HVTO Trends Q&A: North American Transactional Printing Industry Views

with David Davis
Director
INTERQUEST, Ltd.

Segment One: State of HVTO, Transaction Printing in 2009 vs. 2011, and Hot Industry Topics

Interview by Aaron Kiel, senior editor for the OutputLinks and GreensheetBIZ divisions of OutputLinks Communications Group

David Davis is a director for INTERQUEST, a market and technology research and consulting firm focused on the digital printing industry. He has more than 25 years of experience in the printing industry, and prior to joining INTERQUEST he held technical and managerial positions in the newspaper, book and corporate publishing sectors. He is the author of numerous industry reports, publications and educational programs on a variety of industry topics.

OutputLinks spoke with Davis about its just-published North American Transactional Printing: Market Analysis & Forecast (2011-2016), which is based on in-depth surveys of leading transactional printing operations that collectively produce nearly one-third of all transactional impressions in the market.

Question: What is the state of the North American transactional printing market?

Answer: Over the past few years, the transactional printing market in North America has declined at a rate of about two percent to three percent per year. Although the recession directly impacted direct mail print volume as well as other markets where spending is discretionary, transaction mailers must continue to send customers’ bills and statements.

The primary impact of the recession on transactional mail was to reenergize the efforts of mailers to find ways to reduce the cost of transactional mail, and more importantly, to convince customers to accept paperless delivery.

Most customers that have gone paperless will probably not go back, which is one reason standard mail volume has shown more of a recovery this year than First Class presort – transactional – mail.

Over the next few years, we expect the decline in transactional print volume to accelerate to a rate of four percent to five percent annually. This acceleration will be mainly due to electronic diversion and to reductions in the page counts of many bills and statements. In addition, the slow economy will likely result in a decline of some bills related to non-essential services.

Q: What did you learn when you compared the HVTO markets of 2009 and 2011?

A: We learned that the market is showing remarkable resiliency in the face of many challenges. Transactional printers are quickly adapting to the changing environment by adopting new technologies, listening to their customers and adding value in many innovative ways. The market leaders have gained ground in terms of volume and reach, and they are choosing their weapons wisely.

We do note a heightened awareness among providers of the long-term impact of electronic displacement on print. In the past they have probably been more shielded by the impact because they were gaining volume through outsourcing and from competitors, but now, it’s simply a fact of life they must cope with.

Q: What are the hot industry topics in this area?

A: In the area of software, we see a lot of activity in cloud-based solutions and SaaS [software as a service] offerings. There’s also quite a bit of innovation and activity in the area of pre- and post-processing related to wider and faster printing platforms and overall productivity. On the printing side inkjet is as hot as it comes. These systems have very quickly captured a sizable portion of the impressions in the market, and they are aggressively driving the growth of full-color printing. But beyond that we see inkjet also being deployed on inserters and in-line with systems that enable on-demand envelope creation. High-speed inkjet is the highest targeted future acquisition among the companies we surveyed.

Segment Two: TransPromo’s Future, Canadian HVTO vs. U.S HVTO, Advice for the Industry

North American Transactional Printing
OutputLinks spoke with Davis about its just-published North American Transactional Printing: Market Analysis & Forecast (2011-2016), which is based on in-depth surveys of leading transactional printing operations that collectively produce nearly one-third of all transactional impressions in the market.

Q: Where does TransPromo stand and what’s its future?

A: We interviewed the largest transactional providers in the United States and Canada for this study. They tell us that transpromo works when properly done, but that many of their clients do not have the data, do not have the time, and do not have the wherewithal to assemble all the departments in their company that would need to be involved. These are similar challenges we have heard for years about variable data printing in general. So is it growing? Yes. Is it the be-all-end-all it’s often billed as? No. We shouldn’t get caught up into believing that the future of the transactional industry depends solely on using transactional documents as marketing tools. It can certainly bring a great deal of value to the equation, but it is difficult to do well, and not all providers or clients are willing or able to make the effort. Beyond transpromo there are many opportunities in the area of single-pass full-color printing ranging from simply creating a more palatable bill or statement to eliminating pre-printed forms.

Q: How does Canadian transactional printing compare to the U.S. market?

A: The Canadian transactional market is significantly smaller than the U.S. market. Some overriding trends, such as the erosion of transactional print volume due to electronic delivery are the same, but to a lesser degree. As with the USPS, Canada Post is extremely dependent on transactional mail for revenue. From 2006 to 2010 for example Canada Post’s transactional mail declined from 5.5 to 4.8 billion pieces, but the revenue from this mail has generally held steady due to price increases. In general, when we look at the Canadian providers we recently surveyed and compare them to their U.S. counterparts, they are producing relatively fewer full-color impressions, inkjet is less prevalent, and they are somewhat less optimistic about future growth for MICR. We must be careful with these generalizations, though; while this may be true for operations physically located in Canada, a number of these companies also have U.S. locations or subsidiaries that are quite engaged in all of these applications and technologies.

Q: What’s the key message from this study?

A: Although the transactional market will continue to decline over the next few years, it is the largest digital printing market and will remain so for some time to come. There are numerous opportunities for both service providers and corporate in-house organizations to reduce costs and increase the productivity of their transactional operations and processes, as well as to enhance their bills and statements to improve communication and drive additional sales for own or their clients’ customers.

Q: What’s your best advice to the industry, based on the results of this study?

A: If you are a transactional provider of any appreciable size, you probably already know that you can quickly be priced out of this market; there is a lot of over-capacity and some very, very large players out there. The best ways to add value for clients are through innovative services in the areas of postage and data. You should become your customers’ guide through the maze of postal regulations and be a trusted advisor to help them deliver their mail in the most cost-effective way through a combination of efficient production and mail preparation. Waving the flag of transpromo in front of a client will in most cases draw blank stares and yawns, but if you wave the flag of cost savings you’ll get some attention. Certainly be prepared to help those that want to use their transactional mail as a marketing tool, and certainly be prepared to help them across all available channels including web and mobile delivery.

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