American Printer's mission is to be the most reliable and authoritative source of information on integrating tomorrow's technology with today's management.
Dec 1, 1999 12:00 AM
Leave it to fate and fortune that the two biggest drivers of the extraordinary growth are the world's first and second oldest media--printed publications and telephony. Print and non-print, joined at the Internet, are feeding each other to record one-fourth of all printing demand.
Non-newspaper publishing is ranked No. 1 for 2000 and lead by triple-digit gains that will be recorded in technical, professional and scientific books (+155%) and special-interest magazines (+145%). Book series such as For Dummies, and the windfall of online periodicals fat with brag ads, will bring nearly $4 billion in new sales to web printers and about $2 billion to sheetfed perfecting shops.
Other brisk, but cooler segments, will be el-hi books (+55%) and college books (+43%), both benefiting from enrollment increases. CD/I-multimedia publications (+43%), juvenile books, puzzles, etc. (+20%) and religious/ philosophical books (+16%) will slow. Maps and greeting cards will not enjoy negative growth.
Overall, with the adult trades (+11%), consumer magazines (+10%) and the business-to-business press (+8%) all holding market, publishing should hit $80 billion with about 19% or $15 billion going to paper, ink and manufacturing--a gain of at least 29%. This, by the way, presumes no paper price hike in the new year.
Telecommunications is ranked No. 2, though the biggest growth will not be among traditional telephone long-distance and local operating firms. Rather, growth will be found in the providers of broadband access and management of information.
High-speed access services (+273%) will lead the "wide" as fibre-optic cable is laid into every neighborhood during the next five to eight years--faster than supply and slower than demand. Printing, particularly direct mail, outdoor and fleet graphics, will be broadly used by thousands of pre-shakeout access providers seeking each and every pipe destination before it's laid.
Cable providers (+9%) and regional Bell operating companies may remain asleep at their switches, which is why some new players will be at the door--electric and water utilities and local broadcasting stations.
The fight to wire, or wireless, will be great for all print from financial and legal to promotional and sign-on campaigns. Dial into $5 billion in new print from new players in the access game; more if the copper and co-ax crowd makes the connection. Since this will drive America Online and its competitors to literally wider offerings, there will be 20 percent to 30 percent more utility and ad print here than in 1999's record sales year.
Wireless (+28%) will go beyond cell phones and PDRs to kitchen appliances that prepare recipes, athletic shoes that double as personal trainers and smart toys that teach math. Worldwide growth in wireless is five times that of the wired Internet.
The problem for our industry is that the printing buyers for this segment are largely in Europe and Japan. This paradox of the information-infrastructure leader being the wireless follower will impact long-term prospects, but doesn't preclude printers selling their stuff overseas.
Ranked No. 3 is computer software, led by network communications (+380%) essential to the Internet and to hundreds of print salespeople. Soon, entrants with specific applications in smart cars, checkout registers, toys, vacuum cleaners and clothes may come to rely on smart printing from other places. Ink and paper researchers will bring to our craft ultra-thin-film technology so that we may produce low-cost embedded software and memory microdevices. Print won't necessarily be a visual medium after this event. It follows that this and other cheap or free production and distribution methods will displace packaged software (0%), already weakening.
>From box to central server, applications-hosting (+700%) will win over most computer users and force holdouts such as Microsoft to offer webware. Printing will be a net loser in the swift shift from replicating/packaging to promotion, support and maintenance. The Web will win at the expense of the sheetfeds, diecutters and gluers.
Because the balance of the software industry are memory and chipmakers needing little print, software may shrink by one-third to a very soft $9 billion in billings. Worse, network applications pose a dilemma for print sales in all demander categories. Will buyers opt to bid on the Internet and compel e-auctioning of our products and services, or will supply-chain management bring printing up to the forefront of efficiency-driven e-commerce applications? Meanwhile, online business software licensing may triple in the new year.
At No. 4 is banking and insurance where slower market growth will be offset by more deregulation, benefiting print and other media.
Commercial banking (+17%), consolidating and closing thousands of branches, is name changing and branding to the delight of screen and large-format printers. Demutualization, IPOs and record reserves at life (+10%) and property and casualty insurers (+78%) will spur crossovers to banking and stockbrokerage, driving direct mail, inserts and financial/legal printing to about $8 billion in sector revenues. As deregulation and lax enforcement of banking laws continue, brave new combinations of accounting, consulting and financial services will benefit all commercial printing. Brokerages will lose out to bank/insurer takeovers of online trading firms.
Ranked No. 5 and racking up stylish gains is fashion. Catalog sellers (+97%) have redressed and are bringing traditional specialty retailers (+90%) onto the runway of direct marketing in print and on the Web.
Biggest ring-ups will continue to be accessories (+150%), jewelry (+25%), intimate wear (+134%) and footwear (+192%).
Consumer confidence is revving up the automotive sector, (No. 6). New car sales (+10%) will top out in 2000 as inventories, especially of foreign and discontinued models, are pared down and out. Auto parts and repairs (-2%) will be cheaper and in more demand thanks to disinflation.
Printing will stall at the 1999 level of about $7.1 billion as automakers test e-commerce and trim the number of models offered. Predicted are a shakeout of foreign manufacturers and more spinoffs among the domestic OEM parts makers. Dealerships will continue to consolidate and co-market, providing opportunities for design and production of novel traffic building and customer-retention print.
Some car buying will be with proceeds from home equity loans, one of the stars of real estate, ranked No. 7. Mortgage financing (+30%) and residential home sales (+21%) will break records.
This sector is the largest consumer of open web and business forms printing, each of which may double. Add in the high-end sheetfed work demanded by commercial real estate (+33%) developers for sales of $6.7 billion.
Ranked No. 8 is discount retailing. As a sign of consumer spending shifts, record construction of warehouse stores and smaller 40,000-sq.-ft. downtown versions is underway for 2000 openings. Wal-Mart, with one-third of the sector, will determine its course. What's clear is mega-spending on FSIs, direct mail, in-store graphics and membership materials, tripling to over $6 billion.
Also on a comeback will be beverages, ranked No. 9. After a sales slump in '99 in every brand category except waters (+13%), dairy (+9%) and juice drinks (+7%), beverages are poised for success in 2000. This category will be heavily supported by advertising and in-store promotion.
The cola wars, beer battles and booze introductions are past and concentration on teas, coffee and new-wave beverages are in the immediate future. POP/POS, on-packs, outdoor, fleet graphics and event tie-ins will pour over $6 billion to print. Wines (+4%) may sustain modest growth in 2000 after the spike in bubbly consumption at the millennium.
Closely related to beverages is packaged foods, ranked No. 12. Brand consolidations and cross-promotions are anticipated but shelved are $1 billion in couponing and FSIs. This leaves only $5 billion for in-store, below-the-line and retail co-op. Print sales may best be directed at supermarkets that are trying to lure customers with dining-in incentives, including recipes and partyware.
More healthy will be medical products/pharmaceuticals, ranked No. 10, because of major introductions of prescription drugs (+15%) in the new year. Heavy promotional spending in magazine inserts and promotions to physicians and pharmacists should bring $4 billion in print. Folding cartons, roll labels, displays and package inserts should add another $2 billion.
Many of these demanders also are participants in No. 17-ranked personal care. This once high-flyer in ad spending has been blemished by sales slumps and product failures. Color cosmetics, fragrances, baby care and shaving preparations are shadows of their former selves, trying comebacks with lipsticks that eliminate bad breath.
Consumer interest appears focused on skin, sun and haircare products (+32%) sold through salons and personal demonstration. Off-the-shelf items are being discounted and no longer supported by media advertising, but the new high-ticket products with organic, hypo-allergenic or other features require strong print presence where sold. Beauty parlors, health clubs and even physicians' offices are the new venues for POP.
Home improvements, No. 11, may be overtaking personal makeovers. With a predicted 1 million housing units changing hands, there will be lots of room for improvement. Retail circulars, banners, displays and film preparation for ROP ads will reach $6 billion, led by building materials and hardware (+16%), furniture and fixtures (+29%), and household appliances (+16%).
After work around the house, leisure-activity products and consumer electronics, ranked No. 13 and No. 15 respectively, will benefit from disposable personal attention and expenditures. Category leaders will be home computers/peripherals (+25%), sporting equipment (+12%) and recreational vehicles (+8%).
Constrained by average hour-a-day use of the Internet will be home audio and video, (+6%), including DVDs and HDTV. Fitness equipment (+20%) and wheelgoods (+2%) look to be the only competitors for time.
Packaging, collateral and display printers will find print orders spotty and subject to reductions in pipeline inventories. All told, there will be at least $4 billion in new orders from each sector; much more for salespeople who can argue their printing will increase demand.
Remember health care, today ranked No. 14? As a percent of U.S. gross domestic product, this sector has dropped from one-fourth to 1/13th in five years. Printing purchases have been cut two-thirds to about $3 billion, mostly in newsletters and other localized publications and utility printing. Collapsed are the HMOs and physician management rollups that once dominated sector promotional spending. Hospitals will continue to merge and reduce spending in response to capitation. Still, total buys may reach $4 billion.
At No. 16 is travel and hospitality, where the hottest spots are cruise lines (43%) and upscale hotels (+17%). All forms of travel are maxed out as the industry orders more capacity. Participant amusements (+12%) are, proportionately, the largest sector buyers at more than three percent of gate revenues, closely followed by cruise lines. Look for rack brochures, tickets/entry cards, directories, folders and utility graphics.
Overlapping travel and hospitality are No. 19 foodservice and off-the-list wagering and gambling. Restaurants and clubs will aggressively promote business after the record turn-of-the-millennium 1999 run up. Many will change themes and names, driving demand to local designers and printers on the order of $2 billion or more. Institutional foodservice will be a big buyer of pressure-sensitive labels, bringing the forecast total to $2.4 billion.
Recorded and live entertainment, at No. 18, will show printing strength in motion pictures (+9%), live concerts and theatrical performances (+18%), pay cable/ satellite programs (+10%) and spectator sports (+12%).
Radio, television and cable broadcasters, and recorded audio/ video disks and tapes, on the other hand, are at no or negative growth. Packaging, labeling, POP, security anti-pirating devices and promotional printing will, overall, be lower than in 1999 by 15 percent or more at about $2.4 billion.
Among the other top 25 categories, federal and state governments (No. 20) will spend over $2 billion, including the largest job ever undertaken for the Social Security Administration in January, 2000.
Chemicals/petroleum, at No. 21, is a cyclical industry rising in 2000 with broad price hikes in oil and most feedstocks. Identity and defensive printing forecast last year was delayed and likely will materialize in 2000.
Higher education is working harder for students, as the college-age population is the smallest in many years. A possible $2 billion is direct mail and other recruitment materials will match last year.
Tobacco is now back in print. Though restricted where--and when--in advertising, logos will be increasingly prominent at bars and clubs, events and near other places where cigarettes are sold. Direct-mail publications and premiums to smokers and both advocacy and public anti-smoking announcements will puff up print buys to $2 billion.
Religion and charity (No. 24) contributions are growing faster than the economy. With competition for donations will come robust direct mail demand--perhaps to $2 billion.
Finally, 2000 is a Presidential election year, and also one for more than 23,000 other politicians from Congress to dogcatcher. To get out at least that many voters, more than $400 million in print will be purchased. By all indications, fundraising may double that of 1996. If so, print will share in a largess exceeding the forecast.
Taking the top 25 hot markets together, and subtracting overlaps, nets more than 92% of all printing demand forecast for 2000. As a strategic selling objective, the tasks are to pair each sector with actual and prospective accounts and then apportion marketing assets according to each potential.
For those who ignore trends and continue business as usual, the new year won't be a great beginning. Those who plan will reap the rewards.
Readers may obtain the "Hot Markets for Year 2000 Report" in full text with exhibits and supporting data from PB/BA International Inc. For ordering details, call (800) 448-8952.