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Advantage Inc. : Amid Turmoil, a Rising Star

April 2011 By Erik Cagle
Senior Editor
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Not many people would argue with the assertion that Southern California is a tough place to make a buck in the commercial printing business. Even after a few notable closures, acquisitions and consolidations, some would claim that excess capacity still exists.

One thing's certain: Pricing pressures are arguably as strong here as they are in any part of the country. For Anaheim, CA-based Advantage Inc., a purveyor of direct mail, commercial printing and marketing solutions, it's a fact of life.

And, while Advantage might get wet from the splash of commodity pricing, that doesn't mean its founder and owner, Tom Ling, is going to jump into that pool. Ling's firm may not be totally immune from pricing wars, but he's winning more often than Charlie Sheen because Advantage can bring much more to the value proposition table than low prices.

"I sought out strong customer service capabilities and providing more offerings as ways to get away from the pricing game," Ling says. "We're not shielded from pricing competition, but we strive to make sure that's not our only line of defense. We try to bring added value to our sales force and our portfolio."

Advantage accomplishes this through its hybrid direct mail and commercial printing platforms. Roughly 29 percent of its work is mail production, and about half of all the products manufactured there ends up in the mail stream (publications constitute the second-most produced items at Advantage). Its client verticals are diverse, ranging from telecommunications and healthcare, to retail (big-box stores and supermarkets) and non-profits.

Winning Combination

Tom Duchene, director of marketing for Advantage and a 30-year industry veteran, notes that the direct mail/commercial printing hybrid has sparked a complementary relationship. Both disciplines funnel jobs to one another, and either direct mail or commercial printing seems to thrive when the other is going through a soft period.

"(Ling) has positioned the company from an equipment standpoint to be able to serve both marketplaces equally well," Duchene adds. "You rarely see high-volume, direct mail printing houses with a big commercial printing division."

Speaking of things one doesn't often see, there's the metamorphosis that Advantage underwent in 2010—consolidating, condensing and redefining its production operations from eight facilities down to two. The company took up residence in a new, 155,000-square-foot facility in Anaheim and a 100,000-square-foot plant in Salt Lake City.

And, if that seems impressive, this juggling act virtually pales in comparison to the transactional growth spurt experienced by Advantage during the height of the 2007-2010 recession. It has elevated Advantage to the $62 million annual sales level, a 29 percent increase over 2009 revenues.

Ling, along with his CFO, Brett Noss, has been a busy M&A maven since 2007, adding Southern California companies Rogers & McDonald, Valley Printers, Advanced Marketing Print & Mail, and Match Mail, along with Utah companies FranklinCovey, Printech and Rocky Mountain Printing. The latter grouping is now known as Advantage Utah. Most of the deals were assets-based transactions, though in some cases key personnel—including the former owners—joined the fold.

The Beehive State seems a random target, at first blush, but Ling has been the fortunate target of several business opportunities. FranklinCovey, known for its line of planners and organizational systems, decided to focus its energies on electronic solutions and offered Ling the opportunity to take over its printing operations. Ling relished the chance to acquire a sound book of business, and it provided inroads to direct mail growth in the Salt Lake region.

While two more acquisitions soon followed, Noss explains there were certain companies that did not fit the mold of what Ling was seeking. "We look to fortify what we're currently doing and create synergisms within the organization," he says of potential acquisitions. "Plus, we're always looking for companies that have different equipment, to some degree, and to acquire quality assets that open up new markets and provide us greater diversity."

For example, Advantage's Utah haul included wide-format digital printing capabilities, box production and marketing services. Ling is very bullish on the future of packaging and package printing, noting that even as commercial work transitions to digital alternatives and online ordering, "the product still arrives in a box."

Ling's collaborative style has given him a unique perspective on the local and national printing and marketing industry mindset. "In the last few years, as economic conditions have deteriorated, we seem to have lost some of our industry consciousness," he says. "In many ways, it has been replaced with a race-to-the-bottom mentality that ultimately benefits no one and hurts all players. We need a new sense of cooperation in our business, and not just in regard to pricing."

Since Ling has worked closely and even collaborated with competitors in the Southern California marketplace, he already boasted a solid scouting report on prospective acquisitions. That spirit of collaboration gave him a high level of familiarity with his contemporaries in rival corner offices; six former company owners now work at Advantage.

"It can be a difficult transition when you're the one who made all of the key decisions, but now you're in a position where you're just providing input in those decisions," Ling says. "It wasn't easy for (the former owners). We sought to make them feel part of the decision-making process, helping to make the work environment a lot more palatable, especially from an ego standpoint."

Integration is often one of the most difficult aspects of acquisitions, as new employees adjust to different systems and work cultures. Ling was selective in the process, bringing over those employees who were critical to maintaining the expertise in their respective niches, as well as those who boasted key relationships with their respective client bases.

Ling was in the enviable position of being able to be discerning in stocking his firm with the best available talent. The West Coast, it seems, does not lack for quality printing employees. "The Southern California marketplace, especially in the past few years, has been filled with many good free agents," according to Duchene.

With seven deals in a relatively short span, Ling has honed his assessment skills and can rely on instinct. He passed on a number of potential deals because the executives on the other side of the conference table weren't on the same page as Advantage. "Over the course of several meetings, their true colors will come out," Ling adds. "I generally trust my own gut on whether it's a good or bad fit—regardless of how good the acquisition may appear on the surface."

"An acquisition is like a marriage," Duchene relates. "You have to go in with both eyes open, knowing there's going to be both good times and bad. Tom has made some very good choices."

As for future deals, Ling is receptive to the idea of adding new capabilities, as well as fortifying newer endeavors such as wide-format (including billboard printing and bus wraps) and package printing. But, there are no revenue targets; Ling's primary objective is for Advantage to constantly reinvent itself.

Acquiring seven firms has netted Advantage an impressive list of half- and full-web offset presses, including an eight-color M-1000, a 10-color Sanden and a six-color Global Web-8, as well as a Komori Super Perfector to complement its Heidelberg CD sheetfed equipment. An HP Indigo 7000, HP Indigo w3250 rollfed press, two Xerox iGen4s and a Xeikon 8000 web—along with 14 monochrome printers—anchor the 11-year-old digital program at Advantage.

Ling is proud of the digital legacy Advantage has built, headed up by his sister, Stacie Ling Yamasaki, and its leading reputation for helping clients best leverage their customer bases through variable data/imaging, then integrating it into an effective cross-media marketing plan. Yamasaki is quick to point out that the greatest digital assets are the folks who enable clients to best manipulate their data.

"You must have talent behind those machines," she says. "There are too many printers with digital equipment who don't know what to do with it."

Joining the Jet Set

As for technological targets, Ling is pondering the need for four-color inkjet capabilities in his lettershop to bridge certain print and mail needs. He hasn't seen the demand for it yet on the West Coast, but definitely feels it could be the next evolution for Advantage.

"I think in-line (personalization) can be rivaled by four-color inkjet in large quantities as manufacturers evolve to a lower cost per page," he says. "It's not just coming, it's already here, and we have our eyes on it."

Custom marketing is another key growth area in Advantage's future. It boasts a number of solutions, including the AdvantageXM 1:1 cross-media platform for the creation, deployment and tracking of integrated campaigns via print, the Web, e-mail, Quick Response (QR) codes, video and mobile.

Another tool is its AdvantagePoint Web-to-print platform, giving multi-location clients the ability to maintain brand identity for customer communications without losing the ability to personalize and order printed documents. Mobile marketing is another area expected to see considerable movement in the coming years. Late last year, Advantage also began to more aggressively serve its clients' needs for media/ad placement services.

"In an industry where we're losing ground to digital forms of communication, we provide the bridge between print and digital," Ling concludes. "I measure our success not just by how many new and innovative things we can do beyond ink-on-paper. I would love to take all of the credit, but it is our employees, clients, a supportive family and my understanding wife, Penny, who really carry the torch here.” PI





The graphic communications industry is facing some very serious challenges, but that doesn't mean there isn't still a lot of life and opportunity in our future. 

Competing for Print's Thriving Future focuses on how printers can create their own positive future by understanding and taking advantage of the emerging changes — the changes that are shaping the printing industry of today and tomorrow. 

Use the research, analysis, and forecasts in this book to: 
• Assess the changes taking place
• Understand the changes
• Design a plan to deal with the changes

Topics include: 
• Economic forces, life cycle, and competitive position
• Place in the national and global economies
• Industry structure, cost structure, and profitability trends
• Emerging market spaces--ancillary and print management services
• Competitive strategies, tactics, and business models
• Key practices of SuperPrinters
• Combating foreign competition
• Social network usage
• A ten-step process to survive and thrive Competing for Print’s Thriving Future

The graphic communications industry is facing some very serious challenges, but that doesn't mean there isn't still a lot of life and opportunity in our future. “Competing for Print's Thriving Future” focuses on how printers can create their own positive future by understanding and taking advantage of the  changes that...




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