Press Room
Cost cutting and corporate environmental responsibility
set scene for commercial printing cuts in favour of e-marketing -
says new Grant Thornton survey
8 March 2007
The vast majority (83%) of large UK companies are
currently producing online only versions of their marketing
materials such as newsletters and brochures with 1 in 3 items no
longer being printed but created and distributed in electronic copy
only. The trend, largely influenced by the need to cut costs and
improve corporate environmental responsibility, is likely to see a
substantial increase over the next three years as over 70% of large
businesses plan to increase their reliance on e-marketing by
boosting their overall online output by a further 35%. The move
could spell further financial trouble for the UK printing
industry.
The results are part of a survey conducted by leading business and
financial adviser Grant Thornton of senior marketing executives and
print managers within large UK business with average yearly
turnovers exceeding £100m*.
Cost cutting (62% of sample) and corporate responsibility towards
the environment (53%) rather than a wholehearted belief that
e-marketing is just as effective as printed material (35%) appear
to the be the key reasons behind this trend. Environmental
responsibility in particular seems a key factor with over 70% of
those questioned expecting to print less within three years as a
direct consequence of their efforts to reduce the environmental
impact of their corporate activities.
"Ten years ago, e-commerce was heralded as the beginning of the end
for the printing industry. Everything would live online and the
need for printed material would gradually disappear. So far it
hasn't happened", said Daniel Smith a print industry expert at
Grant Thornton. "The proliferation of all sorts of magazines
covering everything from trainspotting and needlework to sport and
celebrities; the growing size and distribution of company financial
statements; the never ending number of direct marketing leaflets
and the now indispensable point of sale kits to promote an ever
growing array of retail products, have ensured that volumes in the
printing industry have continued to rise", he continued.
"In parallel, during the recent past, the use of e-marketing has
continued to creep up. As volumes have continued to rise so has the
proportion of non-printed materials. Already suffering from massive
over-capacity and very low margins, a shift in behaviour could
serious affect the industry which counts over 12,000
companies**".
"With over a third of large UK businesses planning to cut external
print spend by an average of 20% during 2007, and almost another
quarter unsure about it, the UK printing industry will be in for a
rocky ride over the next 24 months", said Daniel Smith .
"Foreign competition and cost pressures have meant that over the
past few years a number of UK printers have run into serious
financial trouble and gone out of business, with 2006 alone seeing
the likes of Pillan & Waddies Ldt, New Jarrld Printing Ltd and
Olwen Direct Marketing Services entering formal insolvency
procedures".
The majority of print industry users (58%) regard printing prices
as still competitive with a further 30% seeing them as about right.
However, there is some concern around costs given that almost half
(49%) of print users have seen prices increase during this past
year, "sparking cost reviews, which will increase the popularity of
e-marketing and eventually see a cut in printing orders. This could
be disastrous for UK printers", said Smith.
"Each year the public is getting more and more used to reading
online. As the popularity of newspaper and online news sites
increases, corporates are taking the view that some of their
marketing materials can be delivered just as effectively online
than in printed copy - in some instances, even more effectively
given the real time benefits of this medium. A further
consideration is that electronic copies don't only save on print
costs but also on postage and stationery costs", continued
Smith.
"While star performers in the industry remain, for many
profitability is at an all time low, with anything non-time
critical now typically printed in the China and the Far East, said
Smith.
"While my expectation is that a further shake out and consolidation
within the industry is inevitable, many UK printers should
ruthlessly review their strategies, as the backlash of e-marketing,
talked about for years but never fully materialising may now, on
the bandwagon of environmental justice start biting where it hurts"
he concluded.