Specialty Printing: Stop the Presses

Thank goodness orders are booked so far in advance. Otherwise, specialty printers would have fared far worse than they did in 2001, when promotion spending fell 3.4 percent to $5.9 billion, according to Printing Industries of America, Alexandria, VA.

For the most part, the decline was caused not by the cancellation of complete jobs but by reductions in order sizes and the postponement of work planned for the third and fourth quarters.

An industry comprised of both small independent companies and large conglomerates underwent a lot last year. While some suppliers posted steady sales, others were forced to cut staff — and some even closed. “It was the year of the good, the bad, and the ugly,” says Val Stark, senior vp-sales and marketing with Fenton, MO-based Fleming Promotional Graphics.

Printers trying to save revenue as the economic climate worsened often sacrificed their own bottom lines: Many a sales rep cut prices to maintain quotas, a trend that took its toll on margins. “A lot of business quickly dried up toward the end of the year,” says Ron Davis, PIA’s chief economist. “Printers did whatever they could.”

In an attempt to capture a bigger share of the dwindling pot, printers are aggressively working on research and development, new product launches, and post-McScandal security efforts.

St. Louis-based The Graham Group, for example, posted solid sales of its Next to Food product, which allows printed pieces to be hygienically sealed and laid directly on food within packaging. More broadly, an increased demand for lenticulars saved more than a few bottom lines last year: Glenview, IL-based Kraft Foods’ Post Cereal offered in-pack baseball cards.

The printing needs of games, contests, and sweepstakes still account for a large portion of promotional printing revenues. Printers are investing in new gamepiece coatings such as laminates, using new inks that allow players to scratch off a branded message (instead of the standard gray box), and replacing scratch-off boxes with pop-out windows.

Good with the Bad

One trend that has been both a blessing and a curse is the integration of offline and online activity, which has reduced some of the need for printed materials — but also saved some programs from being eliminated entirely.

One of the most common strategies is the use of on-pack/in-pack codes consumers enter online to see if they’ve won. Adding codes to standard packaging is less expensive than manufacturing stand-alone gamepieces, explains Mark Davis, vp-sales and marketing with Greenwich, CT printing giant Quebecor USA’s promotional games unit.

Purchase, NY-based Pepsi-Cola Co. mixes old and new methods: Last fall’s second-annual PepsiStuff.com campaign stamped Internet-driving codes under caps, but its January 2002 Super Bowl effort (run in tandem with sister Frito-Lay) seeded packaging with actual gamepieces.

On the heels of last summer’s McDonald’s gamepiece embezzlement scandal, marketers are putting greater pressure on suppliers to beef up security. In response, many printers are upgrading to fully computerized seeding systems that reduce the potential for human error (or corruption).

Elsewhere, the direct mail channel proved its resilience. Despite the rapid rise of e-mail communication and the fall anthrax scare (which postponed millions of mailings), spending rose 4.5 percent to $46.5 billion in the year, according to estimates from the Direct Marketing Association, New York City. That’s the smallest gain since 1995.

Suppliers say orders probably are not arriving in time to save 2002 from proving worse than 2001. “We could be off by as much as 25 percent this year,” says Quebecor’s Davis. “I don’t know anyone that isn’t singing the blues.”