Special Report: Offset and Beyond — Today’s Model: Distribute-Then-Print
PI: What about future industry consolidation?
Kelly: Underutilized capacity in the printing industry, combined with a no-growth market, forces everyone to share what crumbs of business are left out there. No one is safe. Big and small companies alike are all on shaky ground trying to figure out what comes next. Everyone is taking hits. Transcontinental recently invested $200 million in a new plant that opens in June 2009 to print the San Francisco Chronicle, which recently reported that it may be sold or closed. Big competitors are now bidding on small projects that they would have laughed at a year ago. So, industry contraction would seem inevitable.
However, I remain bullish on our industry to transform and grow. First, I believe customers are reducing their budgets on expensive advertising and moving to cheap media, which puts print, online, direct mail and direct marketing at the center of the “media universe.” Secondly, I believe consumers are getting annoyed with high-profile advertisers that receive bailout money, or with companies that publicly announce massive layoffs and closures. This trend will force many marketers to get out of public view and use private direct marketing campaigns to connect with their customers.
For example, my blood pressure rises when I watch NASCAR and see Caterpillar sponsoring a race team, yet they publicly announced layoffs for more than 20,000 people—many of whom are NASCAR fans. I immediately wonder how advertisers rationalize the ROI when sponsoring race teams, Super Bowl TV commercials, sports endorsements and/or stadium signs (e.g., Citibank, a major bailout recipient, continues to pay $400 million for the NY Mets stadium naming rights).
As consumer sentiments shift, so will advertisers’ accountability and ways they direct their shrinking spend on proven marketing programs that get results: print and online direct marketing campaigns. In general, I tend to think of future industry consolidation more as future industry convergence.