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McIlroy--Digital Printing - Are You Making Money?

June 1998
The challenges and rewards of digital printing were revealed more clearly by an informative panel during the recent Seybold Seminars in New York. In a session called "Digital Printing: Making Money at Last," the theme emerged that indeed some companies are making money with digital presses, but it hasn't been easy, and it's far from a sure thing.

Moderator Bob Rosen, a New York-based marketing consultant, set the tone for the session when he declared, "It's our informed guess that in the digital print area, about 20 to 25 percent of the firms are quite profitable, and the rest—about 75 percent—are earning little or nothing."

He pointed out that the 75 percent are not necessarily losing money. "But if you're making 1 to 2 percent, that is really not an economic return, given the risk of investing in a fast-moving technology," Rosen stated. He cast doubt, in fact, on the 20- to 25-percent figure, pointing out that the relatively few firms that are succeeding tend to be heard from more frequently and more loudly. "It's a self-selected sample," he said. "The people who talk about it have picked themselves out."

Creating Digital Demand
But what is the secret of success? What does it take to be in that fortunate minority that is succeeding in digital printing, whether it's 10 or 25 percent of the firms? "The profit leaders are winning due to how they market their services," Rosen revealed.

"They're building relationships, they're finding needs, and they are becoming a consultative resource. They are educating their customers and their salespeople. These three elements lead to high levels of utilization and the possibility of profit." Or, putting it more succinctly, Rosen said, "This whole thing is really about creating demand."

It became clear during the session that demand creation is not a natural talent of most graphic arts firms. They're too accustomed to focusing on equipment acquisition, not on building markets. "Most people believe that when they announce they have added digital printing, customers will magically appear. They're using the theory, 'If we buy it, they will come,' " Rosen said. It's the wrong approach.

"There is no natural demand or pent-up demand for digital printing," he declared. Rosen echoed the comments of market analyst Joe Webb, who has pointed out that digital printing is a need that most customers don't recognize.

Rosen introduced two panelists who are truly making a success out of the digital printing business. The first was Karen Kelty, vice president of marketing at XYAN Corp., outside of Philadelphia. The second was Susan Kinney, president of Castle Press in Pasadena, CA.

 

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