
The paper market has also seen its share of price increases this past year, with further hikes looming in 2011. "Although it's difficult to predict with certainty whether paper price increases will stick in a challenging economy, several factors make higher prices probable," Transcontinental's Jensen remarks. "In addition to the likelihood of an improving North American economy, the paper market is very global and there is an increased demand in other parts of the world. Add to that the reduced North American manufacturing capacity that occurred over the past few years and a devalued dollar that raises the price of imports, and you have a pretty good scenario for higher paper prices in 2011."
In the past year, the catalog sector has also had its share of challenges, such as cost pressures, budget constraints, channel selection issues, fewer page counts, and the use of lighter- and lower-grade papers, to name a few.
Despite all of these challenges, the general consensus among major catalog printers is that the printed catalog will not be disappearing any time soon. The catalog will continue to serve as a primary sales channel that drives consumers to a direct marketer's Website or store.
According to John Coyle, president of Catalog, Direct Marketing and Retail Services for RR Donnelley, the model will continue to be fine-tuned, where the printed catalog calls the consumer to action, which helps to drive both online and retail store sales.
"Looking into 2011, we also expect to see more personalized covers and specialized messaging, as well as targeted inserts in catalogs, as marketers look to motivate frugal consumers," Coyle points out. "They also continue to test and evaluate social media for driving brand engagement. We also see marketers reaching out to include postcard mailers timed between catalog drops, targeting a select audience with a few specific products."
People Still Prefer Print
Transcontinental has continued its thrust to become a stronger multi-channel resource, according to Jensen. He also re-affirms that in spite of many predictions of the printed catalog's demise, it remains a core component of most multi-channel marketing efforts.
"People of all ages enjoy receiving catalogs. The most progressive catalogers are moving past the point of debating whether print works. They know it does. But, with few exceptions, the concept of mailing catalogs that drive consumers to a Website is here to stay. QR codes will further contribute to this trend."
At Itasca, IL-based Continental Web, CEO Ken Field says many of his catalog customers have cut back on quantities. "In 2011, runs will continue to get smaller and the frequency of mailings will increase due to the cost of mailing," he explains. "But, despite the ongoing issue of postal costs, the catalog will continue to draw people in—as color creates an image that people are attracted to, whether in fashion, vacation settings or automobiles."
CDS Publications' Brown relays that while the printed catalog will continue to be an appealing avenue for driving customers to buy products, there is still work to be done on the personalization end. "Marketers are using digital printing to drive highly personalized direct mail, but the catalog marketplace has not yet aligned itself to capitalize on this potential," he maintains.
"With the advent of high-speed inkjet printing technology, the cost/benefit gap with offset continues to narrow. This could prove to be the motivating factor to get catalogers to go digital and fully exploit the potential of personalization."
Even so, print will continue to serve the buying needs of consumers well. "The fact of the matter is that print connects to all of our senses unlike electronic media. Most consumers still prefer to browse products in printed catalogs, and then go to the Internet and order the product," concludes Daniel Bailey, president of CGX's The Hennegan Co. in Florence, KY. "This trend hasn't changed, and many catalogers confirm that it will remain the same in the coming year." PI