Stop the Presses?
For the second straight year, specialty printers took a hit right in the pocketbook, as spending by promotion marketers fell 2.2 percent to $5.7 billion in 2002, down from $5.9 billion in 2001, according to Printing Industries of America, Alexandria VA (PIA). This decline follows a less than spectacular 2001 that showed a loss of 3.4 percent in promotion spending. And the overall industry outlook doesn’t appear to be much brighter for the reminder of the year.
The decline in specialty printing is in line with the 1.8 percent decline in overall printing sales for 2002. “Those segments of the economy (manufacturing and advertising) most closely related to specialty printing did not have a good year, and that pulled specialty printing down in 2002,” explains Ron Davis, chief economist, PIA. “We expect this year to continue along the same lines, with all the uncertainty over the economy generated by the potential Gulf War.”
Another factor contributing to the decline is the frequency of postal rate hikes and the increased usage of the Web to supplement or replace materials that were traditionally the domain of specialty printers. According to the New York-based Direct Marketing Association (DMA), marketers are holding down costs by migrating some promotions to the Web. “Today, 98 percent of direct marketers have an online presence,” explains H. Robert Wientzen, president and CEO, DMA. “The Web has helped us weather the economic downturn by providing marketers with an alternative, cost-effective means of communicating with their customers.”
But PIA economist Davis does offer a ray of hope for specialty printers in 2004. “With the presidential election and the Olympics bringing an expected return in advertising we expect a rebound to a decent growth rate,” he said. “Maybe not spectacular, but decent.” Another optimistic indicator for growth is the fact that no specialty printing plants closed in 2002 despite the down year. Instead the number of plants actually edged up to 994 in 2002, from 991 in 2001.
A Little Ray of McSunshine In The Forecast
There are some signs that specialty printing may be on a faster track to a rebound than pre-orders may suggest as big time sweepstakes and games promotions make a return to the scene.
In the wake of the McScandal of 2001, and a general feeling that sweepstakes were inappropriate in the post-Sept. 11 climate, many marketers virtually abandoned sweepstakes with high-end game pieces — but the tide may be turning on that trend. Increased security at printing plants and larger insurance policies have lowered agency and client resistance to sweepstakes. A desire to return to normalcy may have also helped by lowering any perceived consumer resistance to sweepstakes and games. In the first quarter of 2003, McDonald’s launched its first sweepstakes since the McScandal, and other big spenders are expected to follow suit.
Canadian specialty printers Pollard-Banknote, Winnipeg, saw a 30 percent increase in 2002 sales, and is looking for the same boost this year. The company, which specializes in printing scratch-off lottery tickets for government sales, boasts state-of-the-art security measures. “Lottery organizations are very demanding and push the envelope on what you can do with scratch-off tickets, so we can now do things like four-color logos in the scratch-off area,” explains Nancy Tovell, sales manager. “We’re seeing a large increase in business from CPG customers, both multi-national and Canadian, and it’s due in large part to our security measures and our advanced printing capabilities.”
SPECIALTY PRINTING SNAPSHOT
total spent in 2002: $5.7 billion
Spending fell 2.2 percent in 2002 compared to 2001
Outlook for 2003 is not much better
Increased security equates to increased sales
